L7 INCOME AND BUSINESS TAXATION

• GENERAL PRINCIPLES OF TAXATION:

  1. Taxation as a power

  2. Taxation as a process

  3. Taxation as a mode of cost allocation
• Taxation as a power : It refers to the inherent power of the state to demand enforced contribution for a public purpose to support the government.
• Taxation as a process : It is the legislative act of laying a tax to raise income for the government to defray its necessary expenses.
• Taxation as a mode of cost allocation: Taxation is a means of allocating government burden to the people.
• Purposes of Taxation

  According to Tabag (2018), the primary purpose of taxation is to raise revenue/funds to support the necessary

  expenses of the government. Other secondary purposes of taxation are the following:

  1. Regulatory Purposes. Serve as a regulatory control to attain the visions set by the government.

  b. Compensatory Purposes. Aim to reduceto reduce social inequalities, to advance the economy, and to protect local

  industries against unfair competition.