TAX PRINCIPLES Flashcards
As to what?
Taxation refers to the inherent power of a sovereign state acting
through its legislature to impose a proportionate burden upon persons, property
rights or transaction to raise revenue to support government expenditure and as a
tool for general and economic welfare.
As a state power
As to what?
Taxation refers to the act of imposing a tax by a sovereign state
to raise revenue for the use and support of the government.
As a process
Purpose of taxation
Primary purpose (Revenue purpose Secondary purpose (Regulatory/Sumptuary/Compensatory) Other purpose:
to raise funds for the expenses of the government:
Primary purposes ( also called Revenue purpose)
as a tool for general, social and economic welfare
. Secondary purpose (also called
Regulatory / Sumptuary / Compensatory purpose)
promotion of general welfare, reduction of social inequality,
encourages economic growth and protectionism.
Other purpose
NATURE or CHARACTERISTICS of the taxing power
inherent power of a sovereign state
legislative in character subject to inherent and constitutional limitations.
the state
has the power to tax even if not expressly granted by the constitution.
the inherent power of a sovereign state
taxation is generally exercised by the law-making
body of a state.
s legislative in character
In the absence of inherent and constitutional limitations, the power to tax is
comprehensive and unlimited. It is so comprehensive that in the words of justice
Marshall of US Supreme Court, the power to tax includes the power to destroy. It is
an awesome power.
SCOPE of the power of taxation
Scope of the legislative taxing power
Subject of Taxation - The person, property, or occupation to be taxed.
The amount or rate of tax
The purpose for which taxes shall be levied provided they are public purpose
The kind of tax to be collected
The apportionment of the tax
The situs of taxation
The method of collection.
Where does the power of taxation proceed from?
It proceeds from the necessity of the existence of the government, and since it exists
for the people, it can compel them to pay taxes.
basis of taxation?
The reciprocal obligation of protection and support between the state and its citizens.
In return for the protection provided by the state, the people pay taxes. Benefit –
Protection Theory
Rules of interpretation of tax laws
Tax laws are construed in favor of the taxpayer and strictly against the
Government
Tax exemptions to be construed strictly against the taxpayer
three inherent powers of the state PET
Police Power
Eminent Domain
Taxation
The source of revenue as a whole should provide enough
funds to meet the various expenditures of the government.
Fiscal adequacy
Tax laws should be easy to
understand, capable of enforcement by the administrative personnel and
convenient to the taxpayers as to the modes and methods and time of payment.
Administrative feasibility
Taxes should be imposed equitably based on
the taxpayer’s ability to pay and benefits received.
Theoretical justice and equality
Tax laws should be
consistent with the economic goals of the state.
Consistency or compatibility with economic goals –
