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TAX Notes - Rex B. > General Principles of Taxation > Flashcards

General Principles of Taxation Flashcards

1
Q

Refers to the inherent power of the state to demand enforced contribution for public purpose to support the government

A

Taxation as a power

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2
Q

The legislative act of laying a tax to raise income for the government to defray its necessary expenses

A

Taxation as a process

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3
Q

Taxation is a means of allocating government burden to the people

A

Taxation as a mode of cost allocation

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4
Q

The power to take property for the support of the government and for public purpose

A

Power of Taxation

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5
Q

The power to enact laws to promote the general welfare of the people.

It is wider in application because it is the general power to make laws

A

Police Power

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6
Q

The power to take private property for public use upon payment of just compensation

A

Power of Eminent Domain

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7
Q

Exercising Authority: Government only

Choices: Taxation, Police Power or Eminent Domain

A

Taxation & Police Power

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8
Q

Exercising Authority for each:

  • Taxation
  • Police Power
  • Eminent Domain
A
  • Taxation & Police Power: Government only
  • Eminent Domain: Government and Public/ Utility entities
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9
Q

Necessity of Delegation for each:

  • Taxation
  • Police Power
  • Eminent Domain
A
  • Taxation: Delegation is not necessary since it is inherent
  • Police Power & Eminent Domain: Delegation is necessary
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10
Q

Persons affected for each:

  • Taxation
  • Police Power
  • Eminent Domain
A
  • Taxation & Police Power: Community or class of individuals
  • Eminent Domain: Operates on the owner of the property
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11
Q

Effect of transfer of property rights:

  • Taxation
  • Police Power
  • Eminent Domain
A
  • Taxation: Money paid as taxes becomes part of the public fund
  • Police Power: There is no transfer of title, only restraint on the injurious use of property
  • Eminent Domain: There is transfer of right to property whether it be of ownership or lesser right
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12
Q

Amount of Imposition for each:

  • Taxation
  • Police Power
  • Eminent Domain
A
  • Taxation: Unlimited
  • Police Power: Sufficient to cover the costs of regulation
  • Eminent Domain: No imposition, the owner is paid the fair market value of his property
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13
Q

Importance for each:

  • Taxation
  • Police Power
  • Eminent Domain
A
  • Taxation: Most Important
  • Police Power: Most Superior
  • Eminent Domain: Important only
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14
Q

Relationship with the Constitution for each:

  • Taxation
  • Police Power
  • Eminent Domain
A
  • Taxation: Inferior to the “Non- Impairment Clause” of the Constitution
  • Police Power: Superior to the
    “Non- Impairment Clause” of the Constitution
  • Eminent Domain: Superior and may override the “Non- Impairment Clause
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15
Q

Limitation for each:

  • Taxation
  • Police Power
  • Eminent Domain
A
  • Taxation: Constitutionally and inherently restricted
  • Police Power: Public interest and the requirement of due process
  • Eminent Domain: Public purpose and just compensation
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16
Q

Stages of Taxation:

  1. Levy or imposition
  2. Assessment of Tax

Aspects of Taxation:

  1. Levy: Impact
  2. Assessment: Incidence
A

Tax Process

17
Q

How is the Tax Process exercised?

A
  • Legislation of Laws: Congess (National Tax)
  • Tax ordinances: Local Sanggunian (Local Tax)
  • Tax Collection: Administrative branch of Govt.
18
Q

Purposes of Taxation

A
  • Primary purpose: to raise revenue
  • Secondary purposes: Regulatory and Compensatory
19
Q

Theory that states:

Tax Payment should be based on benefits received and

Everyone is conclusively presumed to be receiving benefits from Govt.

A

Benefit Received Theory

20
Q

Theory that states:

Tax Payment should be based on ability of taxpayers to pay

A

Ability to Pay Theory

This can be:
- Vertical equity
- Horizontal equity

21
Q

______ states:

The existence of the government is a necessity and it cannot continue without means to support itself.

A

Theory of Taxation

22
Q

______ states:

The government and the people have the reciprocal and mutual duties of support and protection.

A

Basis of Taxation

23
Q

Scope of Taxation

Hint: CPUS

A

CPUS

  • Comprehensive
  • Plenary
  • Unlimited
  • Supreme
24
Q

Limitations of Taxation Power

A
  • Constitutional Limitations &
  • Inherent Limitations: (TIP END) Territoriality
    International comity and treaty
    Public purpose
    Exemption
    Non-Delegation
25
Q

Situs of Taxation

A
  1. Persons- residence of taxpayer
  2. Community Development tax- residence or domicile of taxpayer
  3. Business taxes- where business was conducted or transactions took place
  4. Privilege or occupation tax- where privilege is exercised
  5. Real property tax- where property is located
  6. Personal property tax
    - Tangible
    - Intangible
  7. Income- income is earned or residence or citizenship of taxpayer
  8. Transfer taxes- residence or citizenship or location of property
  9. Franchise taxes- state that grants the franchise
  10. Corporate taxes- depend on law of incorporation
26
Q

Double Taxation

A
  • Same object or subject
  • Same period
  • Same kind of tax
  • Same taxing authority
27
Q

This objectionable and prohibited because it violates the constitutional provision on uniformity and equality

A

Direct Double Taxation

28
Q

A double taxation caused by two different taxing authorities, one domestic and foreign

A

International Double Taxation

29
Q

Remedies to Double Taxation

A
  1. Provision for Tax exemption
  2. Allowance for Tax credit
  3. Allowance for Principle of reciprocity
  4. Enter into treaties with foreign govt.
30
Q

Escape from taxation that will not result in loss of revenue

A
  1. Shifting- transferring tax burden to another without violating the law.
  2. Capitalization- seller is willing to lower the price provided it will shouldered by the buyers
  3. Transformation- manufacturer absorbs additional taxes by increasing quantity of production
31
Q

Escapes from taxation that will result to loss of revenue to Govt.

A
  1. Tax evasion- (Tax dodging) Illegal, prohibited and not subject to penalties.
  2. Tax avoidance- (Tax minimization) Legal, not prohibited and not subject to penalties.
  3. Tax exemption- immunity, privilege or freedom from payment to which others are obliged to pay.
32
Q

Kinds of Exemptions

A
  1. Express- constitution, statute, treaties, ordinance, contracts or franchise.
  2. Implied- accidental or intentional omission.
  3. Total- from all taxes (OFWs)
  4. Partial- from certain taxes
33
Q

Grounds for Exemption

A

May be based on:
- Contract
- Public Policy
- to foster Charitable and other benevolent institutions
- Treaty on grounds of Reciprocity
- to Lessen rigors of international double or multiple taxation

34
Q

_______ is:

  • Scheme used outside of lawful means and subjects taxpayer to penalties
  • Accomplished by breaking the law
  • Connotes fraud, deceit and malice
A

Tax Evasion

35
Q

_______ is:

  • Tax saving device within means sanctioned by law
  • Accomplished by legal procesures
  • No fraud involved
A

Tax Avoidance

36
Q

Tax Exemption

A
  • is not automatic
  • is non-transferable
  • is revocable by the government (except when granted under a valid contract or by the Constitution)
  • rule shall be uniform
  • does not contravene the Lifeblood Doctrine
  • is always disfavored
  • is allowed only under a clear and unequivocal provision of the law
  • on Real property tax will be based on the Doctrine of Usage and not Doctrine of Ownership, except for real properties owned by the government which is absolutely exempt from taxation
  • on Real property tax cannot be granted by local governments but can condone real property tax liabilities in special cases
  • on Local taxes can be granted by local governments but they cannot condone existing liabilities on local taxes
37
Q

Constitutional Limitations

A
  1. observance of due process of law
  2. equal protection of the law
  3. uniformity in taxation
  4. progressive scheme of taxation
  5. non-imprisonment for non-payment debt or poll tax
  6. non-impairment of obligation and contract
  7. free worship rule
  8. non-appropriation of public funds or property for the benefit of any church, sect or system of religion
  9. exemption of religious, charitable or educational entities, non-profit cemeteries, churches and mosque from property taxes.
  10. exemption from taxes of the revenues and assets of non-profit, non-stock educational institutions including grants, endowments, donations or contributions for educational purposes
  11. concurrence of a majority of all members of Congress for the passage of a law granting tax exemption
  12. non-diversification of tax collections
  13. non-delegation of the power of taxation

Exceptions:

    a. power to tax was delegated to the President under the Flexibility Clause of the Tariff and Customs Code 

   b. power to tax was delegated to the local government units under the Local Government Code

   c. matters involving the expedient and effective administration and implementations of assessment and collection of taxes or certain aspects of taxing process that are not legislative in character
  1. non-impairment of the jurisdiction of the Supreme Court to review tax cases
  2. appropriations, revenue or tariff bills shall originate exclusively in the House of Representatives but the Senate may propose or concur with amendments
  3. each local government unit shall exercise the power to create its own sources of revenue and shall have a just share in the national taxes
38
Q

Fundamental Doctrine in Taxation

A
  1. No court may enjoin the collection of taxes
  2. Claim for exemptions shall be interpreted strictly against the taxpayer
  3. A law that permit deduction from the tax base is strictly construed against the taxpayer 4. Tax assessment are presumed to be correct and done in good faith
  4. Tax laws are generally prospective in application
  5. Tax are not subject to compensation or set-off
  6. Refund of taxes do not earn interest because interest do not run against the government
39
Q

Tax Amnesty
vs.
Tax Condonation
vs.
Tax Exemption

A

Tax Amnesty

  • a general pardon or intentional overlooking by the state of its authority to impose penalties on persons otherwise guilty of tax evasion or violation of tax laws.
  • The purpose is to give the erring taxpayer a chance to reform and become part of the society with a clean slate.

Tax Condonation

  • means to refrain from exacting or imposing a tax. It cannot extend to refund of taxes already paid when obtaining condonation

Tax Exemption

  • There is no tax liability at all.
  • The grantee need not pay anything
  • Can be availed of by any qualified taxpayer

TAX Notes - Rex B. (21 decks)

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