Caraga state university
Ampayon, Butuan City 8600, Philippines
URL: www.carsu.edu.ph
Taxation
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Taxation
Is the inherent power of the state to demand enforced
contributions for public purposes.
It is the power by which the sovereign, through its law-
making body, raises revenue to defray the necessary
expenses of government.
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It is a way of apportioning the expenses of government
among those who in some measure are privileged to enjoy
its benefits and must bear its burdens.
Taxes are enforced proportional contribution from persons
and property, levied by the state by virtue of its sovereignty
for the support of the government and for all its public
needs.
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SCOPE OF TAXATION
It covers persons, property, or occupation to be taxed within
the taxing jurisdiction.
It is inherent in the power to tax that a State be free to select
the subjects of taxations.
Generally, the legislature exercises such power however,
upon valid delegation, the law-making bodies of LGUs and
the President or as an incident of emergency powers that
Congress may grant to him may exercise the power of
taxation.
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WHEN WAS TAXATION STARTED
In prehistoric period, Filipino
people paid taxes to the Datu
for their protection.
Not paying of “buwis” or taxes
was already punishable, but the
Chieftain family members were
exempted from paying taxes.
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PURPOSES AND OBJECTIVES OF TAX:
1. Revenue Raising from those collected taxes that
are intended primarily to finance the
government and its activities; and
2. Non– Revenue/Sumptuary Purposes for:
a. Promotion of General Welfare,
b. Regulation,
c. Reduction of Social
Inequality/Compensatory Purpose,
d. Encourage Economic Growth and
e. Protectionism.
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THE LIMITATIONS ON THE POWER OF
TAXATION
1. Inherent Limitations (such as Situs or Territoriality of Taxation;
Public Purpose; International Comity; Non-delegability of
power; and Exemption of government from taxation)
2. Constitutional Limitation (such as Due Process of Law and
Equal Protection of Law).
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THE BASIS OF TAXATION IS FOUNDED ON THE
LIFE BLOOD THEORY.
Taxation is indispensable and inevitable
price for civilized society, without taxes,
the government would be paralyzed for
lack of the motives power to activate and
operate it.
Hence, the collection of taxes must be
made without hindrance if the State is to
maintain its orderly existence
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THEORIES OF TAXATION
1. Necessity Theory
The existence of the government is necessity. It cannot continue
without a means to pay its expenses and therefore has a right to
compel all citizens and property within its power to contribute.
2. Benefits – Protection/Reciprocity Theory
Obligation to pay taxes is involuntary and compulsory, in
exchange for the protection and benefits one receives from the
government; taxes are paid for the enjoyment of the benefit of
organized society.
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LIABILITIES INVOLVED
A tax creates civil liability on the part of the delinquent taxpayer
although the non – payment thereof (due to failure or refusal to
pay) creates a criminal liability which could be the subject of
criminal prosecution under existing law.
To sum, in taxation, it is one’s failure to comply with the civil liability
to pay taxes which gives rise to the criminal liability. Nevertheless,
taxes to be paid are personal to the taxpayer.
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The following are some means on which a taxpayer may
minimize if not to escape the payment of taxes:
1. Tax Exemptions,
2. Tax Avoidance, and
3. Tax Evasion.
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TAX EXEMPTION
No law granting any tax exemptions shall be
passed without the concurrence of a majority
of all the members of the Congress.
The power to exempt from taxations as well as
the power to tax is an essential attribute of
sovereignty and may be exercised by virtue of
the Constitution, expressly or by implication.
The inherent power of the State to impose
taxes naturally carries with it the power to
grant tax exemptions.
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KINDS OF TAX EXEMPTIONS
1.Express – when exemptions are expressly granted by the
Constitution, Statutes, Treaties, franchises or similar legislative acts;
an example of which is the exemptions from real property.
2.Implied – whenever particular persons, properties or excises are
deemed exempt as they fall outside the scope of the taxing
provision itself; and
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KINDS OF TAX EXEMPTIONS
3.Contractual – when in consideration of contractual agreement
with the government.
Since taxation is the rule and the exemptions are the
exception, the exemption may be withdrawn in the pleasure
of the taxing authority. However, if the tax exemptions
constitute a binding contract and for valuable consideration, the
government cannot unilaterally revoke the tax exemptions.
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TAX AVOIDANCE
It is reducing or totally escaping payment
of taxes through legally permissible means.
This Method should be used by the
taxpayer in good faith and at arm’s length.
An example of which is the availing of all
deductions allowed by law or refraining
from engaging in activities subject to tax.
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TAX EVASION
It is the illegal means of escaping
taxation. A Scheme used outside of those
lawful means and when availed of,
usually subjects the taxpayer to (further or
additional) civil or criminal liabilities.
An example of which is the failure to
declare for taxations purposes the true
and actual income derived from business
for two (2) consecutive years.
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TAX AMNESTY
Is a general pardon or intentional overlooking by the State of
its authority to impose penalties on persons otherwise guilty of
evasion or violation of a revenue or tax.
It partakes absolute waiver by the government of its right to
collect what is due it and to give tax evaders who wish to
relent a chance to start with a clean slate.
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THE TRAIN LAW
December 19, 2017, the President Rodrigo Duterte signed
into law Package 1 of the Comprehensive Tax Reform
Program also known as the Tax Reform for Acceleration and
Inclusion (TRAIN) as Republic Act (RA) No. 109631.
The law provides for the amendments to several provisions
of the National Internal Revenue Code of 1997 (NIRC of
1997) on personal income taxation, passive income for both
individuals and corporations, estate tax, donor’s tax, value-
added tax (VAT), excise tax, documentary stamp tax (DST),
and tax administration, among others.
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It likewise introduced new taxes such as the excise tax on
cosmetic surgery and sugar-sweetened beverages.
The additional revenues that will be generated in the
implementation of the Act shall be used to fund the President’s
priority infrastructure and social programs that will ultimately
benefit the poor.
RA 10963 was published in the Philippines’ Official Gazette last
December 27, 2017 and took effect last January 1, 2018.
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The Tax Reform for Acceleration and Inclusion (TRAIN) is the
first package of the comprehensive tax reform program
(CTRP) envisioned by President Duterte’s administration, which
seeks to correct a number of deficiencies in the tax system to
make it simpler, fairer, and more efficient.
It also includes mitigating measures that are designed to
redistribute some of the gains to the poor.
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Through TRAIN, every Filipino contributes in funding more
infrastructure and social services to eradicate extreme poverty and
reduce inequality towards prosperity for all.
TRAIN addresses several weaknesses of the current tax system by
lowering and simplifying personal income taxes, simplifying estate
and donor’s taxes, expanding the value-added tax (VAT) base,
adjusting oil and automobile excise taxes, and introducing excise
tax on sugar-sweetened beverages.
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REFERENCES
Nery, I., Sion, PJ., Dolina, V. (2019). Reading in Philippine History.
Paranaque City, Philippines: JTCA Publishing.
De Leon H.S, De Leon H.M Jr. (2004) The Fundamentals of Taxation
14th Edition. Quezon City, Philippines: Rex Printing Press Company,
Inc.
https://www.coursehero.com/file/77509163/TAXATION-DURING-
THE-SPANISH-ERAdocx/
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