chapter 1

Question 1

What is Inherent Powers

Answer 1

Inherent powers are those not explicitly stated in the Constitution that allows the government to take actions, which are needed to efficiently perform essential duties.
It exist as essential force in order that a government can command, maintain peace and order, and survive, irrespective of any Constitutional provision.

Question 2

Police Power

Answer 2

is the power of
promoting the public welfare by restraining and regulating the use of both liberty and property of all the people. It is considered to be the most all- encompassing of the three powers.

It may be exercised only by the government. The property taken in the exercise of this power is destroyed because it is noxious or intended for a harmful purpose.

It lies primarily in the discretion of the legislature. Hence, the President, and administrative boards as well as the lawmaking bodies on all municipal levels, including the barangay may not exercise it without a valid delegation of legislative power.

Question 3

Lawful subject

Answer 3

the activity or property sought to be regulated affects the public welfare.

Question 4

Lawful means

Answer 4

the means employed must be reasonable and must conform to the safeguards guaranteed by the Bill of Rights

Question 5

Power of Eminent Domain

Answer 5

• The power to take private properties for public purpose.
• Involves expropriation of private property.
• Limited to the ‘Just Compensation’ clause of the Constitution.

Question 6

Power of Taxation

Answer 6

The power by which a sovereign state, through its legislative body, raises and accumulates revenue from its inhabitants for public purpose.

Question 7

Importance of Taxation

Answer 7

The most important purpose of taxation is to raise resources for governments to deliver essential public services. It includes raising revenue , which is then used to meet their budgetary demands. This includes financing government and public projects as well as making the business environment in the country conducive for economic growth

By imposing taxes on goods and services, the government can discourage unnecessary consumption and production and ensure that resources are used more efficiently. Taxes pay for many of the things that are fundamental for functioning societies around the world. Such as health care, schools, and social services.

In the Philippines, the government uses taxes to redistribute income and wealth in society.

Question 8

(Basis of Taxation)

Principle of Necessity

Answer 8

Taxation is a power emanating from necessity to preserve the state’s sovereignty.
The government has the right to compel all its citizens, residents and property within its territory to contribute money. It is because the government cannot exist without any means to pay its expenses – a necessary burden to preserve the state’s sovereignty.
Taxation is the “lifeblood” or the “bread and butter” of the government and every citizen must pay his taxes.

Question 9

(Basis of Taxation)

Principle of Benefit-Received of Benefit-Protection Theory

Answer 9

Based on the reciprocal duties, the government collects taxes from the subjects of taxation in order that it may b able to perform its functions and provide services to them.
The government’s right to tax income emanates from its being a silent partner in the production of income through means of providing protection, proper business climate and peace and order to the taxpayers in making of earnings.

Under the benefit principle, taxes are seen as serving a function similar to that of prices in private transactions; that is, they help determine what activities the government will undertake and who will pay for them. If this principle could be implemented, the allocation of resources through the public sector would respond directly to consumer wishes.

Question 10

( Purpose of Taxation )

1. Revenue of Fiscal

Answer 10

the primary purpose of the taxation on the part of the government is to provide funds or property with which to promote the general welfare and the protection of its citizens and to enable it to finance its multifarious activities without which the government cannot function.

Question 11

( Purpose of Taxation )

Non-Revenue or Regulatory

Answer 11

taxation may also be employed for purposes of regulation or control.’This takes the form of the following measures, to wit;
a.) imposition or tariffs on imported goods to protect local industries
b.) the adoption of progressively higher tax rates to reduce inequalities in wealth and income
c.) the increase or decrease of taxes prevent inflation or ward off depression.

Question 12

4 Main Purpose of Taxation

Answer 12

1. Revenue
2. Redistribution
3. Reprising
4. Representation

Question 13

Scope of Taxation Power

Answer 13

1. Plenary or Complete - Taxation has an unlimited area of application and is only restricted by the inherent and constitutional limitation.
2. Comprehensive - It has a wide scope of coverage. It covers all persons, properties, rights, and transactions subject to taxation unless expressly exempted by laws within the sovereign.
3. Supreme - it has the highest degree of application, and it is considered as the strongest among the inherent power of the state

Question 14

Inherent Limitations to Taxation

Answer 14

Inherent limitations are the natural restrictions to safeguard and ensure that the power of taxation shall be exercised by the government only for the betterment of the people whose interest should be served, enhanced, and protected:

• Taxes may be levied only for public purposes
• Taxation cannot be delegated
• Taxation is limited to territorial jurisdiction
• Taxation is subject to international comity
• The government is generally tax exempt

Question 15

Constitutional Limitations

Answer 15

These are provisions of the fundamental law of the land that restrict the supreme plenary, unlimited and comprehensive power to tax by the state.
As a rule, the Constitution does not create the power to tax on the State. Instead, it simply defines and regulates the exercise of tax power in order to safeguard the interest of affected taxpayer.
The 1987 Philippine Constitution sets limitations in the exercise of the power to tax as follows:

1. Due process of law
2. Equal protection of laws
3. Rule of uniformity and equity
4. Non-impairment of contracts
5. Origination of appropriation, revenue, and tariff bills
6. President’s power to veto separate items in revenue or tariff bills.
7. Congress granting tax exemptions 8. Exemption from taxation of properties actually, directly and exclusively used for religious, charitable or educational purposes.

Question 16

Principle of Sound Tax System

Answer 16

FISCAL ADEQUACY
‣ The sources of tax revenue should coincide with, and approximate the needs of, government expenditures. The revenue should be elastic or capable of expanding or contracting annually in response to variations in public expenditures.

ADMINISTRATIVE FEASIBILITY ‣ Tax laws should be capable of convenient. just and effective administration. Each tax should be: ‣ capable of uniform enforcement by government officials, ‣ convenient as to the time, place, and manner of payment, and ‣ not unduly burdensome upon, or discouraging to business activity.

THEORETICAL JUSTICE OR EQUALITY
‣ The tax burden should be in proportion to the taxpayer’s ability to pay. This is the so-called ability to pay principle. Taxation should be uniform as well as equitable
Note: The non-observance of the

Question 17

Certain Doctrines in Taxation

Answer 17

1. Prospective application of tax laws - This states that a tax bill must only be applicable and operative after becoming a law. Thus, the effectivity of the law commences upon its approval, and its scope would only cover the present and future transactions.
2. Imprescriptibility of Taxes - it states that unless otherwise provided by the tax law itself, taxes in general are not cancelable. The court held that there is no time limit on the right of the BIR Commissioner to assess taxes on unreasonable accumulated earnings of the corporation. The law on prescription being a remedial measure should be interpreted liberally in order to protect the taxpayer.
3. Double Taxation - It refers to the imposition of taxes on the same income, assets, or financial transaction at two different points of time. Double taxation can be economic, which refers to the taxing of shareholder dividends after taxation as corporate earnings.

Question 18

Kind of Double Taxation

Answer 18

1. As to its Validity
   * DIRECT
   • It constitutes double taxation in the objectionable or prohibited sense
   • It violates the equal protection clause of the Constitution.
   • Same property is taxed twice when it should be taxed, but once.
   • Local business tax based on gross revenues amounts to direct double taxation.
   *INDIRECT
   • It is permissible and not repugnant to the Constitution.
   • This is allowed if the taxes are of different nature or character imposed by different taxing authorities.
2. As to its Scope
   *DOMESTIC
   • This arises when the taxes are imposed by the local or national government within the same State.
   *INTERNATIONAL
   • It refers to the imposition of comparable taxes in two or more states on the same taxpayer in respect of the same subject matter and for identical periods.