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POWER OF TAXATION TAXATION Tax 3 INHERENT POWER TAXATION POLICE POWER EMINENT D

POWER OF TAXATION TAXATION Tax 3 INHERENT POWER TAXATION POLICE POWER EMINENT DOMAIN Definition Characteristics: Characteristics / Inherent power of the sovereign state / Forced charged / Exclusively lodged with the legislature / Generally payable in money Purpose raise revenue / / Exclusively levied by the legislature / Assessed in accordance w/ some reasonable rule of apportionment Natures: / Imposed by the state within its jurisdiction Amount of exaction no limit / Plenary / Levied for a public purpose / Comprehensive / Awesome power that could destroy Classifications As to subject matter Benefits received Purposes and Objectives: / / RAISE REVENUE / / NON-REVENUE / Contracts may be impared Contracts may be impared Promotion of general welfare Regulation / Reduction of social inequality Transfer of property rights Encourage economic growth As to burden Protectionism / Scope Theories and bases: / / LIFEBLOOD THEORY (Importance of taxation) -taxes are what we pay to civilized society. As to purpose TAX SPECIAL ASSESSMENT / Imposed on persons, property, rights and priveleges. Levied only on land. / NECESSITY THEORY (Theory of taxation) / -tax is an attribute of sovereignty emnating from necessity. As to measure of application / Not based on any special or direct benefits. Based wholly on benefit. / Ad Valorem Tax-tax upon the value of the article or thing subject to tax'n Levied and paid annually. Exceptional both as to time and locality. As to taxing theory / / / BENEFITS-PROTECTION THEORY (Basis of taxation) As to rate TAX LICENCED FEE / Based on power of taxation. Emanates from police power. To generate revenue. Regulatory. / Amount is unlimited. Aspects: / Non-payment makes the business illegal. / Levy or imposition of the tax (tax legislation/function of congress) / Enforcement or tax administration (tax collection/function of executives e.g BIR) Other Impositions than taxes / TAX DEBT / Obligation imposed by law. Created by contract. Scopes of Legislative Taxing Power / Due to govt in its sovereign capacity Maybe due to govt but in its corporate capacity. / Amount or rate of tax Payable in money. Payable in money, property or services. / Apportionment of tax / Does not draw interest except in case of deliquency. Draws interest if stipulated or delayed. / Kind of tax / Method of collection Not assignable. Assignable / / Not subject to compensation or set off. Subject to compensation or set off. / / / Situs of taxation Imposed only by public authority. Can be imposed by private individual. May the COURT interfere with tax legislation? / / Is the DOCTRINE OF EQUITABLE RECOUPMENT followed in the Philippines? / / May a TAX be subject of COMPENSATION or SET-OFF? / / / BASIC PRINCIPLES OF SOUND TAX SYSTEM / / PUBLIC FINANCE VS TAXATION / / -inherent power by which the sovereign through its law-making body raises revenue to defray the necessary expenses of government. -enforced proportional contibutions from the persons and property levied by the law- making body of the state by virtue of its sovereignty in support of government and for public needs. raises revenue to defray the necessary expenses of govt interferes with private rights to promote general welfare take private property upon payment of just compensation forpublic use promote general welfare thru regulations facilitate the state's need of property for public use Subject to inherent, constitutional and contractual limitations limited to the cost of regulation, issuance of the license or surveillance no exaction; but private property is taken for public purposes No special or direct benefit is received by the taxpayer; merely general benefit of protection No direct benefit is received; a healthy economic standard of society is attained direct benefit results in the form of just compensation to the property owner Personal Tax -taxes are of fixed amount upon all person of certain class within the jurisction without regard to property, occupation or business in which they may be engaged e.g Community Tax Certificate -basically, its purpose is to provide funds or property with which the state promotes the general welfare and protection of its citizens Property Tax-assessed on property of a certain class e.g Real Property Tax Excise Tax-imposed on the exercise of a privilege e.g Income Tax, Donors and Estate Tax Non-impairment of contracts Contracts may not be impared Custom Duties-duties charged upon the commodities on their being imported into or exported from a country e.g Tariffs Taxes paid become part of the public funds No transfer but only restraint in its exercise Transfer is effected in favor of the state Direct Tax-both the incidence of or liability for the payment of the tax as well as the impact or burden of the tax falls on the same person e.g Income Tax All persons, property, rights and priveledge. All persons, property, rights and priveledge. Only upon a particular property Indirect Tax-the incidence of or the liability for the payment of the tax falls on one person but the burden thereof can be shifted or passed on to another e.g VAT -without taxes, the government would be paralyzed for lack of motive power to activate and operate it. General Tax-levied for the general or ordinary purposes of the govt Special Tax-levied for special purposes Personal liability attaches on the person assessed in the case of non-payment. Cannot be made a personal liability of the person assessed. -it is a necessary burden to preserve the state's sovereignty and a means to give the citizenry an army to resist an aggression, a navy to defend its shore from invasion, a corps of civil servants to serve, public improvements designed for enjoyment of the citizenry and those which comes within the state's teritory, and facilities and protection which a government is supposed to provide. Specific Tax-imposes a specific sum by the head or number or by some standard of weight or measurement Exemptions granted is applicable. (Art. VI Sec. 28 (3) 1987 Constitution) Exception does no apply. NB If property is exempt from RPT, it is also exempt from SA. National Tax-levied by the National Government Local Tax-levied by the local government -taxation is a symbiotic relationship whereby in exchange of the benefits and protection that the citizen gets from the government, taxes are paid. Progressive Tax-rate or amount of tax increases as the amount of income or earning to be taxed increases Regressive Tax-tax rate decreases as the amount of income to be taxed increases Amount is limited to the cost of (1) issuing the license, and (2) inspection and surveillance. Proportionate Tax- based on the fixed proportion of the value of the property assessed. Non-payment does not make business illegal but maybe a ground for criminal prosecution. Toll-amount charged for the cost and maintenance of the property used Penalty-punishment for the commission of a crime Compromise Penalty-amount collected in lieu of criminal prosecution in cases of tax violations Special Assessment-levied only on land based wholly on benefit accruing thereon as a result of improvements or public works undertaken by government within the vicinity Purpose/s of its levy, provided it is for public purpose License Fee-regulatory imposition in the exercise of the police power Subject to be taxed, provided it is within its jurisdiction Margin Fee-exaction designated to stabilize the currency Non-payment is punished by imprisonment except poll tax. No imprisonment in case of non-payment (Art. III, Sec 20 1987 Constitution) Debt-sum of money due upon contract or one which is evidenced by judgement Subsidy-legislative grant of money in aid of a private enterprise deemed to promote the public welfare As long as the legislatue, in imposing a tax, does not violate applicable constitutional limitations or restrictions, it is not within the province of the courts to inquire into the wisdom or policy of the exaction, the motives behind it, the amount to be raised or the persons, property or other priveledge to be taxed. Custom Duties and fees-duties charged upon the commodities on their being imported into or exported from a country /NO. A tax presently being assessed against a taxpayer may not be recouped or set-off against an overpaid tax refundof which is already barred by prescription. Revenue-a broad term that included taxes and income from other sources as well The court's power in taxation is LIMITED only to the application and interpretation of the law. Impost-in general, it signifies any tax, tribute or duty; in limited, it is a duty on imported goods and merchandise /NO. Taxes cannot be subject of compensation or set-off. Taxes are not contractual obligations but arise out of duty to the government. TITHE-imposes by a church or sect. TRIBUTE-imposes by a monarch Fiscal Adequacy -sufficiency to meet govt expdture and other pub needs Administrative Feasibility -capibility of being effectively enforced. TAX is a mere level of public finance. Theoretical Justice -based on taxpayer's ability to pay; progressive PUBLIC FINANCE refers to the financial operation of all government levels. Such operations include budgeting, taxing, appropriating, purchasing, borrowing, disbursing funds, and regulatimg currency. / Consistency with Economic Goals Is the power to tax the power to destroy? uploads/S4/ tax-guide.pdf