Classifications & Distinctions Flashcards
Different classifications
- Based on Objects
- As to who bares the burden/incidence
- As to determination of amount
- Purpose
- Authority/Scope
- Graduation/Rate
(Object) Personal Taxes
tax of a fixed amount imposed on persons residing within a specified territory, whether citizens or not, without regard to their property or the occupation or business in which they may be engaged
the person themselves
Community Tax or Poll Tax
according to the 1987 constitution, you can not be imprisoned for nonpayment of community tax (the only exception)
(Object) Property Taxes
Tax imposed on property, whether real or personal, in proportion either to its value, or in accordance with some other reasonable methods of apportionment.
Real Property
Fixed [Land, buildings, machineries fixed to the ground], immovable
Personal Property
Movable
(Object) Excise/Privilege Taxes
the obligation to pay this tax is based on the voluntary action of the person taxed in performing the act or engaging in the activity which is subject to the excise
on the privilege to conduct certain activities. having the privilege to have an occupation or having property/assets to donate or pass on
Excise tax
is a charge imposed upon the performance of an act, the enjoyment of a privilege, or the engaging in an occupation
Example of Excise Tax
- Estate tax: A tax imposed on the total value of property and assets transferred from a deceased person to their heirs. It applies to the amount exceeding a certain threshold set by the government. Also known as inheritance tax or death duty.
- Donor’s tax: A tax paid by the donor of a gift given to an individual while the donor is still alive. It is imposed in some countries/jurisdictions instead of or in addition to gift and estate taxes. The rates vary but are generally lower than estate taxes.
(Incidence) Direct
Tax which is demanded or exacted from the very person who also shoulders the burden of the tax; or tax for which the taxpayer is directly or primarily liable or which he cannot shift to another
Statutory liability and economic burden falls onto the same person
Example of Direct tax
Corporate and individual income taxes; community tax; estate tax; donor’s tax
(Incidence) Indirect
tax imposed upon goods before they reach the consumer who ultimately pays for it not as tax but as part of the purchase price of goods sold or services rendered.
Practically all business taxes are _______
indirect taxes
(Determination of amount) Specific
Fixed Amount. An absolute value at peso amount
Example of (Determination of amount) Specific
- Cigarette tax - $1 per pack of cigarettes
- Liquor tax - $5 per bottle of whiskey
(Determination of amount) Ad Valorem
Percentage of the value of the property
Example of (Determination of amount) Ad Valorem
- Property tax - 1.5% of assessed property value
- Sales tax - 8% of purchase price of an item
(Purpose) General
To generate revenue
Example of (Purpose) General
TRAIN Law (2015) - imposed additional excise taxes on petroleum products to finance the BUILD, BUILD, BUILD program
(Purpose) Special
If the purpose of enacting the tax bill is to regulate certain activities, promote general welfare, social justice, encourage economic growth, and generating revenue is only incidental
Example of (Purpose) Special
Sin Tax Law; minimum wage law
(Authority/Scope) National
taxes are being paid to the BIR
(Authority/Scope) Local/Municipal
Local governemnt, power is delegated by the constitution
(Graduation/rate) Proportional or Fixed
Also called a flat tax, the tax rate remains the same regardless of income/earning level. It is a fixed percentage.
Example of (Graduation/rate) Proportional or Fixed
- CGT, VAT, Real Estate Tax, Donor’s Tax
(Graduation/rate) Progressive
the tax base increases, the tax rate increases
(Graduation/rate) Regressive
tax rate of which decreases as the tax base or bracket increases
Tax distinguished from penalty
a penalty is a punishment for violating laws or rules, while a tax is a charge imposed by the government to raise revenue.
Tax distinguished from license or permit fee
a license or permit fee is a charge imposed for regulatory purposes
involves the exercise of police power, is limited to the cost of regulation, and makes the licensed activity legal, while a tax is an enforced contribution for public expenses, has no limit on the amount, and does not necessarily make the taxed activity illegal.
Tax distinguished from toll
a toll is a fee charged for the use of a specific public facility like a road or bridge, while a tax is a broader charge imposed by the government to raise general revenue. The Supreme Court has ruled that tolls are subject to taxation, such as VAT, because they are considered distinct from a general tax.
Tax distinguished from special assessment
A special assessment is based on the benefit to the land, not necessity, and the liability is limited to the land involved, not a personal liability.
the power to tax includes the power to levy a special assessment, but an exemption from taxation does not necessarily exempt from a special assessment.
Tax distinguished from debt
a tax is mandated by law, while a debt arises from a voluntary agreement, and a tax is not assignable and has different rules regarding payment, prescription, and interest compared to a debt.
