VALENCIA & ROXAS INCOME TAXATION - INDIVIDUALS

MARY JOY P. JUNIO, CPA Notre Dame of Midsayap College Midsayap, Cotabato

The Concept of Taxation  INHERENT POWERS OF THE STATE POLICE

EMINENT DOMAIN

TAXATION

The Power to protect citizens and provide for safety and welfare society.

The power to take private property (with just compensation) for public use.

The power to enforce contributions to support the government, and other inherent powers of the state.

 Power  Co-extensive with sovereignty to demand contributions for  

 

public purposes to support the government Process It passes a legislative act through the enactment of tax laws by the Congress which will be implemented by the Executive branch through the BIR Means A way of collecting and apportioning the cost of government among those who are privileged to enjoy its benefits

•Inherent power of sovereignty •Essentially a legislative function •For public purpose •Territorial in operation •Tax exemption of government •The strongest among the inherent powers •Subject to constitutional and inherent limitations

•Taxation is as old as government itself. Its existence commences with the four elements of a state- people, territory, sovereignty and government. •From the moment a state is born, it automatically possesses the power to collect taxes from its inhabitants. •The government having sovereignty can enforce contributions upon its citizens even without a specific provision in the Constitution authorizing it.

The law-making body of the government and its political subdivisions exercise the power of taxation. The powers to enact laws and ordinances, and to impose and collect taxes are given to the Congress.

The tax revenues are for a public purpose if utilized for the benefit of the community in general. An alternative meaning is that tax proceeds should be utilized only to attain the objectives of government. Public use is no longer confined to the traditional notion of use by the public but held synonymous with public interest, public benefit, public welfare, and public convenience. (Commissioner of Internal Revenue v. Central Luzon Drug Corporation, G.R. No. 159647, April 16, 2005)

PUBLIC Purpose

Territorial in Operation

 As a rule, the power to tax can only be

exercised within the territorial jurisdiction of a taxing authority except when there exists a privity of relationship between the taxing State and the object of tax.  Where privity of relationship exists, the state can still exercise its taxing powers over its citizens outside its territory.

The State immunity from taxation is inherent in its power to impose tax. Tax exemption applies only to government entities through which the government immediately and directly exercises its governmental functions.

Tax Exemption of the Government

Taxation power is the strongest of all inherent powers of the government because, without money, the government can neither survive nor dispense any of its other powers and functions effectively.

Inherent Limitations

•Taxes may be levied only for public purpose •Being inherently legislative, taxation may not be delegated •Tax power is limited to territorial jurisdiction of the State •Taxation is subject to international comity •Government entities are generally exempt

Subject to Inherent Limitations

Constitutional Limitations •Due process of law •Equal protection of law •Rule of uniformity and equity •President’s power to veto separate items in revenue or tariff bill •No public money shall be appropriated for religious purposes •Majority of all the members of the Congress granting tax exemption •The Congress may not deprive the Supreme Court of its jurisdiction in all cases involving the legality of any tax •No imprisonment for nonpayment of poll tax •Tax collection shall be generally be treated as general funds

Subject to Constitutional Limitations