taxation

• Income tax is a tax imposed on individuals or entities based on their income or profits.
• Inherent powers of the state include Taxation Power (to enforce proportional contribution from subjects), Police Power (to protect the well-being of people), and Eminent Domain (to take private property for public use after paying just compensation)
• The Theory of Taxation states that government provides public services and the system of government is indispensable for a civilized society
• The Basis of Taxation is the mutuality between the government and its people, where the government provides services and the people provide funds
• The Theory of Cost Allocation includes the Benefits Received Theory (more benefit received, more taxes paid) and the Ability to Pay Theory (taxpayers contribute based on their capacity to sacrifice for the government's support)
• The Lifeblood Doctrine states that the government would be paralyzed without the power to tax, as it provides subsistence to its subjects
• The Marshall Doctrine states that "Power to tax involves power to destroy," but taxation power cannot be used solely to destroy for revenue purposes
• Holme's Doctrine states that taxation power may be used to encourage beneficial activities through tax incentives
• Tax laws are generally prospective in operation
• Non-compensation or set-off exemptions include cases of overpayment of taxes and local taxes
• Taxes cannot be transferred to another entity by contract, ensuring the government's right to collect
• Assessment for taxation is 3 years from the due date of filing or from the date of actual filing, whichever is later; Collection is 5 years from the date of assessment
• The Doctrine of Estoppel holds misrepresentation binding if relied upon in good faith, but the government is not subject to estoppel
• Courts are generally not allowed to issue injunctions against the government in tax collection, following the Lifeblood Doctrine
• Strict construction of tax laws dictates that vague tax laws are construed against the government and in favor of the taxpayer
• The Scope of Taxation Power is comprehensive, plenary, unlimited, and supreme, allowing the government to levy taxes within its jurisdiction with minimal constraints
• Inherent limitations of taxation include territoriality, international comity, public purpose, exemption of the government from taxing itself, and non-delegation of taxing power
• Constitutional limitations of taxation include observance of due process of law, equal protection of the law, and uniformity rule in taxation
• Equal protection of the law in taxation means that rights conferred and obligations imposed should be equal across taxpayers under the same circumstances and conditions
• The uniformity rule in taxation states that taxpayers under dissimilar circumstances should not be taxed the same
• In a progressive system of taxation:

  • Tax rate increases as the tax base increases
  • It is consistent with the ability to pay theory and aids in an equitable distribution of wealth in society
• Non-imprisonment for non-payment of debt or poll taxes (basic community tax only)
• Non-impairment of obligation and contract in taxation means that the government should not set aside its contracts or obligations by the exercise of its taxation power
• Tax exemptions granted under contract should not be cancelled by a unilateral government action
• The free worship rule in taxation states that income of religious institutions from tithes and offerings are not subject to tax, but income generated that is proprietary or commercial in nature is taxable
• Exemption of religious, charitable, or educational entities, non-profit cemeteries, churches, mosques, lands, buildings, and improvements from property taxes
• The Doctrine of Use (not Doctrine of Ownership) applies only to properties used exclusively or primarily, directly, and actually for charitable, religious, and educational purposes
• Non-appropriation of public funds or property for the benefit of any church, sect, or system of religion enforces the separation of church and state
• Exemption from taxes of the revenues and assets of non-profit, non-stock educational institutions, including grants, endowments, donations, or contributions exclusively, actually, and directly used for educational purposes
• Concurrence of a majority of all members of Congress is required for the passage of a law granting exception as it counters the lifeblood doctrine (deprives the government of revenues)
• Non-diversification of tax collections states that collected tax should only be for public use
• Non-delegation of the power of taxation means that the lawmaking/legislative aspect of tax is assigned only to the Congress
• Non-impairment of the jurisdiction of the Supreme Court to review tax cases ensures that all cases involving tax cases can be raised to and finally decided by the SC of the Philippines, notwithstanding the presence of the Court of Tax Appeals
• Appropriations, revenue, or tariff bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments
• Each local government unit shall exercise the power to create its own sources of revenue and shall have a just share in the national taxes
• In the exercise of taxing power, the levy or imposition is the enactment of law by Congress
• Assessment and Collection in taxation is the determination of tax liability and collection thereof, performed by the administrative branch of government (DOF via BIR)
• Situs (or Place) of Taxation determines the tax jurisdiction that has the power to levy taxes upon the tax object
• Double Taxation occurs when the same taxpayer is taxed twice by the same tax jurisdiction for the same thing
• Elements of double taxation include the same object and secondary elements like the type of tax, purpose of tax, taxing jurisdiction, and tax period