CHAPTER 1- Def. Of Terms Flashcards
Process or means by which the sovereign through its law making body imposes burdens upon subjects and objects within its jurisdiction for the purpose of raising revenues to carry out the legitimate objects of the government
Taxation
Three Inherent Powers of the State
- Police Power
- Power of Taxation
- Power of Eminent Domain
Promoting public welfare by restraining and regulating the use of liberty and property.
Police Power
The state raises revenue to defray the necessary expenses of the government
Power of Taxation
Power of the state to acquire private property for the public purpose upon payment of just compensation
Power of Eminent Domain
Similarities among the three inherent powers of the state
- Inherent in the state
- Exist independently in the constitution
- State interferes with private rights and properties
- Legislative in nature and character
- Presuppose an equivalent compensation received, directly or indirectly, by the persons affected.
Power to enforce contributions to raise government funds
Taxation
Power to make and implement laws for the general welfare
Police power
Purposes of Taxation
• Primary : Revenue
• Secondary: Regulatory
Provide funds of property to promote general welfare
Primary : Revenue
Device for regulation or control
Secondary : Regulatory
Theory of taxation
• Necessity Theory
• Lifeblood Theory
Preserve the state’s sovereignty and to give protection and facilities
Necessity Theory
Government’s basic function
Lifeblood Theory
Reciprocal duties of protection and support between the state and its inhabitants
Basis of Taxation
Manifestation of Lifeblood Theory
• No estoppel against the government
• Collection of taxes cannot be stopped by injunction
• Taxes could not be the subject compensation set-off
•Right to select objects (subjects) of taxation
• A valId tax may result in the destruction of the taxpayer’s property
Scope of the power of taxation
• Comprehensive
• Unlimited
• Plenary
• Supreme
Essential Elements of Tax
• Enforced contribution
• Payable in money
• Proportionate
• Levied on persons, property, rights
• Levied by the law-making body
• Levied for public purpose
Aspects of Taxation
• Levying or imposition if tax
• Assessment of the correct amount
• Collection of tax
Nature/ characteristics of the state’s power to tax
• Inherent in sovereignty
• Legislative
• Exemptions of government entities, agencies and instrumentalities
• International Comity
• Limitation if Territorial Jurisdiction
• Strongest among the inherent powers
Exceptions to Non-Delegation Rule
•President
•Local Government
•Administrative Agencies
•Constitutional and Inherent limitations
Exception of government entities, agencies and instrumentalities
- Agencies performing governmental functions
- Agencies performing propriety functions
- GOCCs
- GSIS
- SSS
- PHIC
- Local water district
Classification of taxes:
Scope
- National
- Local
Subject Matter
- Personal
- Property
- Excise
Who bears the burden
-Direct
-Indirect
Determination of fixed amount
- Specific Tax
- Ad valorem
Elements of sound tax system
• Fiscal Adequacy
• Theoretical justice or equity
• Administrative feasubility
Limitations on the state power to tax
• Inherent limitations
• Constitutional Limitations
Situs of Taxation
• Place of Taxation
• The state or political unit which has jurisdiction to impose a particular tax
Factors in Determining Situs of Taxation
a. Subject matter (person, property, or activity)
B. Nature of tax
C. Citizenship
D. Residence of tax payer
E. Source of Income
F. Place of excise, business or occupation being taxed.
Sum of money for the use of something
Toll
A sanction imposed as a punishment
Penalty
Proportional contribution from owners of lands for special benefits
Special Assessment
All funds or income derived by the governement
Revenue
Pecuniary aid directly granted the government to an individual or private commercial enterprise
Subsidy
Pecuniary aid directly granted the government to an individual or private commercial enterprise
Subsidy
Charged imposed under the police power
Permit/license fee
Taxes imposed exported from or imported into a country
Customs Duties
Book of rates containing kinds of merchandise with corresponding duties to pay
Tariff
True or False: There is a burden of two or more impositions
True
DIRECT DOUBLE TAXATION means taxing twice
- By the same taxing authority, jurisdiction or taxing district
- For the same purpose
- In the same year or taxing period
- Same subject or object
- Same kind or character of the tax
Avoiding/Minimizing the burden of tax
•Shifting
•Transformation
•Evasion
•Tax Avoidance
•Exemption
•Capitalization
Transfer of tax burden
Shifting
Producer pays the tax and endeavor to recoup himself by improving his process of production
Transformation
Use of illegal means
Evasion
Exploitation of legally permissible alternative
Tax Avoidance
Grand of immunity
Exemption
Reduction in the selling price
Capitalization
