Inherent power of the sovereign, exercised thru the legislature, to impose burdens upon the subject

and object within its jurisdiction, for the purpose of raising revenues

to carry out the legitimate objectives of the government.

REVENUE OBJECTIVE REVENUE OBJECTIVE - primary purpose is to raise revenueprimary purpose is to raise revenue- e.g. E-VAT “ mounting budget deficit, e.g. E-VAT “ mounting budget deficit, revenue generation, inadequate fiscal revenue generation, inadequate fiscal allocation for education, increased allocation for education, increased emoluments for health workers…”emoluments for health workers…”

NON-REVENUE OBJECTIVENON-REVENUE OBJECTIVE- taxation is employed as a device for taxation is employed as a device for

regulationregulation- e.g. Excise tax on alcohol products, e.g. Excise tax on alcohol products,

tobacco products, amusement places like tobacco products, amusement places like massage parlor, night clubs, cockpitsmassage parlor, night clubs, cockpits

1. It is an enforced contribution2. It is generally payable in money3. It is proportionate in character4. It is levied on persons or property5. It is levied by the state which has

jurisdiction over the person or property

6. It is levied by the law-making body of the state

7. It is levied for public purpose

like blood which acts as a support to every human organ so it could perform every duty inside the body, tax acts as the blood which supports government and state.

“LIFEBLOOD THEORY”

THEORY OF TAXATION

BASIS OF TAXATION

“BENEFITS-RECEIVED PRINCIPLE”

reciprocal duties of protection and support between the state and its inhabitants

Some of the many functions of the government include expenditures on war, the enforcement of law and public order, protection of property, economic infrastructure (roads, enforcement of contracts, etc.), public works, social engineering, and the operation of government itself.

Most modern governments Most modern governments also use taxes to fund also use taxes to fund welfare and public services.welfare and public services.

These services can include These services can include education systems, health education systems, health care systems, pensions for care systems, pensions for the elderly, unemployed the elderly, unemployed benefits, and public benefits, and public transportation. Energy, transportation. Energy, water and waste water and waste management systemsmanagement systems are are also common public utilitiesalso common public utilities. .

Commissioner vs. Algue, Inc.

It is said that taxes are what we pay for It is said that taxes are what we pay for civilized society. Without taxes, the civilized society. Without taxes, the government would be paralyzed for lack of government would be paralyzed for lack of motive power to activate and operate it. motive power to activate and operate it. Hence, despite the natural reluctance to Hence, despite the natural reluctance to surrender part of one’s hard earned income surrender part of one’s hard earned income to the taxing authorities, every person who to the taxing authorities, every person who is able to must contribute his share in the is able to must contribute his share in the running of the government. running of the government.

The government for its part, is expected to The government for its part, is expected to respond in the form of benefits intended to improve respond in the form of benefits intended to improve the lives of the people. This symbiotic relationship is the lives of the people. This symbiotic relationship is the rationale of taxation and should dispel the the rationale of taxation and should dispel the erroneous notion that it is an arbitrary method of erroneous notion that it is an arbitrary method of exaction by those in the seat of power.exaction by those in the seat of power.

But even as we concede the inevitability and But even as we concede the inevitability and indispensability of taxation, it is a requirement in all indispensability of taxation, it is a requirement in all democratic regimes that it be exercised reasonably democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure. If and in accordance with the prescribed procedure. If it is not, then the taxpayer has a right to complain it is not, then the taxpayer has a right to complain and the courts will come to his succor.and the courts will come to his succor.

1. It is inherent in sovereignty

2. It is legislative in character

3. It is subject to constitutional and inherent limitations

1. subjects/objects to be taxed2. purpose of the tax3. amount/rate of the tax4. manner and means of collection of

the tax

1. FISCAL ADEQUACY- the sources of revenue should be sufficient to meet the demands of public expenditures

2. EQUALITY/THEORETICAL JUSTICE- tax burden should be in proportion to the taxpayer’s ability to payay

3. ADMINISTRATIVE FEASIBILITY- tax laws should be capable of convenient, just and effective administration