HANDOUT 1 Flashcards
is the power by which the sovereign, through its law-making body, raises revenue to defray the necessary expenses of government. It is merely a way of apportioning the costs of government among those who, in some measure, are privileged to enjoy its benefits and must bear its burdens.
Taxation
In other words, taxation is (6)
- The inherent power of the sovereign exercised through legislature
- To impose burdens
- Upon subjects and objects
- Within its jurisdiction
- For the purpose of raising revenues
- To carry out the legitimate objects of government
What is the primary or revenue purposes of taxation?
raise funds or property to enable the State to promote the general welfare and protection of the people.
Give the 6 secondary or non-revenue purposes of taxation (PRREP)
a. Promotion of general welfare
b. Regulation of activities/industries
c. Reduction of social inequality - a progressive system of taxation prevents the undue concentration of wealth in the hands of few individuals. Progressivity is based on the principle that those who are able to pay more should shoulder the bigger portion of the tax burden.
d. Encourage economic growth
e. Protectionism
What are the 3 inherent powers of the state?
- Police Power
- Power of Taxation
- Eminent Domain
The power to protect citizens and provide for safety and welfare of society
Police power
The power to take private property (with payment of just compensation) for public use
Eminent domain
The power to enforce contributions
to support the government and other inherent powers
Taxation power
This power is restricted by the DUE PROCESS CLAUSE of the Constitution which provides that no person may be deprived of life, liberty or property without the due process of law.
Police Power
Give the 6 similarities of the inherent powers (IAILCL)
I - they are INHERENT in sovereignty. They can be exercised even without being expressly granted in the constitution
A - they are all necessary ATTRIBUTES of sovereignty because there can be no effective government without them;
I - they can constitute the three ways by which the state INTERFERES with the private rights and property;
L - they are all LEGISLATIVE in nature and charter;
C - they presuppose an equivalent COMPENSATION
L - the provisions in the Constitution are just LIMITATIONS on the exercise of these powers.
What are the 3 theories and basis of taxation?
- Lifeblood Theory
- Necessity Theory
- Benefits-Protection Theory (Symbiotic relationship)
Explain lifeblood theory
The government chiefly relies on taxation to obtain the means to carry on its operations. Taxes are essential to its very existence.
“Taxes are the lifeblood of the government and their prompt and certain availability is an imperious need”
- it expresses the underlying basis of taxation which is governmental necessity, for indeed, without taxation, a government can neither exist nor endure.
Explain necessity theory
The theory behind the exercise of the power to tax emanates from necessity. Without taxes, the government cannot fulfill its mandate of promoting the general welfare and wellbeing of the people. It is a necessary burden to preserve the State’s sovereignty and a means to give the citizenry an army to resist aggression, a navy to defend its shores from invasion, a corps of civil servants to serve, public improvements for the enjoyment of the citizenry, and those which come within the State’s territory and facilities and protection which a government is supposed to provide.
explain the benefits- protection theory
It involves the power of the State to demand and receive taxes based on the reciprocal duties of support and protection between the State and its citizens.
Taxes are what we pay for a civilized society. Without taxes, the government would be paralyzed for lack of motive power to activate and operate it. Hence, despite the natural reluctance to surrender part of one’s earned income to the taxing authorities, every person who is able must contribute his share in the running of the government. The government, for its part, is expected to respond in the form of tangible and intangible benefits intended to improve the lives of the people and enhance their material and moral values.
What are the principles of a sound system? (FAT)
- Fiscal adequacy
- Administrative feasibility
- Theoretical justice
Explain fiscal adequacy
revenue raised must be sufficient to meet government/public expenditures and other public needs.
Explain administrative feasibility
the tax system should be capable of being effectively administered and enforced with the least inconvenience to the taxpayer.
Explain theoretical justice
must take into consideration the taxpayer’s ability to pay. Also, Art. VI , Sec . 28(1), 1987 Constitution mandates that the rule on taxation must be uniform and equitable and that the State must evolve a progressive system of taxation.
What are the inherent limitations of taxation? (PITIE)
- Public Purpose
- Inherently Legislative
- Territorial
- International Comity
- Exemption of government entities, agencies and instrumentalities
Give 3 constitutional limitations that directly affects taxation
a. Prohibition against imprisonment for non-payment of poll tax (Art. III, Sec. 20)
b. Uniformity and equality of taxation (Art. VI, Sec. 28)
c. Grant by Congress of authority to the president to impose tariff rates (Art. VI , Sec. 28)
d. Prohibition against taxation of religious, charitable entities, and educational entities (Art. VI, Sec. 28)
e. Prohibition against taxation of non-stock, non-profit educational institutions (Art. IX, Sec. 4)
f. Majority vote of Congress for grant of tax exemption (Art. VI, Sec. 28)
g. Prohibition on use of tax levied for special purpose (Art. VI, Sec. 29)
h. President’s veto power on appropriation, revenue, tariff bills (Art. VI, Sec. 27)
i. Non-impairment of jurisdiction of the Supreme Court (Art. VI, Sec. 30)
j. Grant of power to the LGUs to create its own sources of revenue (Art. IX, Sec. 5)
k. Origin of Revenue and Tariff Bills (Art. VI, Sec. 24)
l. No appropriation or use of public money for religious purposes (Art. VI, Sec. 28)
Give 3 constitutional limitations that indirectly affects taxation
a. Due process (Sec. 1)
b. Equal protection (Sec. 1)
c. Religious freedom (Sec. 5)
d. Non-impairment of obligations of contracts (Sec. 10)
e. Freedom of the press (Sec. 4)
the proceeds of tax must be used (a) for the support of the State or (b) for some recognized objective of the government or to directly promote the welfare of the community.
Public Purpose
