TAX PRINCIPLES TAX1 3.

The purpose for which taxes shall be levied

LESSON # 1 provided they are public purpose
4. The kind of tax to be collected
A. Define Taxation B. PURPOSES of taxation 5. The apportionment of the tax
6. The situs of taxation
1. As a state power: Taxation refers to the 7. The method of collection.
inherent power of a sovereign state acting through
its legislature to impose a proportionate burden E. The power of taxation proceed from
upon persons, property rights or transaction to
raise revenue to support government expenditure It proceeds from the necessity of the existence of
and as a tool for general and economic welfare. the government, and since it exists for the people,
2. As a process: Taxation refers to the act of it can compel them to pay taxes.
imposing a tax by a sovereign state to raise
revenue for the use and support of the F. Basis of taxation
government.
The reciprocal obligation of protection and
B. PURPOSES of taxation support between the state and its citizens. In
return for the protection provided by the state,
1. Primary purposes: to raise funds for the the people pay taxes. Benefit – Protection Theory.
expenses of the government: ( also called Revenue
purpose) G. Power of judicial REVIEW
2. Secondary purpose: as a tool for general, social
and economic welfare (also called Regulatory / Courts cannot inquire into the wisdom of a taxing
Sumptuary / Compensatory purpose) act. As long as the legislature, in imposing a tax,
3. Other purpose: promotion of general welfare, does not violate applicable constitutional
reduction of social inequality, encourages limitations or restrictions, the courts have no
economic growth and protectionism. concern with the wisdom or policy of the exaction,
the political or other collateral motives behind it,
C. NATURE or CHARACTERISTICS of the taxing the amount to be raised, or the persons, property
power or other privileges to be taxed.

1. It is inherent power of a sovereign state – being H. Rules of interpretation of tax laws

inherent in sovereignty, the state has the power to
tax even if not expressly granted by the 1. Tax laws are construed in favor of the taxpayer
constitution? and strictly against the Government
2. It is legislative in character – taxation is 2. Tax exemptions to be construed strictly against
generally exercised by the law-making body of a the taxpayer
state.
3. It is subject to inherent and constitutional I. Three inherent powers of the state? PET
limitations.
1. Police Power
D. SCOPE of the power of taxation 2. Eminent Domain
3. Taxation
In the absence of inherent and constitutional
limitations, the power to tax is comprehensive and SIMILARITIES:
unlimited. It is so comprehensive that in the words 1. They are indispensable to government
of justice Marshall of US Supreme Court, the existence.
power to tax includes the power to destroy. It is an 2. They can exist independent of the constitution.
awesome power. 3. They are means by which the state interferes
with private rights and properties.
Scope of the legislative taxing power (SARPKASM) 4. They are generally exercised by the legislature.
1. Subject of Taxation - The person, property, or 5. They contemplate an equivalent compensation
occupation to be taxed. or benefit.
2. The amount or rate of tax
 DISTINCTIONS Taxation Eminent Domain Police Power
Subject Persons, property and Private property Persons, property and
exercise of right or exercise of rights or
privilege. privileges.
Purpose Raise revenue for the To acquire private For regulation and
support of the property for public control.
government. use.
Limitation Generally unlimited Limited to the fair Limited to the amount
value of the necessary to defray the
property. cost of regulation
Act involved Taxpayer pays taxes. Private property is Restriction of personal
taken. and/or property rights.
Benefit in Benefits and protection Amount Protection and other
exchange of the from the Government equivalent to benefits from the
foregoing just compensation. Government.
Status as against Inferior Superior Superior
the non-
impairment
clause of the
constitution

J. Enumerate and briefly define the 2. Constitutional limitations – those that limit the
principles/characteristics of a SOUND TAX power of taxation as embodied in
SYSTEM the constitution.
a) Due process of law in taxation and equal
1. Fiscal adequacy – The source of revenue as a protection of the laws.
whole should provide enough funds to meet the b) Rule on uniformity and equity in taxation.
various expenditures of the government. c) No imprisonment for non-payment of poll
2. Administrative feasibility and compliance – Tax tax.
laws should be easy to understand, capable of d) Non-impairment of the obligation of
enforcement by the administrative personnel and contracts.
convenient to the taxpayers as to the modes and e) No appropriation of public money for
methods and time of payment. religious purposes.
3. Theoretical justice and equality – Taxes should f) Exemption of religious, charitable,
be imposed equitably based on the taxpayer’s educational entities, n-profit cemeteries
ability to pay and benefits received. and churches from property taxation.
4. Consistency or compatibility with economic g) Exemption from taxation of non-stock,
goals – Tax laws should be consistent with the non-profit educational institutions and
economic goals of the state. donations for educational purposes.
h) Concurrence by a majority of the
K. What are the limitations on the power of members of Congress for passage of a law
taxation? granting tax exemption.
i) The power of the President to veto a
1. Inherent limitations - Goes in the very nature of revenue or tariff bill.
the taxing power itself. Developed by customs, j) Non-impairment of the jurisdiction of
usages and tradition (CUT). Supreme Court in tax cases.
a) Public purpose. 3. Contractual limitations – these are restrictions
b) Exemption of government agencies and on the taxing power imposed by previously
instrumentalities. existing contracts entered into by the government
c) Non-delegability. with another party who may be another state or
d) International Comity its own citizens.
e) State’s territory a) Franchise granted to its citizen
 b) Service contracts on petroleum and other b) It is proportionate in character.
energy operations c) It is imposed pursuant to a legislative
c) Agreement with the Asian Development authority.
Bank. d) It is imposed for public purpose.
e) It is generally payable in money.
L. Give the steps/stages involved under taxation f) It is levied within the territorial and legal
system (Aspects). jurisdiction of a state.

1. Levying or imposition of taxes – which is a P. CLASSIFICATION of taxes

legislative act
2. Collection of taxes – an administrative act 1. As to subject matter:
a) Assessment a) Personal, poll or capitation tax
b) Actual tax collection b) Property tax
c) Enforcement of tax laws/criminal c) Excise tax
prosecution for willful violation of tax 2. As to who bears the burden:
laws a) Direct tax
b) Indirect tax
M. Repository of tax laws 3. As to determination of amount:
a) Specific tax – tax based on weight,
a) Constitution number or some other standards of
b) Statues – National Internal Revenue Code weight or measurement.
and other special tax laws b) Ad-valorem tax – tax imposed based on
c) Implementing Rules and Regulations the value of the taxable item.
d) BIR Rulings 4. As to purpose:
e) Decision of the Supreme Court a) General tax – tax imposed for general
(Jurisprudence or Case Law) purposes of the government.
f) Decisions of the Court of Tax Appeals b) Special tax – tax imposed for a special
(persuasive; does not have the same purpose or purposes.
stature as 5. As to jurisdiction /scope or authority imposing
g) that of decisions of the Supreme Court tax:
h) Tax Treaty – executive agreement, duly a) National tax – tax imposed on a national
approved by the Philippine Senate and for the national/government.
b) Local tax – tax imposed on a local level for
N. Define TAXES the support of local governments.
6. As to graduation or rate:
Taxes are enforced proportional contributions a) Proportional tax – the tax rate of which is
levied by the state for the support of fixed or constant.
the government. b) Progressive tax - the tax rate increases as
the taxable amount or tax bracket
O. What are the essential characteristics, increases.
requisites or elements of a tax? c) Regressive tax – the tax rate decreases as
the taxable amount or tax bracket
a) A tax is an enforced contribution. increases.

Q. Tax distinguished from OTHER CHARGES and FEES

TAX TOLL
Demand of sovereignty Demand of proprietorship
For the support of the government For the use of another’s property
Imposed by the State only May be imposed by private individuals or
entities

TAX SPECIAL ASSESSMENT

 Imposed on persons, property rights and Levied only on lands
transactions
Support of the Government Contribution to the cost of public
improvement.
Regular exaction Exceptional as to time and place.

TAX LICENSE FEE

Imposed to raise revenue. For regulation.
Exercised under taxation power of the Exercised under police power of the state.
State.
Generally, amount imposed is unlimited. Limited to the amount necessary to defray
the cost of regulation.
Non-payment does not make the activity Non-payment makes the activity illegal.
illegal.

TAX DEBT
Based on law Based on contract
Not assignable Assignable
Payable in money Payable in kind or money
Non-payment may result to imprisonment No imprisonment
Bears interest only if delinquent Interest only if stipulated in writing

P. DOUBLE TAXATION R. Powers and duties of the BIR

Direct double taxation – means taxing twice, on 1. Assessment and collection of all national
the same purpose, in the same year. To constitute internal revenue taxes, fees and charges
double taxation – the two or more taxes must be: 2. Enforcement of all forfeitures, penalties and
1. Imposed on the same property fines connected therewith
2. By the same state or government 3. Execution of judgement in all cases decided in
3. During the same taxing period, and its favor by CTA and ordinary courts
4. For the same purpose. 4. Give effect to and administer the supervisory
and police power conferred to it by the NIRC or
Q. Tax Administration other laws.
S. Chief official of the BIR
It is a system involving assessment, collection and The BIR shall have a chief to be known as
enforcement of taxes, including the execution of Commissioner of internal revenue and four
judgement in all tax cases decided in favor of the assistant chiefs to be known as Deputy
BIR by the courts. Commissioners.
 Examples of popular individual sports include:
 Athletics
 Badminton ( Doubles event)
 Billiards
 Bullfighting
 Bodybuilding
 Calisthenics
 Bowling
INDIVIDUAL AND DUAL GAMES  Canoeing
 Bowls
SPORT/GAMES  Caving
 Boxing

Individual sports are sports in which one What are DUAL SPORTS?
athlete competes on their own. Other sport are
dual sports in which two athletes competes Compared to individual sports, there aren’t
against each other or as a team against another as many dual sports out there, but dual sports can
team of two people. Both of these are distinct take several different forms. In one form of dual
from team sports, together against an opposing sports, a single athlete competes against another
team made up of an equal number of single athlete. There’s no team, just two athletes
competitors. against each other in a one-on-one match. Dual
sports can also involve two athletes on the same
However, among all the many sports team competing with two athletes of the opposite
recognized here in our country, which one would team, known as two on two.
be best to consider? Generally, sports can be
classified in the three: INDIVIDUAL, DUAL, and Dual sports came with many benefits. Not
TEAM. only do they encourage a lot of discipline, but they
also involve utilizing analytical skills and studying
The main difference between INDIVIDUAL what’s needed in order to beats your opponents.
and DUAL Sports is the number of athletes who While bringing your own skills to the court is
compete on the same side. However, each sport impressive, you also have to know something
type comes with plenty of benefits and challenges. about whom you’re competing against. You can
then make their weakness your strength and study
What are INDIVIDUAL SPORTS? their techniques to overcome them during play.

Individual sports are defined as activities in However, when one player is off their game
which competing as a part of a team isn’t required. for that day, it can affect both teammates,
The athlete is on their own and is the one who’s cooperation is extremely important in dual sports,
responsible for bringing home the win. Although and it’s essential to get along with you teammate
individual sports can be competitive, the athlete is before trying to compete. While this classification
also in competition with themselves. of sport has its own advantages, one should not
disregard its disadvantages as well. The social
Practicing a sport individually requires plenty aspect is denfinitely not a strength of this sport.
of motivation in order to develop the skill that are Since the athlete compares alone in individual
needed to progress in activity. Along with gaining sports, the formation of bonds as those who play
additional skills, two other main benefits of dual spots is not nurtured.
individual sports are self-discipline and mental
focus. The more you practice, the better you can Disadvantages also exist in this classification
get, and you’re the one who’s responsible for of sport. One of which is sowign unhealthy
reaching your goal. competition between pairs. This can create a
spiteful environment and can cause feelings of
However, one primary disadvtsantage of inadequacy to the players.
individual sports is that same responsibility, if you
take competitions seriously and lose, you’re Examples of some of the most popular in dual
responsible and it can be hard to push yourself to sports include:
keep improving at times when you’re only holding
yourself accountable.
 Chess
 Table tennis
 Badminton ( Single event )
 Tennis
 Racquetball
 Fencing
 Beach volleyball