Taxation Quiz 1 Reviewer

• Taxation is the process or means by which the sovereign (independent state) through its law making body (legislative) imposes burden upon subjects and objects within its jurisdiction for the purpose of raising revenues to carry out the legitimate objects of government.
• Taxation is the act of levying tax to apportion the cost of government among those who, in some measure, are privileged to enjoy its benefits and must therefore bear its burdens
• Taxes is for civilized society
• Types of taxpayers are individual and non-individual
• Inherent powers of the state are police power, power of taxation, power of eminent domain
• Police power is the power of the state for promoting public welfare by restraining and regulating the use of liberty and property. It may be exercised by government only. The property taken in the exercise of this power is destroyed because it is noxious
• Power of taxation is the power by which the state raises revenues to defray the necessary expense of government.
• Power of eminent domain is the power of the state to acquire property for public purpose upon payment of just compensation
• Eminent domain may be granted to quasi-public service or utility companies
• The primary purpose of taxation is for revenue or fiscal purpose
• The secondary purpose of taxation is for regulatory or sumptuary / compensatory
• The primary purpose of taxation is to provide funds or property with which to promote the general welfare and the protections of its citizens and to enable it to finance its multifarious activities.
• Taxation can be employed as a devise for regulation or control by means which certain effects or conditions envisioned by the government may be achieved
• The goal of regulatory taxes are promotion of general welfare, reduction of social inequality, economic growth
• Theory of taxation is the lifeblood or necessity theory.
• The power of taxation proceeds upon the theory that the existence of the government is a necessity
• The power of taxation is necessary because the government can neither exist nor endure without taxation.
• Lifeblood theory - taxes are the lifeblood of the government and their prompt and certain availability is an imperious need.
• The basis of taxation is benefits received or reciprocity theory
• The basis is the reciprocal duties of protection and support between the state and its inhabitants.
• The state collects taxes from the subjects of taxation in order that it may be able to perform the functions of government. The citizens pay taxes in order that they may be secured in the enjoyment of benefits of organized society
• Taxpayers receive benefits from taxes through the protection the state afford to them.
• 1. Rule of “No estoppel against the government
  2. Collection of taxes cannot be enjoined (stopped) by injunction
  3. Taxes could not be the subject of compensation or set-off
  4. Right to select objects of taxation
  5. A valid tax may result in the destruction of the taxpayer’s property

  Manifestation of the Lifeblood theory
• Rule of “No estoppel against the government” means that the state cannot be estopped by the neglect of its agents/officers.
• Collection of taxes cannot be enjoined by injunction shall apply to all collection activities
• Taxes could not be the subject of compensation or set-off since claim for taxes is not a debt or contract. If taxes could be a subject to compensation, or set off, it can give rise to confusion and abuse.
• The right to select objects (subjects) of taxation rests with the congress. The matters include the determination of:

  1. The subject to be taxed
  2. The purpose of tax as long as it is a public purpose
  3. The amount or rate of the tax
  4. Kind of tax
  5. Apportionment of the tax
  6. Situs of taxation
  7. The manner, means, and agencies of collection of tax
• The power to tax includes the power to destroy where the tax is a valid tax. This is so because the taxpayer cannot seek the nullification of the valid tax solely upon the premise that the tax will impoverish him.
• Power of taxation is the most absolute of all powers of the government
• Principles or scope of the power of tax are comprehensive, unlimited, plenary, and supreme
• Comprehensive as it covers persons, businesses, activities, professions, rights, and privileges.
• Unlimited in the absence of limitations prescribed by law or the constitution
• Plenary as it is complete
• Supreme in so far as the selection of the subject of taxation
• Essential elements of tax:

  1. It is an enforced contribution
  2. It is generally payable in money
  3. It is proportionate in character
  4. It is levied on persons, property, or the exercise of a right or privilege
  5. It is levied by the law-making body if the state
  6. It is levied for public purpose
• Aspects of taxation are levying, assessment, and collection
• Characteristics of state’s power to tax are inherent in sovereignty and legislative in character.
• National tax is imposed by the national government
• Local tax is imposed by local government units
• Personal, poll or capitation- tax of a fixed amount imposed upon individual, residing within a specified territory without regard to their property or the occupation