QUIZ 1 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
power of the state to acquire private property for the public purpose upon payment of just compensation.
Power of Eminent Domain
The State raises revenue to defray the necessary expenses of the government.
Power of Taxation
Similarities among the Three Inherent Powers of the State
*Inherent in the state
*Exist independently in the constitution
-conditions for their exercise may be prescribed by 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.
Purposes of Taxation- Primary
Primary : Revenue
-Provide funds of property to promote general welfare
Purposes of Taxation- Secondary
Secondary : Regulatory
-Device for regulation or control
Theory of Taxation- Necessity
-Preserve the state’s sovereignty
-To give protection and facilities
Theory of Taxation- Lifeblood
Lifeblood Theory
-Government’s basic function
Basis of Taxation
Reciprocal duties of protection and support between the state and its inahabitants.
Manifestation of Lifeblood Theory
*No estoppel against the government
*Collection of taxes cannot be stopped by injunction
*Taxes could not be the subject of compensation or 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 of 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 of Territorial Jurisdiction
-Strongest among the inherent powers
Exception of government entities , agencies and instrumentalities
-Agencies performing governmental functions
-Agencies performing propriety functions
-GOCCs
-GSIS
-SSS
-PHIC
-PCSO
-Local water District
Exceptions to Non-Delegation Rule
President
Local government
Administrative agencies
Constitutional and inherent limitations
Classification of Taxes-Scope
National
Local
Classification of Taxes-Subject matter
Personal
Property
Excise
Classification of Taxes-Who bears the burden
Direct
Indirect
Classification of Taxes-Determination of fixed amount
Specific Tax
Ad valorem
As to purpose- taxation
-Primary, Fiscal, or Revenue Purpose
-Secondary, Regulatory, Special or Sumptuary Purpose
As to Graduation /rate
Proportional
Progressive
Regressive
As to Taxing authority
National
local
Elements of Sound Tax System
Fiscal adequacy
Theoretical justice or equity
Administrative feasibility
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 the taxpayer
e. Source of Income
f. Place of excise, business or occupation being taxed
Double Taxation
There is a burden of two or more impositions
DIRECT DOUBLE TAXATION means taxing twice:
1. By the same taxing authority, jurisdiction or taxing district
2. For the same purpose
3. In the same year or taxing period
4. Same subject or object
5. Same kind or character of the tax
Sources of Tax Laws
- Constitution
- National Internal Revenue Code
- Tariff and Customs Code
- Local Government Code (Book II)
- Local tax ordinances/ City or municipal tax codes
- Tax treaties and international agreements
- Special Laws
- Decision of the Supreme Court and the Court of Tax Appeals
- Revenue rules and regulations and administrative ruling and opinion
Tax Distinguished From Other Terms Or Imposts
sum of money for the use of something
Toll-
Tax Distinguished From Other Terms Or Imposts
a sanction imposed as a punishment
Penalty -
Tax Distinguished From Other Terms Or Imposts
– proportional contribution from owners of lands for special benefits
-Special Assessment
Tax Distinguished From Other Terms Or Imposts
- all funds or income derived by the government
-Revenue
Tax Distinguished From Other Terms Or Imposts
- pecuniary aid directly granted the government to an individual or private commercial enterprise
-Subsidy
Tax Distinguished From Other Terms Or Imposts
- charge imposed under the police power
Permit/license fee
Tax Distinguished From Other Terms Or Imposts
- taxes imposed exported from or imported into a country.
Custom duties
Tax Distinguished From Other Terms Or Imposts
- book of rates containing kinds of merchandise with corresponding duties to pay
-Tariff
Avoiding/Minimizing the Burden of Tax
- transfer of tax burden
Shifting
Avoiding/Minimizing the Burden of Tax
- producer pays the tax and endeavor to
recoup himself by improving his process of production
Transformation
Avoiding/Minimizing the Burden of Tax
- use of illegal means
Evasion
Avoiding/Minimizing the Burden of Tax
– exploitation of legally permissible alternative
Tax avoidance
Avoiding/Minimizing the Burden of Tax
– grant of immunity
Exemption
Avoiding/Minimizing the Burden of Tax
– reduction in the selling price
Capitalization
Sources of Tax Laws
- Constitution
- National Internal Revenue Code
- Tariff and Customs Code
- Local Government Code (Book II)
- Local tax ordinances/ City or municipal tax codes
- Tax treaties and international agreements
- Special Laws
- Decision of the Supreme Court and the Court of Tax Appeals
- Revenue rules and regulations and administrative ruling and opinion
