set 4: Income and business taxation Flashcards
the process by which a government impose charges on its inhabitants to raise money for public use
Taxation
primary purpose of taxation
raise revenue that will be used in defraying government expenses
secondary purpose of taxation
achieved certain social and economic objectives
may be adjusted in order to prevent economic depression
Regulate Inflation
tobacco is taxed to discourage smoking; imported goods are taxed to protect local producers, and the like
Minimize the Adverse Effects of Certain activities
higher taxes are imposed on those who earn more
Equitable Distribution of Wealth
social science (nature of taxation)
Inherent Power
appropriate private property for particular uses to promote public welfare (under of inherent power)
Eminent Domain
enact laws to promote peace and order, public welfare, security, health and safety, (under of inherent power)
Police Power
“lifeblood” or “bread and butter” (under of inherent power)
Tax
tax laws must first be enacted before taxes can be imposed (nature of taxation)
Legislative
taxation is considered plenary (absolute or supreme), (nature of taxation)
Subject to constitutional and inherent limitations
can be levied for public purposes (Inherent limitations)
Purpose
may levy only on persons and properties within its jurisdiction (inherent limitations)
Territorial Jurisdiction
power to create tax laws with the Congress (inherent limitations)
Non-delegation of legislative power to tax
inherent limitation
Tax exemption of government entities
may not tax the property belonging to a foreign government
International Comity
protect the taxpayer from the promulgation 1 (constitutional limitations)
a. Due of process and equal protection of the laws
protect the taxpayer from the promulgation 2 (constitutional limitations)
b. Rule of uniformity and equity in taxation
protect the taxpayer from potential abuse 1 (constitutional limitations)
c. Presidents power to veto tax bills
protect the taxpayer from potential abuse 2 (constitutional limitations)
d. A law granting any tax exemption needs the concurrence of the majority of the members of the congress
protect the taxpayer from potential abuse 3 (constitutional limitations)
e. Supreme Court’s power to make a final judgement on tax cases
non-imprisonment for non-payment of poll tax
Constitutional limitations
exemption of religious, charitable, or educational institutions
Constitutional limitations
exemption of revenues and assets of non-stock, non-profit educational institutions from taxation
Constitutional limitations
government protects the welfare of its people, in return, the people support the government (theory and basis of taxation)
Reciprocal duties of protection and support
taxes are used for the benefit of the public (theory and basis of taxation)
Benefits received principle
specifying the object and amount of taxation are enacted (aspects of taxation)
Levy
tax laws are implemented and administered (aspects of taxation)
Collection
revenues should be sufficient to defray expenditures (principles of sound tax system)
Fiscal Adequacyt
taxes are proportionate to the taxpayer’s ability to pay (principles of sound tax system)
Theoretical Justice
tax laws can be implemented efficiently and effectively (principles of sound tax system)
Administrative Feasibility
mandatory contributions
Taxes
Characteristics of tax 1
mandatory
Characteristics of tax 2
Levied by the lawmaking body
Characteristics of tax 3
imposed primarily to raise revenues for the government
Characteristics of tax 4
generally payable in money
Characteristics of tax 5
proportionate in character
Characteristics of tax 6
levied on persons and property
Characteristics of tax 7
levied for public purposes
Classification of taxes
1. as subject matter
> fixed amount charged to all persons residing within specified territory
Personal, capitation or poll tax
Classification of taxes
1. as subject matter
> imposed on properties based on their value
Property Tax
Classification of taxes
1. as subject matter
> imposed upon the performance of an act, the enjoyment of privilege
Excise Tax
Classification of taxes
2. as to who bears the burden
> taxpayer must pay and cannot shift to another
Direct Tax
Classification of taxes
2. as to who bears the burden
> taxpayer can shift to another
Indirect Tax
Classification of taxes
3. as the determination of the amount
> based on the value of the property
Ad Valorem
Classification of taxes
3. as the determination of the amount
> based on weight, volume or other physical unit of measurement
Specific
Classification of taxes
4. as to scope
> tax levied by the national government
National Tax
Classification of taxes
4. as to scope
> tax levied by the local government
Local Tax
Classification of taxes
5. as to rate or graduation
> based on a fixed rate
Proportional (han sooyoung)
Classification of taxes
5. as to rate or graduation
> based on an increasing rate as the taxable amount increases
Progressive (Kim Dokja)
Classification of taxes
5. as to rate or graduation
> based on decreasing rate as the taxable amount increases
Regressive (Yoon Joonghyuk)
tax on persons income derived from employment, business, trade, practice of profession, or from property
Income Tax
tax on the production, sale, or consumption of goods and services, leasing of property, or other business activities
Business Tax
Classification of Individual Income Taxpayers
> Filipino residing permanently
Resident Citizen
Classification of Individual Income Taxpayers
> Filipino citizen residing permanently abroad (183 days)
Non-resident citizena
Classification of Individual Income Taxpayers
> foreigner residing in the Philippines
Resident Alien
Classification of Individual Income Taxpayers
> foreigner not residing in the Philippines
Non-resident Alien
all inflows of wealth to the taxpayers
Income
taxpayers income for taxation purposes
Gross Income
