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TAXATION

LIMITATIONS ON POWER OF TAXATION


1. Rule of taxation shall be uniform and equitable. Congress shall evolve a
progressive system of taxation.
2. Charitable institutions, etc. and all lands, building and improvements actually, directly
and exclusively used for religious, charitable or educational purposes shall be exempt
from taxation.
3. All revenues and assets of non-stock, non-profit educational institutions used actually,
directly and exclusively for educational purposes shall be exempt from taxes and duties.
4. Law granting tax exemption shall be passed only with the concurrence of the majority
of all the members of Congress.
UNIFORM
Uniformity. Uniformity signifies geographical uniformity. A tax is uniform
when it operates with the same force and effect in every place where the
subject is found.
Uniformity in taxation v. Equality in taxation. Uniformity in taxation
means that persons or things belonging to the same class shall be taxed at the
same rate. It is distinguished from equality in taxation in that the latter requires
the tax imposed to be determined on the basis of the value of the property. Tan v.
del Rosario:
Uniformity means:
(1) the standards that are used therefor are substantial and not
arbitrary;
(2) the categorization is germane to achieve the legislative purpose;
(3) the law applies, all things being equal, to both present and
future conditions; and
(4) the classification applies equally well to all those belonging to
the same class.
There is a difference between the homeless people and the middle
class. The two social classes are differently situated in life. (Tolentino v.
Sec. of Finance)
EQUITABLE
The present constitution adds that the rule of taxation shall also
be equitable, which means that the tax burden must be imposed
according to the taxpayers capacity to pay.
Progressive system of taxation. The Congress shall evolve a
progressive system of taxation. Tax system is progressive when the rate
increases as the tax base increases.
Reason for progressive system. The explicit mention of progressive
taxation in the Constitution reflects the wish of the Commission that the
legislature should use the power of taxation as an instrument for a more
equitable distribution of wealth.

Directive not a judicially enforceable right. The directive to evolve a


progressive system of taxation is addressed to Congress and not a judicially
enforceable right. (Tolentino v. Sec. of Finance)
Indirect taxes. The Constitution does not prohibit the imposition of
indirect taxes, which are regressive. The provision simply means that direct taxes
are to be preferred and indirect taxes should be minimized as much as possible.
It does not require Congress to avoid entirely indirect taxes. Otherwise, sales
taxes, which are the oldest form of indirect taxes, will be prohibited. The mandate
to Congress is not to prescribe but to evolve a progressive system of taxation.
(Tolentino v. Sec. of Finance)

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