Professional Documents
Culture Documents
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I.
Principles of Taxation
A. Nature, Scope, Classification, and Essential Characteristics
i.
ii.
Nature
1.
Legislative
2.
Inherent in Sovereignty
Scope
Taxation is unlimited, plenary, comprehensive, and supreme
iii.
Classification
1.
Property taxes
2.
Direct taxes
Indirect taxes
3.
Specific Taxes
Ad valorem taxes
4.
According to Purpose:
General or Fiscal
5.
National
Municipal or Local
6.
According to Graduation:
Progressive
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iv.
Regressive
Mixed
Proportionate
Essential Characteristics
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Fiscal Adequacy
There must be a balance between government revenue and
government expenses.
ii.
Theoretical Justice
The tax system must be equitable and fair to each taxpayers
ability to pay.
iii.
Administrative Feasibility
The tax laws must be enforced on taxpayers with the least
inconvenience.
Inherent Limitations
1.
2.
The proceeds of tax must be used for the support of the State or for
some recognized objects of government or directly promote the
welfare of the community.
Taxation is inherently legislative
3.
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4.
ii.
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Constitutional Limitations
1.
All money collected on any tax levied for a special purpose shall be
treated as a special fund and paid out for such purpose only. If the
purpose for which a special fund was created has been fulfilled r
abandoned, the balance, if any, shall be transferred to the general
funds of the Government.
The President shall have the power to veto any particular item or
items in an appropriation, revenue, or tariff bill, but the veto shall
not affect the item or items to which he does not object.
The Supreme Court shall have the power to review, revise, reverse,
modify or affirm on appeal or certiorari, as the law or the Rules of
Court may provide, final judgments and orders of lower courts in all
cases involving the legality of any tax, impost, assessment, or toll
or any penalty imposed in relation thereto.
Each local government unit shall have the power to create its own
sources of revenues and to levy taxes, fees and charges subject to
such guidelines and limitations as the Congress may provide,
consistent with the basic policy of local autonomy. Such taxes, fees,
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and charges shall accrue exclusively to the local governments.
Local government units shall have a just share, as determined by
law, in the national taxes which shall be automatically released to
them.
2.
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Tax Evasion
ii.
Tax Avoidance
E. Situs of Taxation
i.
Interest
2.
Dividends
3.
Service
4.
5.
Technical advice, assistance or services in connection with
technical management or administration of any scientific, industrial or
commercial undertaking, venue, project or scheme
6.
The use or right to use motion picture films, films or videotapes,
and tapes for use in radio broadcasting
7.
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8.
ii.
2.
3.
Compensation for labor or personal services performed not within
Philippines
4.
5.
Gains, profits, and income from sale of real or personal property
not located within Philippines.
iii.
F. Double Taxation
-
Taxing for the same tax period the same thing or activity twice, when it
should be taxed but once, for the same purpose and with the same
kind of character of tax.
i.
ii.
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J. Organizations
i.
ii.
Bureau of Customs
iii.
iv.
Board of Investments
v.
PEZA
II.
A. Principle of Necessity
B. Explanation:
The Principle of Necessity states that the government has the power
and right to compel all within its territory to pay taxes or contribute
money. Government will not continue to exist and preserve its
sovereignty if it cannot pay its expenses. Every citizen must pay taxes
because tax is the lifeblood of the government. This is why this
principle is also called the lifeblood theory.
C. Example: Air Canada vs. Commission on Internal Revenue
(January 11, 2016)
D. Application:
As a resident citizen of the Philippines, I must abide by the laws,
especially in the statutes regarding taxation. In order for me to avail the
benefits from the government, I must take part in ensuring that the
government will continue to exist.
E. Organizational Chart: