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• The beginning of the idea of taxation cannot be dated in the continuum of our history. It came as a matter of survival for the government.
• The development of tax law as a comprehensive and general system is a recent phenomenon resulting from the evolution of taxes and increasing state economy relationship
• A tax law is a body of rules passed by the legislature by virtue of which the government acquires a claim or property as a matter of legal duty or obligation by operation of law
• Taxation may be defined then, as the power of the sovereign to impose burden or charges upon persons, property or property rights for the use and support of government in order to enable it to discharge its function
• The power of taxation is both inherent and legislative in character because it has been reserved by the State for it to exercise.
• It is an essential and inherent attribute of sovereignty, belonging as a matter if right to every independent government. The government possesses it without being conferred by the people. The power is inherent because the sustenance of government requires contribution from them.
• The power of taxation is legislative in character because only the legislature can make tax laws. It is an exercise of the high act of sovereignty to be performed only by the legislature upon consideration of the policy, necessity and public welfare.
• Having the power to tax, it must also possess the sole power to prescribe the means by which the tax shall be collected, and designate the officers through whom it shall be enforced
• The primary purpose of taxation is to raise revenues for public needs so that the people may be enabled to live in a civilized society. It also serves a variety of purpose
• It may be increased in order to stabilize prices and stimulate greater production; taxes on imports may be increased to favor domestic production; or decrease to encourage foreign trade; it can also mobilize capital to be poured into capital deficient fields of business
• taxation is an instrument of fiscal policy, and fiscal policy influences the direction and structure of money supply, prices and of the national economy
• The power of taxation originated from the theory that the existence of a government is a necessity. No government, whether democratic or despotic, can exist without resources to finance its operations
• A true tax is an exaction for revenue that is for the support of the government.
• Limitation of public purpose – A tax is for public purposes where it is for the support of the government, or any of the recognized objects of the government, or where it will directly promote the welfare of the community in equal measure
• Limitation of territorial jurisdiction – The general rule is that sovereignty of a state extends only as far as its territorial jurisdiction. It follows that its taxing power does not extend beyond its territorial limits, but within its limit, it may tax persons, property, income or business
• Limitation of double taxation – Double taxation may be understood as direct duplicate taxation which means taxing twice by the same public authority for the same purpose during the taxing period of some of the property in the territory in which the tax is paid without taking all of them a second time.
• Limitation of non-delegation of taxing power – The constitution provides that sovereignty resides in the people and all government authority emanates from them. power cannot be delegated to the President and to local government. may be delegated to the municipal corporations which are the instrumentalities of the state for the better administration of the government in matters of local concerns.
• Limitation of exemption of government agency or instrumentality – The general rule is that agencies and instrumentalities of the government are exempted from taxation. So, properties owned by the Philippine government, any province, city, municipality, or municipal districts are exempted from taxation. However, government entities performing profit-making activities are not exempted from taxation.
• Fiscal adequacy – emphasizes the source of revenue as a

  whole must be sufficient to meet the expanding

  governmental expenses regardless of business conditions,

  export taxes, trade balances, and problems of economic

  adjustments
• Equality or theoretical justice – refers to the use of revenues which must be believed based on the taxpayer’s ability to pay.
• Administrative feasibility – means that the tax system must be clear to the taxpayers, can be enforced and is convenient and not burdensome or discouraging to a business activity
• Police Power – authority of the government to regulate the activities of an individual even in the absence of law for the benefit and protection of public welfare
• Taxation – authority of the government to improve taxes, charges and fees from its taxpayers under its sovereignty and/or territorial jurisdiction, to support its necessary expenses.
• Eminent Domain – authority of the government to expropriate private property for public use upon payment of a just compensation.
• A tax may be defined then, as a forced and involuntary burden assessed in accordance with some reasonable rule of appointment by the authority of a sovereign government
• It proceeds upon the theory that the existence of the government is a necessity, that it cannot continue to operate without the means to pay for its expenses
• Characteristics of taxes

  1. It is an enforced contribution
  2. It is exacted pursuant to legislative authority
  3. It is contribution in money
  4. It is levied upon person, property and property rights
  5. It is for the purpose of raising revenue
  6. It must be for public purpose
  7. It must be proportionate in character
• Fiscal Taxes – designed to raise revenues for governmental needs. Ex. Percentage tax on locally manufactured commodities
• Regulatory Taxes – designed to achieve some social and economic goals irrespective of whether revenue is actually raised or not. Ex. protective tariff or custom duties
• Personal, Captivation or Poll Tax – imposed on individuals within the jurisdiction of the taxing power, without regard to the amount of their property or occupation in which they are engaged. Ex. residence tax
• Property Taxes – computed upon the valuation of property and assessed at the owner’s domicile, although privileges may be included in the valuations. Ex. real estate tax
• Excise Tax – imposed directly by the legislature and the sum is measured by the amount of business done or the extent to which the privilege has been enjoyed or exercised.
• Direct Tax – when the person on whom the tax is imposed absorbs the tax or bears it. Ex. income tax
• Indirect Tax – charge paid by a person other than the one on whom it is legally imposed. Ex. value-added tax
• Specific Tax – of fixed amount by the hear or member, or by some standards of weight and measurement, and requires no assessment other than a listing or classification of the subjects to be taxed. Ex. excise taxes on wines and liquors
• Ad Valorem Tax – of fixed proportion, of the value of the property with respect to which the taxes are assessed, and require the intervention of assessors to appraise the value of such property before the amount due from each taxpayer can be determined. Ex. real state tax, excise tax on cigars and cigarettes
• National Taxes –levied and collected by the national government. Ex. income tax
• Municipal Tax – levied and collected by the municipal government. Ex. real state tax
• Proportional Tax – based on a fixed percentage regardless of the amount of income, property or other bases to be taxed, a single rate being applied to different objects with different values.
• Progressive Tax –the tax rate increases as the tax base increases. Ex. income tax