Chatpter 1: General Principles Flashcards
BAR Q: What is the nature of taxation?
It is an inherent power of the State, being an attribute of sovereinty. Therefore, the legislature can enact laws to raise revenues even without grant of the said power in the Constitution.
Define tax.
Tax is the power of the sovereign to raise revenue to defray the expenses of the government.
BAR Q: Why is it an inherent power?
Lifeblood theory. A government cannot exist nor endure without the means to pay its expenses. It is a necessary attribute of sovereignty belonging as a matter of right to every State.
What is the role of Congress and Senate in taxation?
All revenue and tariff bills must emanate from the lower house but the Senate may propose or concur with amendments.
Enumerate the 3 stages of taxation?
P-A-L
Levy - enactment of a tax law by Congress
Assessment and collection - the act of implementation by the executive department through administrative agencies
Payment - the act of compliance by the taxpayers including schemes, options or remedies as may be legally available to him.
BQ: ABC Corp. was notified by SEC that it would be subject to involuntary disolution. The stockholders did not comply with the requirements. The corporation was dissolved. Will the stockholders be held liable for unpaid taxes?
No. As a general rule, the personality of the corporation is separate and distinct from its stockholders.
However, stockholders may be held liable for unpaid taxes of a dissolved corporation if it appears that corporate assets have passed into their hands.
What are the purposes and objectives of taxation?
3 Rs EEP
Revenue
Regulatory - for stabilization and rehabilitation of industries imbued with public interest.
Promotion of General Welfare
Reduction of Social Inequity
Encourage economic growth
Protectionism
BQ: X’s lot was expropriated by the government and was paid 300k therefor. X has a tax liability of 150k. Can he claim that his liability is compensated since the govt owes him 300k?
No. Taxes are of distinct character than ordinary obligations. Income tax liability cannot be compensated with the amount owed by the government. The taxpayer and the government are not mutual creditors and debtors of each other.
BQ: X is a lessor of a property who pays real estate tax on the premises, real estate dealer’s tax based on rental receipts and income tax on rentals. is there double taxation.
No. The taxes imposed are essentially of different kind and character, imposed by different taxing authorities.
Differentiate between tax avoidance and tax evasion.
Tax avoidance is the tax saving device within the means sanctioned by law. Tax evasion is a scheme used outside of lawful means and subjects the taxpayer to further civil or criminal liabilities. (Toda case)
