INTRODUCTION TO TAXATION

Basic Concepts & Principles

Nature
Taxes

are the enforced proportional contributions from the persons and property, levied by the State by virtue of its sovereignty, for the support of government and for all public needs. It is a method by which these contributions are exacted.

Scope
It

reaches even the citizen abroad and his income earned from sources outside his State. The power to tax may include the power to destroy if it is used validly as an implement of the police power in discouraging and in effect ultimately prohibiting certain things or enterprises inimical to the public welfare.

Exercise
It

is inherent in the State. Primarily vested in the national legislature, it may now also be exercised by the local legislative bodies pursuant to a direct authority conferred by Article X, Section 5, of the Constitution.

Due Process and Taxation

Like all government powers, it is subject to the requirements of due process. It has already been observed that taxes will not be allowed if they are confiscatory, except where they are intended precisely for destruction as an instrument of the police power. If it is based on the value of the taxable property, the taxpayer is entitled to be notified of the assessment proceedings and to be heard therein on the correct valuation to be given the property.

Equal Protection and Taxation

The

rule of taxation shall be uniform and equitable. It is also provided that the rule of taxation shall be equitable. Equitable taxation connotes that taxes should be apportioned among the people according to their capacity to pay.

Double Taxation
There

is no provision in the Constitution specifically prohibiting double taxation. Punzalan vs. Municipal Board of Manila

Public Purpose
Like

public use in eminent domain, the phrase public purpose as applied to taxation is now given the broadest interpretation so as to included even indirect public advantage or benefit.

Tax Exemptions

It is either constitutional or statutory. Article VI, Section 28 (3) Lladoc vs. Commissioner of Internal Revenue Statutory exemptions are granted in the discretion of the legislature. However, the Constitution provides that no law granting any tax exemption shall be passed without the concurrence of a majority of all the members of the Congress. Article VI,S. 28 (4)

QUIZ #1 (OPEN NOTES / ONE WHOLE YELLOW PAD)

Define

and provide short explanation in relation to taxation on the following: 1. Revenue and Regulation 2. Local Autonomy 3. Uniform and Equitable 4. Exemption Make a short comparative analysis on the constitutional and statutory exemptions.