TAXATION

What are Taxes?
- Taxes are the enforced proportional contributions from persons and property levied by the State
by virtue of its sovereignty, for the support of the government and for all public needs and
purposes. The essential characteristics of a tax are that it is not voluntary payment or donation,
but an enforced contribution exacted pursuant to legislative authority.
The Important Characteristics of Taxes

1. A tax is an enforced proportional contribution because its imposition is not based upon the will of
the person taxed.
2. A tax is generally payable in the form of money, although the law may provide payment in kind,
3. A tax is laid by some rule of appointment which is usually based on the ability to pay.
4. A tax is levied on persons or property and also acts, transactions, rights, or privileges. In each
case, it is the person who pays taxes.
5. A tax is levied by the state, which has jurisdiction over the person or property.
6. A tax is levied by the law-making body of the State because the power of task is an exclusive
function of the legislature, which is the case of congress.
7. A tax is levied for the public purpose.
The Theory of taxation

The power of taxation proceeds from the theory that without funds, the government cannot meet the
various essential expenses it has to incur to enable the government to exist the function effectively. The
existence of the government is anchored on the necessity, that the government cannot continue to function
without the means to pay its expenses. Along this line, therefore the government has to call upon the
citizens and residents to assume monetary burdens and pay taxes so that it can perform its functions and
perform services its people.
The Power of Taxation
It is the power of the state to impose and collect revenues for the operations of the government. The
money generated from the people in form of different taxes shall be used in the operations of government,
for infrastructure programs, and other expenditures of the state. Generally, the revenues collected shall go
back to the people in the form of services.
The Purpose and Importance of Taxation
The purpose of taxations is undoubtedly to raise revenues of funds to support the Government and its
services. Taxation is also utilized to a tool to carry out the national objective or social and economic
development.
The importance of taxation derives from the unavoidable and inevitable obligation of the Government to
protect the people and extend them benefit in the form of public project and services. In return, the people
are subjected to the reciprocal duty of sharing the expenses in the form of taxes.
The Nature of Taxation
(1) The power of taxation is an inherent power, being indispensable in the existence and function of
the government. It is inherent because it exists without the necessity of any specific grant of the
power by the constitution. Just like the police power and the power of eminent domain, the power
of taxation exists independently of the constitution.
(2) The taxing power is essentially a legislative function. Even in the absence of an expressed
Constitutional grant, the power of taxation falls on the legislative branch of the government as
part of more general power of law-making.
The Constitutional Limitations of taxation
1. Observance of Due process of law
Section 1, Article III, Bill of rights: ‘No person shall be deprived of life, liberty, or property
without due process of law, nor shall any person be denied the equal protection of the laws”
2. Observance of equal protection of the laws
Section 1, Article III, Bill of rights: ‘No person shall be deprived of life, liberty, or property
without due process of law, nor shall any person be denied the equal protection of the laws”
3. Protection against imprisonment for non-payment of poll tax
Section 2, Article III, Bill of Rights: “No person shall be imprisoned for debt non-payment of poll
tax”
4. Prohibition against impairment of obligation of contracts
Section 10, Article III, Bill of Rights: “No law impairing the obligation of contracts shall be
passed”
5. Requirement of uniformity and equity in taxation
Section 28, Article VI, Legislative
1. “The rule of taxation shall be uniform, and equitable. The Congress shall evolve a
progressive system and taxation.
2. The congress may, by the law, authorize and President to fix within specified limits, and to
such limitations and restriction as it may impose, tariff rates, import and export, quotas,
tonnage and wharf age dues, and other duties imposts within the framework of the national
development program of the government.
3. Charitable instructions, churches, and parsonages or convents appurtenant thereto, mosques,
non-profit cemeteries, and lands, buildings and improvements, actually, directly, and
exclusively used for religious, charitable, or educational purposes shall be exempt from
taxation.
4. No law granting any tax exemption shall be passed without concurrence of any majority of all
the members of the congress.”
6. Prohibition against taxation appropriation of religious purposes
Section 29, Paragraph 2, Article VI, Legislative Department.
2. “No public money and property shall be appropriated, applied, paid, or employed. Directly or
indirectly, for the use, benefit, or support of any sect, church, denomination, sectarian institution, or
system of religion, or any priest, preacher, minister, other religious teacher, or dignitary as such, except
when the priest, preacher, minister, or dignitary assigned to the armed forces, or to any penal institution,
government orphanage or leprosarium.”
History of Taxation in the Philippines
The Pre-Spanish Era
Albeit records having been lost in antiquity, there is the long standing belief that the ancient
Filipinos in the barangay started the practice of paying taxes. The purpose of paying taxes was simple: it
is for the protection that they receive for the local chieftain, the datu.
 Collected tax called buwis

 Non-payment of the “buwis” was already punishable during this period.
Taxation, Taxes, and the Revenue System in the Philippines during the Spanish Era
 The original basis of the revenue system was the responsibility of the native chieftains, the
cabezas de barangay, for the taxes levied by the colonial government against the people of their
districts.
 The Spaniards realized that in order for them to effectively maintain control of the colony then
they must take measures in order to improve the production of food and the gathering and storing
of resources in the Islands.
 Many important sources of revenue were assigned or subcontracted, and the profits of conducting
these farms were also levied upon without scruple by those high in office.
 The task of ascertaining and determining and verifying the pertinent statutory provisions and the
application of these revenue or tax laws in the Philippine Islands was a most daunting and
difficult task.
 And if ever such laws existed or were published at all (usually by posting in public buildings),
these laws were in Spanish, a tongue but little understood among the people.
The Various Taxes Raised and Collected
During the Spanish period, the taxes or revenues raised and collected were usually entered under six
general headings:
（1) The direct taxes (contribuciones directas), including the personal taxes and the income tax; （
2)The indirect taxes (contribuciones indirectas), or the custom duties;
（3) The monopolies (rentas estancadas), including at various times the stamp taxes and the sale of
quicksilver, salt, playing cards, corrosive sublimate, gunpowder, spirituous liquors, tobacco, and opium;
（
4)Lotteries (loterias)
（5) Public domain (bienes del estado);
（6) Miscellaneous and indeterminate revenues (ingresos eventuales); The direct taxes or contribuciones
directas were divided into two parts: （
1)the personal taxes, and
（2) the income tax.

TAXATION

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TAXATION

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What are Taxes?

The Important Characteristics of Taxes

The Theory of taxation

 Collected tax called buwis

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