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Limitations of taxing power aware and in common contact with the instances and situations of their

districts making them the ones knowledgeable of how best their district
While the power does not emanate from a grant, as the same is necessarily could be affected by the new taxes imposed. Likewise, this is premised on
inherent upon the existence of the state, exercise of the power is subject to the legal maxim “delegate potestas, non delegari potest” which means,
those limitations inherent upon it and those expressly provided for by the what has been delegated cannot be re-delegated so as not to hamper the
Constitution as follows: objective of the delegation. However, there are at least two (2) instances
where delegation is possible (a) delegation to the President of some tariff
Inherent limitations. These limitations are those limitations that emanates powers, and (b) Local government unit’s fiscal autonomy for their self
from the very nature of the power of taxation. They are very basic and are serving needs.
built-in with the power. Some may be similar to the constitutional limitation
but the constitutional limitation seems to be supreme as they are the most • Exemption of government entities. Government is the people, by (not
specific, thus, specifically intended to rule the application or exercise of the BUY) the people, for (not POOR) the people. Government exists for the
power of taxation. Hereunder are the INHERENT LIMITATIONS: people and whatever amount it makes, came from the people and such
amount it use to finance its various activities to address the general welfare
• Levy for public purpose. To levy a tax means to impose or to charge or of its inhabitants. It is not constituted to engage in any trade or business but
to collect a tax from those to whom it is addressed. Technically however, to to deliver basic services and serve everyone within. Analytically, taxing the
levy is to pass on laws or ordinances imposing a tax or duty upon specific government itself will not generate more revenue. The money will only
group of taxpayers. Under this concept, the impelling reason for the rotate and so no effect, at all, would be made. Suffice it to say however,
imposition of the tax must be the welfare of the public, in general. This there exist no express prohibition
follows that the proceeds from such imposition shall inure to the benefit of
the public. • International comity has something to do with the friendly interaction
and participation of different estates. This adheres to some amount of
In one case, a certain imposition was successfully passed for the purpose of submission and compliance of certain international rules and covenants for
upholding the welfare of the sugar industry. It was questioned on the mutual benefits and enjoyment of the states and its inhabitants. Bilateral
ground that there is no PUBLIC purpose since the sugar industry does not agreements, conventions and international treaties fall under this category.
allegedly represent the public. The issue was resolved in favor of the validity
of the imposition. While sugar industry does not represent the entire public • Territorial jurisdiction relates to the area of jurisdiction and
as the proceeds would not add to the general budget of the national responsibility of a particular estate. Independent states power of taxation is
government, nevertheless, the industry itself admits of a public nature generally confined only within its jurisdiction to give due respect and as
whose circumstances and effects directly affect the public. The requirement courtesy to other states. A state, as a rule, can only impose and implement
of direct purpose does not admit of a direct public benefit from the tax laws and rules within its jurisdiction in accordance with its wishes.
imposition. Outside its jurisdiction, it is without power to do so. But then, it can tax on
citizens or entities of other states doing a trade or business or deriving
• Non-delegation of legislative power to tax. To delegate is to pass on or income within the jurisdiction of its state. See the case of Spratley
to entrust to another a certain duty or obligation. Power to tax is lodged islands for better picture. Issue on who owns spratley had long been
with the legislative department. To my mind, this is because the legislative outstanding for each party claims jurisdiction in accordance with its of the
branch is theoretically the representative of the people and they are directly parties belief that it rightfully belongs to it.
This post is a sequel to the limitations of the taxing power of the state. This the basic doctrine in civil law that civil liability does not put the person liable
time let us proceed to the CONSTITUTIONAL LIMITATIONS - those behind bars. Applied to tax, while poll tax is a basicmandate in the Local
limitations on the state's exercise of the taxing power specifically provided Government Code, its non-payment does not entitle imprisonment.
by the particular provisions of the Philippine Constitution.
d. Non-impairment of obligations of contracts. To impair is to damage or to
a. Due process of law. As provided for, no person shall be deprived of life, harm and obligation referred to is the duty or commitment imposed upon
liberty or property without due process of law. This covers two types: by the valid contract entered into by the contracting parties. Applied to tax,
substantive, and procedural. Substantive due process relates to the a new tax law shall not be passed in such a way as to impair or to prejudice
circumstances and procedures in the passage of tax laws and ordinances, the obligation of a contracting party by virtue of a contract entered into
while the other relates to the procedural aspects in the implementation of with the state. This is to give due respect to the contractual terms the state
the tax laws and ordinances. Applied to taxation, due process mandates that is bind with respect to its contract with private individuals.
there should be a valid law imposing a tax to a particular taxpayer, and A theoretical example of this is, if an exemption is granted by the state by
should the taxpayer failed to pay the same, it must be given each and every virtue of a contract with a private entity for which a valuable consideration
opportunity to explain itself and justify. No law imposing a tax, then the is involved, then no new law could later be passed to prejudice said
taxpayer shall not be collected such tax. On the other hand, granting that exemption.
the taxpayer failed to pay in full but was not issued as assessment notice
informing the facts and the law of the assessment, still, the taxpayer could e. Rule of taxation shall be uniform and equitable. As stated in uniform
not be held to pay. These are the essence of due process. The taxing application above, uniformity relates to classification of taxpayers to be
authority, while implementing the necessary mandates of its office must subjected to tax. Equitable on the other hand relates to the ability to pay
give due respect to the established procedures the way it works in an the tax of those that belong to the same class. In other words, it refers to
organized society. how much will each pay and the constitution requires that there must be a
reasonable classification and justification for the unequal imposition.
b. Equal protection of law. "...nor shall any person be denied equal
protection of law". Equal protection relates to how a particular tax measure f. Separation of church and state. This is based on the sad experiences
or ordinance is being applied to persons or class of persons similarly during the Spanish regime where the church had much to say about the
situated. Thus, if two entities falling on the same classification shall be taxed governance of state. Applied to tax, no public money from taxes shall be
similarly. Example, if an ordinance imposes a tax on technicians and it spent for furtherance ofreligious activities. Thus, a municipality cannot
happened that in a locality there was a single technician, such technician spend public funds for the celebration of its municipal fiesta.
cannot complain for unequal application because the ordinance is made
applicable to all technicians belonging to the same class. g. Exemption of educational, charitable, and religious institutions. The
state acknowledges the valuable contribution of educating its inhabitants,
c. Non-imprisonment for non-payment of debt or poll tax. Debt refers to a benefits brought about by charities on various programs for general
civil obligation that is payable in money or in kind, while poll tax or welfare, and thereligious well-being of its inhabitants to the success and
community tax refers to an charge or imposition administered by the local development of thesociety as a whole. Thus, to encourage private
government unit (LGU) where the taxpayer is located. The prohibition individuals and entities for the furtherance of this objectives, the
admits the fact of inequality of distribution of wealth in the society and constitution provided certain tax exemptions from income, real property
provides for instances in extreme poverty. This is likewise in furtherance of and customs duties and taxes under specific circumstances and limitations.
There must be showing of an actual, direct, and exclusive use and
furtherance of such objectives in order to be exempt to prevent abuse and
capitalization of such objectives to escape from tax.

h. Concurrence of the majority members of Congress in granting tax

exemption. Tax exemptions are immunity from a particular tax that is being
imposed to others similarly situated. The more exemptions, the less
collections. Accordingly, in order to control and to see to it that only those
necessarily entitled must be provided exemptions, the constitution require
that such grant of tax exemption shall be concurred by the vote of the
majority of the membership in the Congress. It should be noted that
Philippines is on a bicameral congress, the senate and the lower house,
thus, granting tax exemptions are not quite easy to legislate.

i. Non-impairment of the jurisdiction of the Supreme Court on tax cases.

This is in furtherance of the principles of check and balances. The
jurisdiction of the lower courts are based on the mercy of the laws passed
for the purpose, thus, may be modified and revised from time to time.
However, in the case of the Supreme Court, no law can take its power to
become the final arbiter of tax cases.

j. Veto power of the President in tax bills. Generally, on bills passed by

Congress, the President is empowered to either approve or disapprove a bill
as a whole. If approved or not acted upon within a certain period of time, it
becomes a law, and if vetoed, it does not become a law in its entirety. Tax
bills however, can be granted either fully or partially. If a bill is granted
partially, provisions which are approved becomes part of the law while
those provisions vetoed upon becomes ineffective.