Introduction to

Taxation
John V. Balanquit

Objectives
After the presentation, students
should be able to:
Identify the elements of a state
Define and distinguish the inherent
powers of a state
Explain the nature of taxation

Objectives (continued)
Enumerate and explain the
similarities and distinctions among
the inherent powers
Enumerate and explain the
inherent and constitutional
limitations of a state
Explain the importance, basis and
purpose of taxation

The State
A civilized society characterized by
urban comfort as well as peace
and order.

Elements of a State

People
Territory
Government
Sovereignty

Inherent Powers of a State

Police Power
The power to protect citizens and
provide for safety and welfare of
society
A power limited by the due process
clause of the constitution

Inherent Powers of a State

Eminent Domain
The power to take private
properties for public purpose
Involves expropriation of private
property
Limited to the just compensation
clause of the constitution

Inherent Powers of a State

Taxation
The power by which a sovereign
state, through its legislative body,
raises and accumulates revenue
from its inhabitants for public
purpose

Nature of Taxation
It is an inherent power
It is essentially a legislative
function
It is for public purpose
It is territorial in operation

Nature of Taxation
The government is generally tax
exempt
The strongest inherent power
It is subject to inherent and
constitutional limitations

Similarities of the Inherent

Powers
They are inherent powers
They interfere with private rights
and properties
They are legislative in nature
They presuppose equivalent
compensation

Similarities of the Inherent

Powers
They exist independently from
constitutional provisions
They are necessary attributes of
sovereignty

Distinctions Among the

Inherent Powers
Taxation power is the
strongest, because much of the
needed government revenue are
raised through taxation.
Police power is broad in scope,
taxation is governed by special
law, while police power is governed
by the general law

Distinctions Among the

Inherent Powers
In exercise of police power the
amount imposed depends on
whether the activity is useful or
not
Taxation and police power are
applied to the community as a
whole, eminent domain affects
only the particular owner of real
property.

Distinctions Among the

Inherent Powers
eminent domain is affecting only
the particular person whose real
property is needed by the
government in its priority projects.
Exercise of eminent domain is
restricted by Constitutional just
compensation clause

Distinctions Among the

Inherent Powers
Police and eminent domain are
superior to the nonimpairment clause of the
Constitution, taxation must
observe this provision.
Eminent domain may be
exercised by private entities

Inherent Limitations to
Taxation
Taxes may be levied only for public
purpose
Taxation cannot be delegated
Taxation is limited to territorial
jurisdiction
Taxation is subject to international
comity
The government is generally tax
exempt

Constitutional Limitations

Due process of law

Equal protection of law
Uniformity and equity in taxation
Presidents veto power
Exemptions of certain institutions
from income and real property tax

Constitutional Limitations
No public money shall be
appropriated for religious purposed
Majority of all members of
congress granting tax exemption
Non-imprisonment for not paying
poll tax
Tax collections are general funds of
govt

Importance of Taxation
It is essential for the continuous
existence of a nation
The other inherent powers will be
paralyzed in the absence of
taxation
Government functions will cease
without taxation

Basis of Taxation
Necessity
Taxation is the life blood of a
government
The government cannot exist
without a means to support its
operations

Basis of Taxation
Reciprocal Duties
Taxation is based on the benefits
received theory
The government collects taxes
while they provide protection,
proper business climate and peace
and order.

Purpose of Taxation
Revenue Purpose
To raise revenue

Regulatory or Sumptuary Purpose

To control consumption or production

Compensatory Purpose
To pay costs for benefits received

End of Lecture.
Thank You!