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Xavier_s Poison Reviewer.docx

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XAVIER’S POISON REVIEWER 1. Taxation a. Is the power by which the sovereign through its law-making body, raises revenue to defray the necessary expenses of the government. 2. Taxes a. Are the enforced proportional contributions from persons and property levied by the law-making body of the state by virtue of its sovereignty for the support of government and for public needs. b. Characteristics of Taxes: i. A tax is a forced charge, imposition or contribution and as such it operates in invitum.
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  XAVIER’S POISON REVIEWER   1. Taxation a. Is the power by which the sovereign through its law-making body, raises revenue to defray the necessary expenses of the government. 2. Taxes a. Are the enforced proportional contributions from persons and property levied by the law-making body of the state by virtue of its sovereignty for the support of government and for public needs. b. Characteristics of Taxes: i. A tax is a forced charge, imposition or contribution and as such it operates in invitum . They are not contracts. ii. It is a pecuniary burden payable in money. iii. It is levied by the legislative body of the State. iv. It is assessed in accordance with some reasonable rule of apportionment. v. It is levied for public purpose. 3. Do regressive taxes go against the constitutional mandate? a. The constitution does not really prohibit the imposition of indirect taxes which are regressive. What it simply provides is that Congress shall evolve a progressive system of taxation. Resort to indirect tax should be minimized but not avoided entirely because it is difficult, if not impossible, to avoid them by imposing such taxes according to th e taxpayer‟s ability to pay. 4. Taxes are important because they are the lifeblood of the Government and so should be calculated without unnecessary hindrance. 5. Taxes are personal to the taxpayer. a.  A corporation‟s tax delinquency cannot be enforced against its stockholder not only because this would run counter to the principle that taxes are personal. A corporation is an entity with a distinct and separate personality from those persons composing it. i. Stockholders may be held liable for the unpaid taxes of a dissolved corporation if it appears that the corporate assets have passed into their hands. 6. Nature of the Taxing Power a. The power to tax is an attribute of sovereignty. It is inherent in the State. b. It is a power emanating from necessity. c. It is not granted in the Constitution. 7. Characteristics / Elements of Taxation a. It is the exercise of the high act of sovereignty. b. It is a legislative prerogative c. It is unlimited, that is, the power to tax extends to everything over which the sovereign power extends but not to anything beyond its sovereign power. d. It can only be exercised within the territory or jurisdiction of the Philippines. 8. Purposes and Objectives of Taxation a. Revenue  –  To provide funds or property with which the state promotes the general welfare and protection of its citizens. b. Regulation  –  It also has a regulatory purpose as in the case of taxes levied on excises or privileges. c. Promotion of General Welfare d. Reduction of Social Inequality  –  To prevent undue concentration of wealth in the hands of a few individuals. e. Encourage Economic Growth f. Protectionism 9. Theory and Basis of Taxation a. Necessity Theory  –  The existence of government is a necessity, that it cannot continue without the means to pay its expenses. b. The Benefits Protection Theory  –  In exchange of for the protection that the State gives to its citizens, taxes must be correspondingly paid to it. (CIR v. Algue).  XAVIER’S POISON REVIEWER   10. Scope of Taxing Power a. It extends to: i. Person, property or occupation. ii. The amount or rate of tax. iii. The purpose for which taxes shall be levied provided they are public purposes. iv. The kind of tax to be collected. v. The situs of taxation. vi. The method of collection. 11. Is the power to tax the power to destroy? a. The rule that the power to tax involves the power to destroy is pertinent only when there is no power to tax a particular subject and has no relation to a case where such right to tax exist. b. While tax is said to be the power to destroy, it is by no means unlimited. As long as it does not destroy the right to perform the act or to use the property subject to tax. It is subject to inherent and constitutional limitations. 12. Power of Judicial Review in Taxation a. GR: Courts cannot inquire into the wisdom of a taxing act. Courts cannot review the wisdom or advisability of a tax. As long as the legislature, in imposing a tax, does not violate applicable constitutional limitations or restrictions, the courts have no concern with the wisdom or policy of the exaction, political or other collateral motives behind it, the amount to be raised, or the persons, property or other privilege to be taxed. b. Exception: It may interfere only to the application and interpretation of the law. 13. Aspects of Taxation a. Levy or imposition of tax on persons, property or excises. b. Collection of the taxes already levied. 14. Basic principles of a sound tax system a. Fiscal Adequacy  –  sufficient to meet government expenditures and other public needs. b. Administrative Feasibility  –  Taxes should be capable of being effectively enforced. c. Theoretical Justice  –   Taxes must be based on the taxpayer‟s ability to pay. 15. Tax v. other impositions a. Toll  –  a demand of ownership. An amount charged for the cost and maintenance of the property used. Tax is a demand of sovereignty for the purpose of raising public revenue. b. Penalty  –  Penalty is punishment for the commission of a crime. Tax is a civil liability. c. Compromise  –  Amount collected as a compromise in cases involving violations of the Tax Code. It cannot be legally imposed without consent from the taxpayer. d. Special Assessment  –  It is levied only on land unlike tax which is imposed on person, property and excises. It is based wholly on benefit. e. License Fee  –  Emanates from the police power of the state. f. Margin Fee  –  Only a currency measure designed to stabilize the currency such as the exaction of certain fee. g. Debt  –  An obligation created by contract. Tax is an obligation created by law. Taxes are not debts. Taxes and debts cannot be the subject of compensation because the government and the taxpayer are not mutually creditors and debtors of each other. Debts are due to the Government in its corporate capacity. Taxes are due to the Government in its sovereign capacity. h. Subsidy  –  Is a legislative grant of money in aid of a private enterprise deemed to promote public welfare. It is not a tax. i. Custom duties and fees  –  These are duties charged upon commodities on their being imported into or exported from a country. Custom duties are taxes.  XAVIER’S POISON REVIEWER    j. Revenue  –  Includes not only taxes but income from other sources as well. k. Tribute  –  Synonymous with tax. l. Impost  –  It signifies any tax, tribute or duty. 16. Taxes classified a. Personal Tax  –  a.k.a capitation or poll tax. Taxes of fixed amount upon all persons of a certain class within the jurisdiction of taxing power. b. Property Tax  –  Taxes assessed on all property or all property of a certain class within the jurisdiction of the taxing power. c. Direct Tax  –  Taxes wherein both the incidence of or liability for the payment of the tax as well as the impact or burden of the tax falls on the same person. The burden cannot be shifted to another person. d. Indirect Tax  –  Taxes wherein the incidence of or liability for the payment of the tax falls on one person but can be shifted or passed to another person. e. Excise Tax  –  Laid upon the manufacture, sale, or consumption of commodities within the country, f. General Tax  –  Taxes levied for the general or ordinary purposes of the Government. g. Special Tax  –  Taxes levies for special purpose. h. Ad Valorem Tax  –  A tax upon the value of the article or thing subject to taxation. i. Custom Duties  –  duties charged upon the commodities on their being imported into or exported from a country.  j. National Tax  –  Taxes levied by the National Government. k. Local Tax  –  Taxes levied by the Local Government. 17. Taxpayer‟s Suit  a. In order to justify a taxpayer‟s suits, it is necessary that public funds should be involved. Thus, a taxpayer‟s suit would fail if what are alleged to be illegally disposed of are objects which were acquired from private sources. LIMITATIONS ON THE TAXING POWER 1. Inherent Limitations on the Taxing Power a. They are called inherent limitations because they proceed from the very nature of the taxing power itself. i. Public purpose of taxes 1. Test for determining the public purpose in a tax: a. Whether the thing to be furthered by the appropriation of public revenue is something which is the duty of the state, as a government, to provide. b. Whether the proceeds of the tax will directly promote the welfare of the community in equal measure. ii. Non-delegability of taxing power 1. GR: Taxing power cannot be delegated 2. EXCP: a. Under the Constitution, the Congress may expressly authorize the president to fix within the specified limits, and subject to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the government. b. In case of Local Taxing Pow er, “Each local government unit shall have the power to create its own sources of revenue and to levy taxes, fees and charges subject to  XAVIER’S POISON REVIEWER   such guidelines and limitations as the congress may provide, consistent with the basic policy of local autonomy. iii. Territoriality or situs of taxation 1. Taxing power is limited only to persons, property or businesses within its jurisdiction. a. Protection  is a basic consideration that  justifies the situs of taxation. The Person or property must be within the protection of the taxing state. b. Mobilia Sequuntur Personam    –  (Movables follow the person). According to this maxim, the situs of personal property is the domicile of the owner. c. Legislative Power to fix situs  –  check! iv. Tax Exemption of the government 1. GR: Income derived from any public utility or from the exercise of any essential government function accruing to the government or any political subdivision is exempt from income tax. Moreover, under the LGC, real property owned by the Government or any of its political subdivisions is exempt from real property tax. a. EXCP: Unless, the beneficial use thereof is granted for consideration or otherwise to a taxable person. v. International Comity 1. You know this! 2. Constitutional Limitations a. Due process clause, whether it be substantive or procedural. b. Equal protection of the laws. c. Freedom of speech and of the press. d. Non-infringement of religious freedom and worship. e. Non-impairment of contracts. f. Non-imprisonment for debt or non-payment of poll tax. g. Rule requiring that Appropriations, Revenue and Tariff bills shall srcinate exclusively from the HR. h. Uniformity, Equitability and Progressivity of taxation. i. Limitations on the congressional power to delegate to the president the authority to fix tariff rates, import and export quotas, etc.  j. Tax exemptions of properties, AED used for religious, charitable and educational purposes. k. Voting requirement in connection with the legislative grant of tax exemption. l. Non-impairment of the jurisdiction of the SC in Tax cases. m. Exemption from taxes of the revenues and assets of educational institutions, including grants, endowments, donations and contributions. DOUBLE TAXATION AND TAX EXEMPTIONS 3. Double Taxation is defined as taxing the same property twice when it should be taxed but once. It is also defined as taxing the same person twice by the same jurisdiction over the same thing. a. There is no prohibition against double taxation i. It is something not favored but is nevertheless permissible. Double taxation is not forbidden by the Constitution. b. Kinds of Double Taxation (Duplicate) i. Direct Double Taxation  –  The same property is taxed twice when it should be taxed only once; both taxes are imposed on the same property or subject matter for the same purpose by the same state, government or taxing authority within the same jurisdiction or taxing district
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