INCOME TAXATION
INTRODUCTION OF TAXATION
Income Tax - is a tax on inCOME
PURPOSE OF TAXATION- PRIMARY PURPOSE- TO PROVIDE FUNDS OR PROPERTY
WITH WHICH TO PROMOTE THE GENERAL WELFARE AND PROTECTION OF ITS
CITIZEN AND TO ENABLE IT TO FINANCE ITS MULTIFARIOUS ACTIVITIES.
SECONDARY PURPOSE
1. TO STRENTHEN ANEMIC ENTERPRISE BY GIVING TAX EXEMPTIONS.
2. TO PROTECT LOCAL INDUSTIRES AGAINST FOREIGN COMPETITION
THROUGH IMPOSITION OF HIGH CUSTOMS DUTIES ON IMPORTED
GOODS.
3. TO REDUCE ENEQUALITIES IN WEALTH AND INCOME BY IMPOSING
PROGRESIVELY HIGHER TAX RATES; AND
4. TO PREVENT INFLATION BY INCREASING TAXES OR WARD OFF
DEPRESSION BY DECREASING THEM
Business Tax is - IT IS A TAX ON THE POINT OF SALES or purchases
I TRILLION=1B X 1,000
3 INHERENT POWER OF THE STATE
1. POWER OF TAXATION- IS TO RAISE REVENUES TO SUPPORT
GOVERNMENT PROGRAMS. WITHOUT SUCH POWER, THE GOVERNMENT
BECOMES INEFFECTIVE AND POWERLESS.
2. POLICE POWER OF THE STATE- AIMED AT REGULATING THE RIGHTS AND
ACTIONS OF A PERSON TOWARDS OTHERS FOR THE GENERAL WELFARE
OF SOCIETY.
3. POWER OF EMINENT DOMAIN - THE RIGHT OF THE STATE TO
EXPROPRIATE PRIVATE PROPERTIES FOR PUBLIC USE WITH JUST
COMPENSATION.
EXAMPLE OF POLICE POWER OF THE STATE
1. No medical doctor can exercise his profession without passing the board exam.
2. Issuance of driver’s license.
3. THE COURT AND RENDERING OF JUDICIAL JUDGEMENT
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IMPRISONEMENT OF CRIMINALS
ELECTIONS OF OFFICIAL DONE BY COMELEC
ISOLATION OF COVID VICTIM, AIDS VICTIM
CURFEW HOUR
TRAVIC VIOLATION
CREMATION OF COVID VICTIM
FACE MASK
Limitations of the Power of Taxation
INHERENT LIMITATIONS- THOSE WHICH RESTRICT THE POWER ALTHOUGH ARE NOT
EMBODIED IN THE CONSTITUTION
1. Taxes must be levied for public purpose and no amount shall be used for
religious purposes
2. The power of taxation cannot be delegated
3. Only one tax can be imposed on the same income (rule against double taxation)
4. Government instrumentalities and agencies through which the government exercises
sovereign powers are exempt from tax, in the absence of a contrary intent in the law.
5. The power of taxation is limited to the territorial jurisdiction of the taxing state.
6. The tax laws cannot apply to properties of foreign government based on international
comity.
7. The Supreme Court has jurisdiction on tax laws
CONSTITUTIONAl LIMITATIONS- THOSE RESTRICTIONS FOUND IN THE CONSTITUTION OR
IMPLIED FROM ITS PROVISIONS.
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TAXATION IS SUBJECT TO THE DUE PROCESS OF LAW
NO LAWS IMPAIRING OBLIGATION AND CONTRACTS SHALL BE PASSED
NO PERSON SHALL BE IMPRISONED FOR DEBT OR NON-PAYMENT OF POLL TAX
THE RULE OF TAXATION SHALL BE UNIFORM AND EQUITABLE
CHARITABLE INSTITUTIONS, CHURCHES, PARSONAGE OR CONVENTS APURETENANT
THERETO, MOSQUE., AND NON-PROFIT CEMETERIES, AND ALL KINDS OF LAND, BUILDING, AND
IMPROVEMENTS, ACTUALLY, DIRECTLY, OR EXCLUSIVELY USE FOR RELIGEOUS OR CHARITABLE
PURPOSES, SHALL BE EXEMPT FROM TAXATION.
POWER AN DUTIES OF THE BUREAU OF INTERNAL REVENUE
1. ASSES AND COLLECT ALL NATIONAL REVENUE TAXES, FEES AND CHARGES
SUCH AS:
a. Income tax
1. INCOME TAX FROM EMPLOYMENT
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2. INCOME TAX FROM SELF-EMPLOYMENT
3. INCOME TAX FROM CORPORATION AND PARTNERSHIP
4. INCOME TAX FROM ESTATE AND TRUST
b. Value-added tax =112% 1,475.65 /1.12= P1,317.54 VATABLE SALES
X .12= 158.11
VALUE MEAL (ONE PIECE CHICKEN PLUS RICE AND COKE) 103 PESOS
c. Other Percentage taxd. Estate tax or INHERITANCE TAX
e. Donor’s tax - TAX ON DONATION
f. Excise tax- CIGARETTE, OIL, GASOLINE, LIQOUR, WINE, PERFUME,
IMPORTATIONS, CAR, BODY ENHANCEMENT
g. Documentary stamp tax- CONTRACT, AGREEMENT, BANK LOANS
2. Enforce all forfeitures, penalties, and fines connected with the above
national taxes
3. Execute judgements in all cases decided by the Court of Tax Appeals and
other courts
4. Effect and administer the National Internal Revenue Code.
THREE BASIC PRINCIPLES OF A SOUND TAX SYSTEM
1.
FISCAL ADEQUACY-MEANS THAT THE SOURCES OF REVENUES AS A WHOLE ARE ADEQUATE TO
MEET EXPANDING GOVERNMENT EXPENDITURES.
2. THEORITICAL JUSTICE- MEANS THAT THE TAX MUST BE EQUITABLE OR PROPORTIONATE
DISTRIBUTION OF THE TAX BURDEN AND THAT TAX IMPOSITION MUST BE BASED ON THE
CAPABILITY OF THE TAXPAYER.
3. ADMINISTRATIVE FEASIBILITY-MEANS THE TAX LAWS MUST BE ENFORCEABLE BY GOVERNMENT
OFFICIALS AND EMPLOYEES AS TO TIME, MANNER, AND PROCEDURES OF PAYMENT AND THE
REQUIRED TAXES TO BE PAID. PROPER INFORMATION DESSIMATION AND EDUCATION MUST BE
DONE BY THE CONCERNED GOVERNMENT AGENCIES SO THAT TAX PAYAMENT WOULD NOT
SERVE AS A HINDRANCE TO BUSIENSS,
DEFINITION OF TAX
TAX –REFERS TO THE BURDEN OF ENFORCED CONTRIBUTION IMPOSED BY THE GOVERNMENT UPON
PERSON, PROPERTIES, AND RIGHTS TO PROVIDE PUBLIC REVENUES FOR ITS USE AND SUPPORT,
ESSENTIAL CHARACTERESTICS OF TAXES
1. IT IS INHERENT IN SOVEREIGNTY- NOT EXPRESSSLY GRANTED BY THE CONSTITUTION
2. LEGISLATIVE IN NATURE- CONGRESS
3. IMPOSED FOR PUBLIC PURPOSE
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PROPORTIONATE IN CHARACTERGENERALLY PAID IN MONEY
IMPOSED UPON PERSON, PROPERTIES, OR RIGHT AND OBLIGATION
IMPOSED TO RAISE GOVERNMENT REVENUES
IMPOSED BY THE STATE WITHIN ITS JURISDICTION
PAID IN REGULAR INTERVAL.
CLASSIFICATION AND NATURE OF TAXES
1. AS TO SUBJECT MATTER
A. PERSONAL OR CAPITATION TAX OR POLL TAX- REFERS TO THAT FIXED AMOUNT IMPOSED
UPON CERTAIN CLASS OF PERSON OR UPON PERSON RESIDIND WITHIN THE TERRITORIAL
JURISDICTION OF THE STATE REGARDLESS OF THEIR PROPERTY, PROFESSION OR
OCCUPATION. SEDULA
B. PROPERT TAX- REFERS TO THAT IMPOSED UPON PROPERTY, REAL OR PERSONAL, WITHIN
THE TERRITORIAL JURISDICTION.
C. EXCISE (PRIVILEDGE TAX) TAX IMPOSED UPON PERFORMANCE OF AN ACT, THE ENJOYMENT
OF A PRIVILEGE, OR ENGAGING IN AN OCCUPATION. ANY TAX DOES NOT FALL ON THE
CATEGORY OF A POLL TAX OR A PROPERTY TAX. Ex. Income tax, donors tax
D. AS TO WHO BEARS THE BURDENA. DIRECT- A TAX DEMANDED FROM THE PERSON WHO SHOULDERS THE BURDEN OF THE
TAX. EX. INCOME TAX, ESTATE, DONORS TAX
B. INDIRECT- A TAX DEMANDED FROM ONE PERSON IN THE EXPECTATION AND INTENTION
THAT HE SHALL INDEMNIFY HIMSELF AT THE EXPENSE OF ANOTHER. Ex. value-added
tax.
e. AS TO PURPOSE
a. general fiscal or revenue- tax that is imposed solely to raise revenue for government
expenditures.
b. special or regulatory – tax imposed for a special purpose, I,e to achieve some social or
economic ends irrespective of whether revenue is actually raised or not.
Examples: sugar adjustment tax, oil price stabilization fund
f. As to authority imposing them
a. National
b. Municipal or local
g. As to graduation or rate
a. Proportional – a tax based on a fixed percentage of the amount of property, receipts, or
other basis to be taxed. Example, value added tax
b. Progressive – tax the rate of which increases as the tax base or bracket increases. Ex.
Income tax
c. Regressive- the tax rate of which decreases as the tax base increases. Ex. Value added
tax
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