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42 Cards in this Set
- Front
- Back
It is defined as a State power, a legislative process, and a mode of government cost distribution. |
Taxation |
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Taxation is an inherent power of the State to enforce a proportional contribution from its subjects for public purpose. |
Taxation as a State Power |
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Taxation is a process of levying taxes by the legislature of the State to enforce proportional contributions from its subjects for public purpose. |
Taxation as a legislative process |
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Taxation is a mode by which the State allocates its costs or burden to its subjects who are benefited by its spending. |
Taxation as a mode of government cost distribution |
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The government can exist without a system of funding. TRUE or FALSE |
FALSE. The government cannot exist without a system of funding, and their necessity for funding is the THEORY OF TAXATION. |
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Explain the basis of taxation (the mutuality of support between the people and government) |
The government provides benefits to the people in the form of public services, and the people provide the funds that finance the government in the form of taxes. |
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Tax payers cannot avoid payment of taxes under the defense of absence of benefit received. TRUE or FALSE |
TRUE. Because the receipt of benefits is conclusively presumed. |
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2 Theories of Cost Allocation |
Benefit received theory Ability to pay theory |
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The theory of cost allocation that presupposes that the more benefit once receives from the government, the taxes he should pay. |
Benefit received theory |
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The theory of cost allocation that presupposes taxpayers should be required to contribute based on their relative capacity to sacrifice for the support of the government. |
Ability to pay theory |
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2 Aspects of the ability to pay theory |
Vertical Equity Horizontal Equity |
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Aspect of the ability to pay theory which proposes that the extent of one's ability to pay is directly proportional to the level of his tax base. |
Vertical Equity |
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Aspect of the ability to pay theory that requires consideration of the particular circumstance of the taxpayer. |
Horizontal Equity |
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Gross concept of ability to pay theory |
Vertical Equity |
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Net concept of the ability to pay theory |
Horizontal Equity |
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Taxes are essential and indispensable to the continued subsistence of the government. Without taxes, the government would be paralyzed for lack of motive power to activate or operate it. (CIR vs. Algue) |
The Lifeblood Doctrine |
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Implication of the lifeblood doctrine in taxation |
1. Tax is imposed even in the absence of a Constitutional grant. 2. Claims for tax exemption are construed against taxpayers. 3. The government reserves the right to choose the objects of taxation. 4. The courts are not allowed to interfere with the collection of taxes. 5. In income taxation: a. Income received in advance is taxable upon receipt b. Deduction for capital expenditures and prepayments is not allowed as it effectively defers the collection of income tax. c. A lower amount of deduction is preferred when a claimable expense is subject to limit. d. A higher tax base is preferred when the tax object has multiple tax bases. |
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The government sustains itself by the power of taxation, secures itself and the well-being of its people by police power, and secures its own properties to carry out its public services by the power of eminent domain. |
Inherent powers of the state |
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3 Inherent Powers of the State |
Taxation Power Police Power Eminent Domain |
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The power of the State to enforce proportional contributions from its subjects to sustain itself. |
Taxation Power |
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The general power of the State to enact laws to protect the well-being of the people. |
Police Power |
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The power of the State to take private property for the public use after paying just compensation. |
Eminent Domain |
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Inherent Limitations of the Taxation Power |
1. Territoriality of taxation 2. International comity 3. Public purpose 4. Exemption of the government 5. Non-delegation of the taxing power |
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Public services are normally provided within the boundaries of the State. |
Territoriality of Taxation |
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The government can only demand tax obligations upon its subjects or residents within its territorial jurisdiction. |
Territoriality of Taxation |
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Two-fold obligations of taxpayers: |
1. Filing of returns and payment of taxes 2. Withholding of taxes on expenses and its remittance to the government |
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Exception to the territoriality principle |
1. In income taxation, resident citizens and domestic corporations are taxable on income derived both within and outside the Philippines. 2. In transfer taxation, residents or citizens such as resident citizens, non-resident citizens and resident aliens are taxable on transfers of properties located within or outside the Philippines. |
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The fundamental concept of co-equal sovereignty |
All nations are deemed equal with one another regardless of race, religion, culture, economic condition or military power. |
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No country is powerful than the other. Each country observes mutual courtesy or reciprocity between them. |
International comity |
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Tax is intended for the common good. It cannot be exercised to further any private interest. |
Public Purpose |
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The government normally does not tax itself as this will not raise additional funds but will only impute additional costs. |
Exemption of the government |
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To ensure a system of checks and balances, the legislative taxing power is vested exclusively in Congress. |
Non-delegation of the taxing power |
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Constitutional limitations of the taxation power |
1. Due process of law 2. Equal protection of the law 3. Uniformity rule in taxation 4. Progressive system of taxation 5. Non-imprisonment for non-payment of debt or poll tax 6. Non-imprisonment of obligation and contract 7. Free worship rule 8. Exemption of religious or charitable entities, non-profit cemeteries, churches and mosque from property taxes 9. Non-appropriation of public funds or property for the benefit of any church, sect or system of religion 10. Exemption from taxes of the revenues and assets of non-profit, non-stock educational institutions 11. Concurrence of a majority of all members of Congress for the passage of a law granting tax exemption 12. Non-diversification of tax collections 13. Non-delegation of the power of taxation 14. Non-impairment of the jurisdiction of the Supreme Court to review tax cases 15. The requirement that appropriations, revenue, or tariff bills shall originate exclusively in the House of Representatives 16. The delegation of taxing power to local government units |
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No one should be deprived of his life, liberty, or property without due process of law. |
Observance of due process of law |
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2 aspects of due process |
1. Substantive due process 2. Procedural due process |
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An aspect of due process wherein tax must be imposed only for public purpose, collected only under authority of a valid law and only by the taxing power having jurisdiction. |
Substantive due process |
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Aspect of due process wherein there should be no arbitrariness in assessment and collection of taxes, and the government shall observe the taxpayer's right to notice and hearing. |
Procedural due process |
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Taxpayers should be treated equally both in terms of rights conferred and obligations imposed. |
Equal protection of the law |
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Tax payers should be classified according to commonality in attributes, and the tax classification to be adopted should be based on substantial distinction. |
Uniformity rule in taxation |
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Tax rates increase as the tax base increases. |
Progressive system of taxation |
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An aids in an equitable distribution of wealth to society by taxing the rich more than the poor. |
Progressive system of taxation |
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No one shall be imprisoned because of his poverty, and no one shall be imprisoned for mere inability to pay debt. |
Non-imprisonment for non-payment of debt or poll tax |