Tax 1

 

1 TAXATION LAW 5overnment renders no special or commensura 5overnment commensurate te benet to any particular person or property.

I. GENERAL PRINCIPLES POWER OF TAXATION TAXA AXATION TION – power by which the sovereign through its law-making body raises revenue to defray the necessary expenses expen ses of govern government ment from among those who in some measure meas ure are privil privileged eged to enjo enjoy y its benets and must bear its burdens. Two Fold Nature of the Power of Taxatio 1. It is an inherent attribute of sovereignty 2. It is legislative in character

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Extet of Taxi! Power ubject to constitutional and inherent restrictions! the powe powerr of taxa taxati tion on is re rega gard rded ed as co comp mpre rehe hens nsiv ive! e! unlimited! plenary and supreme. SCOPE OF LEGISLATI"E  TAXING POWER 1. "m "mou ount nt or ra rate te of tax tax 2. "p "ppo port rtio ionm nmen entt of tthe he ttax ax #. $ind of tax %. &e ð thod od of co coll llec ecti tion on '. (u (urp rpos ose) e)s s of iits ts llev evy! y! provided  provided it  it is for public purpose *. ubject to be taxed!  provided it is with thin in its  jurisdiction  jurisdic tion +. i itu tus so off ttax axat atio ion n TAX AXES ES – enforc enforced ed propor proportional tional contributions from the persons and property levied by the law-making body of  th the e tate tate by virtu virtue e of its sover sovereig eignty nty in su supp pport ort of  government and for public needs. C#ARACTERISTICS OF TAXES 1. fo forrced ced c cha harrge ge,, 2. #. %. '. *.

pecu pecuniar niary y bur burden den pay payable able in mone money, y, lev levied ied by the leg legisl islatu ature re,, assessed with some reasonable rule apportionment, see theoretical justice impo imposed sed b by y the tat tate e with within in it its s jurisdi jurisdictio ction, n, lev levied ied for a pu publ blic ic p pur urpo pose. se.

IS T#E POWER TO TAX T#E POWER TO &ESTRO0 1 1. 2P 2Pow ower er to ta tax x i+ th the e /ow /ower to de+ de+tro) tro)3 3 !ars !arshall hall "ict "ictum) um) # refers to the unlimitedness and the degr degree ee or vi vigo gorr wit with h wh which ich the tax taxin ing g po power wer may be employed to raise revenue. - the nancial needs of the tate may outrun any human ca calc lcul ulat atio ion! n! so the the powe powerr to me meet et thos those e need needs s by taxation must not be limited even though taxes become burdensome or conscatory.

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RE$%ISITES OF A "ALI& TAX 1. sho should uld be ffor or a pu publi blic c pu purp rpose ose 2. the rrul ule e of ta taxa xatio tion n sha shall ll b be e uni unifor form m #. that ei either ther tthe he per person son or p prop roperty erty ttaxe axed d be within within th the e  jurisdiction  jurisdic tion of the taxi taxing ng authori authority ty %. that th the e asse assessmen ssmentt and c colle ollectio ction n of ce certai rtain n kin kinds ds of  taxes tax es guarant guarantees ees agai against nst inju injustic stice e to indi individ viduals uals!! especi esp eciall ally y by way of noti notice ce and opp opport ortun unity ity for hearing be provided '. th the e tax mu must st not imp impinge on the inhere erent and and /onstitutional limitations on the power of taxation T#EORIES AN& 'ASES OF TAXATION 1. Life(lood Theor)  0  0axes axes are what we pay for civilied society. ithout taxes! the government government would be paralyed for lack of the motive power to activate and operate it. 3ence! despite the natural reluctance to surrender part of one4s hardearned ear ned inc income ome to the taxi taxing ng auth authorit orities! ies! ever every y pers person on who is able to must contribute his share in the running of  the government. (CIR v. Algue, Inc.)

2Power to tax i+ ot the /ower to de+tro) while the Su/re4e Su/re4e Cou Court rt +it +it+3 +3 ($olmes "ictum)  "ictum)  7 the power to tax knows no limit except those expressly stated in the /onstitution. &arshall and 3olmes 8ictum 9econciled "lthou "lthough gh th the e power power to tax is alm almost ost un unlim limite ited! d! it must not not be e exe xerci rcised sed in a an n arb arbitra itrary ry manner manner.. If the ab abus use e is so grea greatt so as to dest destro roy y the the natu natura rall and and fu fund ndam amen enta tall ri righ ghts ts of pe peop ople le!! it is the the duty duty of the the  judiciary  judicia ry to hold such such an act unc unconstitution onstitutional. al. P%RPOSES AN& O'5ECTI"ES OF TAXATION 1. Re Re6e 6eue ue – basically! the purpose of taxation is to pr provi ovide de funds funds or pr prope operty rty with with which which the ta tate te promote pro motes s the gene general ral welfar welfare e and protec protection tion of its citiens. 2. No-Re6eue 78e)9 PR:EP; a. Promotion of general welfare  welfare  b. Regulation c. Reduction of social ine6uality d. Encourage economic growth e. Protectionism POWER OF 5%&ICIAL RE"IEW IN TAXATION "s long as the legislature! in imposing a tax! does not vi viol olat ate e ap appl plic icab able le cons consti titu tuti tion onal al li limi mita tati tion ons s or restrictions! it is not within the province of the courts to in6uir in6 uire e into the wisd wisdom om or policy of the exacti exaction! on! the moti mo tive ves s behi behind nd it it!! the the am amou ount nt to be ra rais ised ed or the the persons! property or other privileges to be taxed.  0he court:s power in taxation is limited limited   only to the application and interpretation of the law. Note 0he princip Note 0he  principle le o% &udicial &udicial non'inter%e non'inter%erence rence extends to the administrative realm. ASPECTS OF TAXATION 1. ;ev ;evy y or imposi imposition tion of th the e tax tax tax llegis egislati lation on 2. bill. (Art  3I, 5ec. 8(), 1/8 Constitution)  Constitution)   2. Cec Cecess essity ity of an app appro ropr priat iation ion befor before e mone money y may be paid out of the public treasury. (Art. 3I, 5ec. 1 (), 1/8 Constitution) #. Con Con-ap -appr prop opria riatio tion n of public public mon money ey or pr prope operty rty for the use! benet! or support of any sect! church! or syst system em of rel elig igio ion. n. (A (Art rt.. 3I, 3I, 5e 5ec. c. 1 (), (), 1 1/8 /8 Constitution) 0reatment reatment of of tax taxes es lev levied ied fo forr a spe special cial p purp urpose. ose. (Art. 3I, 5ec. 1 (), 1/8 Constitution) '. In Inte tern rnal al re reve venu nue e al allo lotm tmen ents ts to loca locall go gove vern rnme ment nt units. (Art. @, 5ec. 9, 1/8 Constitution) %.

&O%'LE TAXATION &O%'LE T AXATION – taxing the same property twice when it should be taxed but once. IS &O%'LE TAXATION PRO#I'ITE& IN T#E P#ILIPPINES1 No.   0here No. 0here is no cons constitu titution tional al prohibi prohibition tion against against double taxation. taxation. It is not fav favored ored bu butt permiss permissible. ible. (Pepsi Cola 4ottling Co. v. City o% 4utuan, 19/). IN&S OF &O%'LE TAXATION 8 IN&S 7; &ire*t &u/l &u/li*ate i*ate T Taxati axatio o  O(ox O(oxiou+ iou+ – –   double taxation in the objectionable or prohibited sense.  0his constitutes a violation of substanti substantive ve due

process. Ele4et+9 a. the s a am me p rro operty o r su subject m at atter i s ta taxed twice when it should be taxed only once.

 

7 b. c. d. e. f.

both ta tax xes a arre lev leviied for the s sa ame purpose ose imposed by the sa same taxing a au uthority within the same jurisdiction during the same taxing period covering tth he sa same k kiind o orr ch character of of ta tax. (3illanueva vs. City o% Iloilo)

7:; Idire*t &u/li*ate Taxatio – no nott le lega gall lly y objectio obje ctionabl nable. e. 0he abs absence ence of on one e or more of the ab abov ove-m e-men enti tion oned ed elem elemen ents ts ma mak kes th the e doub double le taxation indirect. 7B; &o4 &o4e+t e+ti*i*- this arises when the taxes are imposed by the local or national government within the same state 7; It Iter erati atioa oall- refers  refers to the imposition of comparable taxes in two or more states on the same taxpayer in respect of the same subject matter and for identical periods. RE > D> >  Hther (owers B. 8u 8uty ty to ens ensur ure e th the e pr prov ovisi ision on and di distr strib ibuti ution on of  forms! receipts! certicates! and appliances! and the acknowledgment of payment of taxes (5ec. /) . "uthority to administer oaths  oaths   and to take testimony (5ec. -) D. "uthority to make arrests  arrests  and seiures  seiures (5ec. 0) . "u "utho thorit rity y to emp employ loy!! ass assig ign n  or rea reassig ssign n interna internall revenue o=cers involved in excise tax functions to establishments where articles subject to excise tax are produced or kept (5ec. 9) . "u "utho thorit rity y to ass assig ign n  or rea reassig ssign n inte intern rnal al rev revenu enue e o=cers and employees of the @I9 to other or special duties ties conn onnect cted ed with with the the enfor forcem emen entt or administration of the revenue laws (5ec. 8) ARE  LEGAL  OFFICERS  OF  T#E  'I 'IR A%T#ORIE&  TO INSTIT%TE  APPEAL  PROCEE&INGS  WIT#O%T  T#E PARTICIPATION OF T#E SOLICITOR GENERAL1 CH. 0he inst institut itution ion or commenc commencement  ement   befo before re a proper court of civil and criminal actions and proceedings aris arisin ing g un unde derr the the 0ax 9ef efor orm m "ct "ct wh whic ich h shal shalll be conducted by legal o=cers of the @I9 is not in dispute. "n appeal appeal from  from such court! however! is not a matter of  right. It is still the o olicitor licitor 5ener 5eneral al who has the p primary rimary responsibility to appear for the government in appellate proceedings. proce edings. (Com (Commiss missione ionerr vs. a 5uer 5uerte te Cig Cigar ar and Cigarette 7actory, GR No. --1-,