01 TAXATION Flashcards
Constitutional mandate to Congress on tax laws
Sec. 28, Art. VI, 1987 Constitution.
CONST. Art. VI. Sec. 28.
(1) T r o t s b u a e. T C s e a p s o t.
(2) T C m, b l, a t P t f w s l, a s t s l a r a i m i, t r, i a e q, t a w, d, a o d o i w t f o t n d p o t G.
(3) C i, c a p o c a t, m, n-p c, a a l, b, a i, a, d, a e u f r, c, o e p s e f t.
(4) N l g a t e s b p w t c o a m o a t M o t C.
Power of LGUs to generate revenues
Sec. 5. Art. X, 1987 Constitution
Art. X. Sec. 5. E l g u s t p t c i o s o r a t l t, f, a c s t s g a l a t C m p, c w t b p o l a, s t, f, a c s a e t t l g.
Sison v. Ancheta
When can we say that the requirement for the univormity of taxes is met?
The requirement is met when the tax operates with the same force and effect in every place where the subject may be found. The rule on uniformity does not call for perfect uniformity or perfect equality, because this is hardly attainable. There is quite a similarity then to the standard of equal protection for all that is required is that the tax “applies equally to all persons, firms and corporations placed in similar situation.”
Sison v. Ancheta
May a tax be imposed for the benefit of a certain sector or industry in society?
Yes. In Lutz v. Araneta the Court held valid the levy of taxes upon sugar owners for the benefit and protection of the sugar industry. Thus, the SC, citing Johnson v. State ex rel. stated:
“The protection of a large industry constituting one of the great sources of the state’s wealth and therefore directly or indirectly affecting the welfare of so great a portion of the population of the State is affected to such an extent by public interests as to be within the police power of the sovereign.”
Tax in this case was used as an implement of the police power of the state.
May taxes levied on a particular sector of society be considered valid?
Yes. In Lutz v. Araneta, the Court ruled that “it is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been repeatedly held that ‘inequalities which result from a singling out of one particular class for taxation, or exemption infringe no constitutional limitation.’”
What is the characteristic of the power of taxation?
- The power to tax is an attribute of sovereigny. It is the strongest of all the powers of government [Sison v. Ancheta];
- The power to tax is the lifeblood of the government; it is an inherent prerogative, and it has to be availed of to assure the performance of vital state functions.
- The power to tax, while broad, is not unconfined. There are limitations on the power to tax which are set forth in the Constitution (due process and equal protection);
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What are the characteristics of the power of taxation?
- The power to tax is an attribute of sovereigny. It is the strongest of all the powers of government [Sison v. Ancheta];
- The power to tax is the lifeblood of the government; it is an inherent prerogative, and it has to be availed of to assure the performance of vital state functions.[Sison v. Ancheta]
- The power to tax, while broad, is not unconfined. There are limitations on the power to tax which are set forth in the Constitution (due process and equal protection); [Sison v. Ancheta]
- The power to impose taxes is one so unlimited in force and so searching in extent, that the courts scarcely venture to declare that it is subject to any restrictions whatever, except such as rest in the discretion of the atuhority which exercises it. [Tio v. Videogram Regulatory Board]
What are the theories of taxation?
- Necessity Theory - Lifeblood doctrine; Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. [Commissioner v. Algue]; Obligation to pay taxes rests not upon the privileges enjoyed by, or the protection afforded to a citizen by government, but upon the necessity of money for the support of the state. For this reason, no one is allowed to object to or resist payment of taxes solely because no personal benefit to him can be pointed out. [Lorenzo v. Posadas]
- Benefit-Received Principle - Taxes are what we pay for civilized society. Without taxes, the government would be paralyzed for lack of the motive power to activate and operate it. Hence, despite the reulctance […], every person who is able to must contribute his share in the running of the government. The government for its part is expected to respond in the form of tangible and intangible benefits intended to to improve the lives of the people and enhance their moral and material values. [Commissioner v. Algue]
- Tax exemptions are construed strictissimi jurs - Since taxes are what we pay for civilized society, or are the lifeblood of the nation, the law frowns against exemptions from taxation and statutes granting tax exemptions are thus construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority. [Paseo Realty & Development Corp. v. CA]
What is the requirement in order to grant the tax exemption?
Note: Taxes are construed strictissimi jurs
Since taxes are construed strictissmi juris, “A claim for refund or exemption from tax payments must be clearly shown and be based on language in the law too plain to be mistaken.” [Paseo Realty & Development Corp. v. CA]
What are the purposes of taxatin?
Taxes may be levied for:
(1) General/Fiscal/Revenue purpose - Taxes are the lifeblood of the nation. Their primary purpose is to generate funds for the State to finance the needs of the citizenry and to advance the common weal. [NAPOCOR v. Province of Albay]; or
(2) Non-revenue/Special or regulatory purpose. - Fees; “It has been recognized that taxation may be made the implement of the state’s police power.” [Southern Cross Cement Corp. v. Cement Mgf. Assoc. of the Phils.]; While the funds collected may be referred to as taxes, they are exacted in the exercise of the police power of the State. [Osmena v. Orbos]; Fees may be properly regarded as taxes even though they also serve as an instrument of regulation [PAL v. Edu].
What are examples of taxes levied for revenue purposes?
- Real property tax - “Real property taxes […] form part and parcel of the financinng apparatus of the Government in development and nation-building, particularly in the local government level.” [ NAPOCOR v. Province of Albay];
- Value Added Tax - VAT is imposed on the sale, barter lease or exchange of goods or properties or the sale or exchange of services and the lease of properties purely for revenue purposes. [Tolentino v. SOF, resolution]
How do we determine whether a charge is a “tax” or a “fee”?
If the purpose is primarily revenue, orif revenue is at least one of the real and substantial purposes, then the exaction is properly called a tax. Tese exactions are sometimes called regulatory taxes. [PAL v. Edu]
What are examples of taxes levied for a regulatory purpose (regulatory taxes)?
- Safeguard duties (Souther Cross Cement Corp. v. CMAP)
- Monies collected for the Oil Price Stabilization Fund (Osmena v. Orbos)
- Motor vehicle registration fee (PAL v. Edu)
