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Limitations on the Power of Taxation

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Jannica Papelleras

on 2 October 2013

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Transcript of Limitations on the Power of Taxation

Limitations on the Power of Taxation
Classifications of Tax
Constitutional Limitations
- those expressly found in the Constitution or implied from its provisions
Inherent Limitations
- those which restrict the power although they are not embodied in the constitution
Requirement of due process
- Sec. 1, Art. III
Meaning of due process
- we can safely say that any deprivation of life, liberty, or property by the gov't is w/ due process if it is done with:
Substantive due process
- under the authority of a law that is valid.
Procedural due process
- after compliance with fair and reasonable methods of procedure prescribed by law.

Requirement of equal protection
- Sec. 1, Art III
Meaning of equal protection of the laws
- all persons subject to legislation shall be treated alike under like substances and conditions both in the privileges conferred and liabilities imposed.
Requirements of Uniformity and Equity in Taxation
- Sec. 28[1], Art. VI
Meaning of uniformity in taxation
- all taxable articles or properties of the same class shall be taxed at the same rate.
Uniformity of operation throughout tax unit
- the rule requires the uniform application and operation w/o discrimination, of the tax in every place where the subject of it is found.
Equity in burden
- uniformity implies equality in burden, not equality in amount or in its strict and literal meaning

Prohibition against imprisonment for non-payment of poll tax
- Sec. 20, Art III
- a person cannot be sent to prison for failure to pay the community tax
Meaning of equity in taxation
- the concept of equity in taxation requires that such apportionment be more or less just in the light of the taxpayer's ability to shoulder the tax burden, ad on the basis of the benefits he receives from the gov't
the constitutional requirement of equity in taxation also implies an approach which employs a reasonable classification of the entities or individuals who are to be affected by a tax
Relationship w/ equal protection guarantee
Uniformity and equity refer to the proper relative treatment for tax purposes of persons in unlike circumstances.
Prohibition against impairment of obligation of contracts
- Sec. 10, Art. III
Meaning of impairment of obligation of contract
- obligation is impaired when its terms or conditions are changed by law or by a party w/o the consent of the other
The contract, the obligation of which is secured against impairment under the constitution, includes contracts entered by the gov't
The law, the enactment of which is prohibited, includes also executive order or instructions issued by the President
Prohibition against infringement of religious freedom
- Sec. 5, Art. III
- It has been held that the imposition of license fees on the distribution and sale of bibles and other religious literature not purposes of profit by a non-stock, non-profit religious corporation violates the above constitutional guarantee of the free exercise and enjoyment of religious profession and worship.
Prohibition against appropriation for religious purposes
Basis - Sec. 29[2], Art. VI
Application - the above limitation is based on the requirement that taxes can only be levied for a public purpose.
Prohibition against taxation of religious, charitable, and education entities, etc.
- Sec. 28[3], Art. VI
- the exemption covers only property taxes and not other taxes
Test of exemption
- It is the use of the property and not ownership
Nature of use
- to be tax-exempt, the property must be actually, directly, and exclusively used for the purposes mentioned
Prohibition against taxation of non-stock, non-profit educational institutions
- Sec. 4[3], Art XIV ; Sec 4[4], Art. XIV
- the exemption covers income, property and donor's taxes, and custom duties
Granting of tax exemption
Basis - Sec. 28[4], Art. VI
Veto of appropriation,revenue, or tariff bills by the President
Basis - Sec. 27[2], Art VI
Non - impairment of the jurisdiction of the Supreme Court
Basis - Sec. 2, Art VIII ; Sec. 5 [2b], Art VIII
Full transcript