Taxation

• History of Taxation


  • Ancient Egypt around 3000 BC - 2800 BC
  • Biblical times
  • Earliest taxes in Rome (portoria - customs duties on imports and exports)
  • Augustus Caesar introduced inheritance tax
• Inheritance tax

  5% of the earning goes to the government
• Inheritance tax

  Galing sa yumao na namamana
• Pension

  Naka-base ang pension sa taas ng sweldo
• Taxes introduced during Spanish Period in the Philippines

  • Manila-Acapulco Galleon Trade
  • Polo Y Servicio (Forced Labor)
  • Bandala
  • Encomienda System
  • Tribute

  
• Manila-Acapulco Galleon Trade

  Main source of income for the colony during its early years
• Polo Y Servicio

  Forced labor for 40 days, of men ranging from 16 to 60 years of age who were obligated to give personal services to community projects
• Falla

  Fee paid to be exempted from Polo Y Servicio (worth one and a half real)
• Bandala

  One of the taxes collected from the Filipinos, comes from the Tagalog word mandala, which is a round stock of rice stalks to be threshed
• Encomienda

  Large tracts of land given to a person as reward for a meritorious act, encomenderos were given full authority to manage the encomienda by collecting tribute from the inhabitants and governing people living in it
• Tribute

  Residence tax during the Spanish times, may be paid in cash or kind, partly, or wholly
• Cedula personal

  Replaced the tribute in 1884, equivalent to the present community tax certificate
• Legal Basis for Taxation in the Philippines

  • Philippine Constitution - Article VI, Section 28
  • Republic Act No. 8424 (Tax Reform Act of 1997)
  • Republic Act No. 10963 (Tax Reform for Acceleration and Inclusion (TRAIN))
  • Republic Act No. 11534 (Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act)
  • Presidential Decree No. 1464 (Tariff and Customs Code of 1978)
  • Republic Act No. 7160 (Local Government Code of 1991)

  
• Taxation

  Inherent power of the sovereign, exercised through the legislature, to impose burdens upon the subject and object within its jurisdiction, for the purpose of raising revenues to carry out the legitimate objectives of the government
• Branches of Government

  • Congress (makes the laws)
  • Executive (implements the laws)
  • Judiciary (interprets the laws)
  • We are the subject, our property is the object
• Legitimate Objectives of Taxation

  • Education (DepEd, CHED, TESDA, DOST)
  • DOH
  • DPWH
  • DND
• Positive GDP

  Enough na may pang-gastos ang mga tao
• Inflation

  Pagtaas ng gastos ng mga bilihin

  
• Goal of taxation is to have a healthy competition
• Power of Taxation

  • Attributable to sovereignty and emanates from necessity
  • Refers to the inherent power of the state to demand enforced contribution upon its subjects and objects within its territorial jurisdiction for public purpose to support the government
• Taxation as a process

  The legislative act of laying a tax to raise income for the government to defray its necessary expenses, the means whereby the government distributes the burden of its cost among those who enjoy its benefits
• Legal Basis of the Power of Taxation

  • Benefit-Received Theory (mutual and reciprocal duty of support and protection between the government and people)
  • The sovereign power of the State over its people and property
  • The presumption of receipts/enjoyment of benefits and protection by the people
  • To protect new conditions by imposing special duties
  • To uplift social conditions by imposing regulatory taxes/licenses
• Principles of Taxation

  • Principle of Necessity (the existence of the government is a necessity, and it cannot continue without means to support itself)
  • Benefit-Received Theory (the government and the people have the reciprocal aid mutual duties of support and protection to one another)
  • Lifeblood Doctrine (taxes are the lifeblood of the government without which it can neither exist nor endure)
• Lifeblood Doctrine

  Without money, the government cannot deliver services to the people or function and serve the people
• Importance of Taxation

  • Taxes are indispensable to state existence, Without taxation, the state cannot raise revenue to support itself, pay for governmental services, and its financial obligations, and deliver basic services to the people
  • Neither can the police power and power of eminent domain be effectively and permanently exercised without the power of taxation
• Basic Services

  Education, Health, Safety
• Purpose of Taxation

  • Primary - to raise or generate revenues and to mobilize resources
  • Secondary - To regulate the conduct of businesses or professions, To achieve economic and social stability, To protect local industries
  • Compensatory - Reduces inequalities in wealth distribution, Key instruments of social control, Strengthens anemic enterprises, Provide incentives, Tools on international bargains, Promotes science and inventions, Use as an implement in the exercise of police power to promote general welfare
• Elements of the Tax System

  • Tax Structure (tax rates, tax base, tax subjects, and other taxable events)
  • Tax Administration (assessment, collection, and enforcement of taxes, including the execution of judgment in all tax cases, decided by the courts in favor of the government)
  • Public tax consciousness (level of voluntary and honest compliance of tax obligations by the people)

  
• Characteristics of Sound Tax System

  • Fiscal adequacy (sources of revenue must be adequate to meet government expenditures and their variation regardless of business conditions)
  • Administrative feasibility (tax laws should be capable of convenient, just, and effective administration, clear, concise, and capable of proper and economic enforcement, convenient as to time and manner of payment, and not burdensome)
  • Theoretical justice (taxes levied must be based upon the ability of the taxpayer to pay, it must not be unduly burdensome, confiscatory, or discouraging to business, it must be equitable and uniform)

  
• Taxpayer's Obligation

  • Filing and Payment of Tax under the Self-Assessment
  • Withholding and Remittance of Tax under the Withholding Tax System
• The Tax Concept

  • Return on Capital
  • Realized Benefits
  • Not Exempted by Law, Constitutions, Contracts or Treaty
• Exemptions from Taxation

  Senior, Lower Salary
• Assessment

  Cinocompute kung ano ang taxable amount
• Principal Approaches in the Distribution of Tax Burden

  • Benefit Approach (tax payment should be based on benefits received by the taxpayer)
  • Ability to pay approach (tax payment should be relative to the ability of taxpayers to pay)

  
• Inherent Powers of the Government

  • Power of Taxation (power to take property for the support of the government and for the public purpose)
  • Police Power (power to enact laws to promote the general welfare of the people)
  • Power of Eminent Domain (power to take private property for public use upon payment of just compensation)
• Tax

  An enforced proportionate contribution imposed upon persons, properties, businesses, rights, interests, privileges, transactions, and acts within the territorial jurisdiction of the taxing authority exercised by the legislature for the public purpose and generally payable in money

  
• Taxes are the lifeblood of the government without which the government can neither exist nor function
• Classification of Taxes

  • As to purpose (Fiscal/Regulatory)
  • As to subject matter (Personal/Property/Excise)
  • As to incidence (Direct/Indirect)
  • As to amount (Specific/Ad valorem)
  • As to rate (Proportion/Progressive)

  
• Fiscal (general or revenue) taxes

  Levied without a specific or pre-determined purpose, example - Income Tax
• Regulatory (special or sumptuary) taxes


  Intended to achieve some social or economic goals, example - Business Permit