WHAT TAXATION IS

Taxation refers to the act of collecting taxes. This

power is vested in the government, whether local or
nation. Taxes are
compulsory payments
associated with income, consumption, or holding of
property that individuals and corporation are
required to make each year to governments.
THE NEED FOR TAXATION
The government serves to promote the
general welfare and protection of its citizens. As
such, various functions related to the following are
formed: education, defense, social welfare, food
production, protection of the environment, and
others. To maintain activities that are deemed
important, funds need to be provided on a regular
basis; in effect, it becomes necessary for the
government to collect taxes.
When people do not pay taxes, the viability of
the government is placed in jeopardy. The provision
of services will not be sustained. Even if people
decide to remove a government that imposed
taxes, they will not be able to find one that will not
need funds to operate.
It is important that people should share in the
burden of running the government, and this can be
achieved through the regular payments of taxes.
REQUISITES OF A VALID TAXATION
Although the government has the power to tax
its citizens, there are certain requisites that must be
present before taxation is deemed valid.
The requisites consist of the following:
1. The tax should be for a public purpose;
2. The rule of taxation shall be uniform;
3. The person or property taxed shall be
within the jurisdiction of the government
levying the tax;
4. The assessment and collection of certain
kinds of taxes must provide guarantees
against injustice to individuals.
A tax is said to be for public purpose if the
funds is generated through it is used to support the
government, like when it is used to pay for the
construction
of public buildings. Financing
research in agriculture is also a valid reason for
collecting taxes.
Taxation is valid when all taxable articles or
kinds of property belonging to the same class or
category are tax at the same rate. Two adjoining
lots located in a residential area, for instance, must
be levied with tax with the same percentage over
the value of the lots. If uniformity of application is
implemented, taxation is said to be valid.
When the state collects taxes on persons,
properties, or transactions where it has jurisdiction,

taxation valid. A property owned by a person living

in another place may be levied a tax by the
government of the place where the property is
located.
Taxation is valid if sufficient notice and
opportunity for hearing is provided to individual
subject of taxation.
OBJECTIVE OF TAXATION
Taxation serves to achieve any or all of the
following objectives:
1. To raise funds
2. To redistribute wealth
3. To regulate consumption
4. To protect local industries
The chief means for raising funds to support
the government is through taxes.
Some individuals amass great wealth during
their lifetimes. Taxation is one of way of
redistributing this wealth to the people. Taxes
relating to estate and inheritance are examples of
means used.
The consumption of some goods sometimes
reaches levels that become harmful to the society.
To limit the sale of these goods, taxes are imposed.
If, for instance, foreign travel depletes the nations
dollar reserves, the government may impose taxes
at rates enough to discourage the said activity.
Imported goods sometimes enter our local
markets to the detriment of local producers. If
imported goods are sold locally at lower prices, the
government may impose taxes that will raise its
selling price. When this happens, imported goods
will be less attractive to domestic consumers.
CLASSES OF TAXES
Taxes may be classified according to the
following:
1. Subject
2. Purpose
3. Authority imposing tax
4. Determination of the amount
5. Who bears the burden
6. Graduation rate
According to subject
Taxes may be classified according to subject
as personal, property, or excise.
Personal tax is imposed on individuals
residing within a specified territory, regardless of
property or occupation. An example is the
community tax levied by the barangay to its
residents.
Property tax is one levied on property. The
amount paid is in proportion to its value, or some

reasonable means of apportionment.

Excise tax is one laid upon goods consumed,
sold, or manufactured within a nation. An example
is the tax levied on alcohol or cigarettes.
According to Purpose
Taxes may be classified as either revenue or
regulatory.
A revenue tax is imposed to collect revenues
for the general purpose of the government.
Examples are income tax and sales tax.
A regulatory tax is imposed for a special
purpose like the protection of local industries from
foreign competition.
According to Authority Imposing Tax
Taxes may also be classified according to
authority imposing the tax, which consist of the
national and local governments.
A national tax is one imposed by the national
government. Examples are income taxes and
custom duties.
A local tax is one levied by the municipal,
provincial, or barangay governments. An example
is the real property tax.
According to Determination of Amount
As to determination of amount, a tax may be
classified as either a specific or ad valorem.
A specific tax is one assessed on the basis of
tax per unit. When assessment is based on a
percentage of the value of the item, the tax is
regarded as ad valorem.
According to Who Bears the Burden
As to who bears the burden, a tax may be
classified as either direct or indirect when the
person on whom the tax is imposed absorbs the
burden. An example is income tax.
A tax is indirect when the amount is paid by
the person other than the one on whom it is legally
imposed. An example is the value added tax VAT
paid by the seller but passed on to the buyer as
part of the selling price.
According to Graduation Rate
In terms of graduation rate, a tax may either
be proportional, progressive, or regressive.
A tax is proportional if it is based on fixed
percentage of the amount of the property, income,
or other factors. Examples are sales tax and real
property tax.
A tax is progressive when the rate increases
at the tax base increases. An example is the
income tax.
A tax is regressive if the effective rate
decrease as the tax base increases.

REQUISITES FOR AN IDEAL TAX

SYSTEM
A nation that imposing on its citizens must be
able to adapt one that is considered good. An
ideal tax system must be :
1. Adequate,
2. Equitable
3. Economically efficient, and
4. Simple