TAX I TRANSCRIPT FOR “WHERE WERE WE?

” PURPOSES

NOVEMBER 9, 2017 MEETING

Etymology: the term “tax” came from the Latin word “taxare”, which means to censure or to charge. This then
evolved: taxare ➡ task ➡ tax

History: the earliest record of taxation took place in China; around 3000 years ago.
In Egypt, collection of taxes was done by the scribes. A common example of an item on which tax was imposed is
cooking oil. The book of Genesis in the Bible also tells us that taxes were collected for the benefit of the Egyptian
pharaohs.
In Greece, Athenians imposed a tax called eisphora which was used to pay for wartime expenditures. When
additional resources were gained by the war effort, these resources were used to refund the tax. Aside from the
eisphora, Athenians also imposed a monthly poll tax on foreigners, those who did not have both an Athenian mother
and father; this tax was referred to as metoikion.
In Rome, the earliest taxes were customs duties on imports and exports called portoria, and tax collectors were
referred to as the publicani. During the reign of Caesar Augustus, the publicani were eliminated as tax collectors for
the central government, and cities were given the responsibility for collecting taxes. Caesar Augustus also instituted
an inheritance tax to provide retirement funds for the military. Julius Caesar, Caesar Augustus’ successor, imposed a
sales tax of 4 percent for slaves and 1 percent for all other commodities.
In Great Britain, tax schemes were adopted during occupation by the Roman Empire. Leofric, Earl of Mercia, imposed
high taxes which were levied on the residents of Coventry. Lady Godiva asked him to reduce these taxes, to which
Leofric agreed, subject to a condition: that she would ride naked through the streets of the town (which she did).
When the Roman Empire fell, the Saxon kings imposed taxes on land and property called danegeld. Customs duties
were also imposed. In 1800, taxes were used to finance the war against Napoleon Bonaparte (this is now called
income tax).
In Colonial America, colonists were paying taxes under the Molasses Act, which was modified in 1764 to include
import duties on foreign molasses, sugar, wine, and other commodities (new act was known as the Sugar Act);
however, since this did not raise enough revenue, the Stamp Act was added in 1765. This imposed a tax on all
newspapers printed in the colonies, as well as most commercial and legal documents.
In Post-Colonial America, the Whiskey Rebellion took place as a result of people’s opposition to Alexander Hamilton’s
excise tax. Settlers rioted against the tax collectors due to the discriminatory nature of the tax. Seven years later,
John Fries spearheaded the Fries Rebellion in opposition to the enactment of the Federal Property Tax, which was
used to pay for the expansion of the army and navy in case of war with France. In 1864, taxes were imposed to raise
additional revenue to support the Civil War.

Philippine History: the original basis of the revenue system was the responsibility of the cabezas de Barangay, who
levied taxes (buwis) against the people of their districts. Collection of tribute from Natives was thereafter practiced.
This tribute was a personal tax of the nature of a uniform poll tax and was the only direct tax enforced. The tribute
was then replaced by the cedula, which serves as one’s proof of tax payment.

Definition of Taxation: (remember that he always asks for the complete definition)
1. It is an inherent power of the state (What)
2. Exercised through the legislature (Who) THEREFORE it is not the ENTIRE sovereign which is given this inherent
power.
3. By enforcing contributions (How)
4. To raise revenue and defray expenses of the government (Why)
Note that taxation is different from tax.

Paseo Realty v CA: Taxation is a destructive power which interferes with the personal and property rights of the
people and takes from them a portion of their property for the support of the government.
Pelizloy Realty v Province of Benguet: The power to tax is an attribute of sovereignty, and as such, inheres in the
State. However, such is not true for provinces, cities, municipalities, and barangays as they are not the sovereign.
Rather, they are mere territorial and political subdivisions of the Philippines.

Nature of Taxation: it is an inherent prerogative of the sovereign. It therefore does not need to be expressly
conferred by the people and may be exercised even in the absence of a Constitutional grant.

Mishel Escaño | EH 407

Basis? LIFEBLOOD THEORY. The existence of a government is a necessity, hence, the sovereign State may compel all
its citizens and property to contribute for its continued existence. This is why the power to tax is also said to involve
the power to destroy. The State may collect taxes until you have nothing, and this is also why there are limitations
provided.
Cases: NPC v City of Cabanatuan (the state enters into a social contract with its citizens: for the promotion of public
interest and the common good or social welfare); MCIA v Marcos; Chamber of Real Estate & Builders Association Inc.
V Executive Secretary Romulo

Simply put, the nature of the power of taxation involves the following: (1) it is an inherent attribute of sovereignty; (2)
it is legislative in character; and (3) it is subject to certain limitations

A. Collection of taxes cannot be enjoined by injunction

EXC: it will jeopardize the interest of the government or the taxpayer, as determined by the Court of Tax Appeals or
the Supreme Court. (Sir’s comment: I do not see how it is possible for the government’s interest to be jeopardized
when the collection of taxes is made precisely for its protection)
B. Not subject to compensation and set-off
Compensation takes place when merging of the qualities of the debtor and creditor in one and the same person with
respect to one and the same obligation. Such obligation therefore has to be due and demandable.
EXC: both claims have already become overdue and demandable AND fully liquidated.

Concept of equitable recoupment: where the refund of a tax illegally or erroneously collected from or overpaid by a
taxpayer is barred by prescription, a tax presently being assessed against a taxpayer may be recouped/set-off. Take
note, however, that this doctrine finds no application in the Philippines.

Mishel Escaño | EH 407