ECONOMICS WITH TAXATION AND AGRARIAN REFORM (SS 4) TOPIC: TAXATION NATURE OF TAX -Tax is an onus, a Latin name for burden or obligation. -Tax is fee imposed upon individuals, properties, transaction and business entities to support the necessary expenses and services of the government. - Tax is an enforced proportional contribution from persons and property levied by the state by virtue of its sovereignty. II. Purpose of Taxation The purpose of taxation is to raise revenues from all possible sources to support government expenditures and services and to promote the general well- being and protection of its citizens. CANONS OF TAXATION (SOUND TAX SYSTEM) Fiscal adequacy – means that the taxes collected by the Bureau of Revenue must be sufficient enough to fund the necessary government expenditures and basic services in a given fiscal year. Administrative feasibility- means that the payment of taxes must be a taxpayer friendly. The payment of taxes must be accessible and convenient. The time for payment and manner of collection must not be burdensome to the taxpayer. Theoretical justice- refers to the ability to pay principle. This means that tax burden must be in proportion to the taxpayers. SITUS OF TAXATION (PLACE OR LOCATION) 1. INCOME TAX- this is paid either in the place where the income is earned or the place of residence of the taxpayer. 2. REAL PROPERTY TAX- this paid where the property is situated. 3. PERSONAL PROPERTY TAX- personal property, as mentioned can be tangible or intangible. Taxes on tangible properties are paid in the place where the property is located. On the other hand, the place of taxation of intangible properties is the owner’s domicile. 4. Business and occupation taxes- this is paid in the place where the business or occupation is located. LIMITATION ON TAXATION A. Inherit Limitations- rooted in the nature of taxation itself. These are specific limitations that are not affected by changes in the provision of the constitution. 1. The tax revenues must only be used for public purpose. 2. There should be proper delegation of legislative power of tax. 3. Government entities are exempted. 4. There are territorial jurisdictions. 5. There is an observance of international law. B. Constitutional limitations- taxation those limitations provided in the constitution. These limitations are more subject to change when a new constitution is approved. 1. Observance of due process law. 2. Equal protection of the law. 3. Uniformity and equity rule 4. Non imprisonment for non-payment of poll tax. 5. No appropriate for religious purposes. Double taxation- refers to an instance when the income, a property or a transaction was imposed with two or more taxes by taxing authority in the same year. AVOIDING TAXATION 1. Shifting- this is passing on of the tax burden from one person to another. 2. Capitalization- this done by reducing the price of a taxable product or services to lower the tax that will impose on its consumptions. 3. Tax avoidance- this refers to the availing by the taxpayer of legally allowable means in reducing or minimizing the tax due on certain properties, items and services. 4. Tax evasion- refers to the use of by the taxpayer of illegal means of escaping, defeating or lessening the tax due. 5. Tax exemptions- mean the bestowal of immunity by the taxing authority on a taxpayer from the obligation of tax payment. CHARACTERISTICS OF TAX 1. It is an obligatory or forced contribution to the government. 2. It is usually monetary on form 3. It is proportionate in character 4. I is imposed in person and in properties. 5. It is levied by the state that has jurisdiction over the person or property. 6. It is levied by the Legislative body of state. 7. It is levied for public purposes. CLASSIFICATION OF TAXES 1. According to object a. Personal tax- a fixed amount imposed on individuals residing within a specific territory , regardless of their property , occupation and business in which they may be engaged. b. Property tax- imposed on property, real or personal, in proportion to its value, or in accordance with some reasonable method or apportionment c. Consumption tax- levied on goods and services that people consume from the market. 2. As to who bears the burden of the tax a. Direct- the tax is imposed on the person who also bears the burden thereof b. Indirect – imposed on the taxpayer who shifts the burden of the tax to another. 3. as to determination of amount a. specific – imposed and based on a physical unit of measurement as by head number, weight, length or volume. b. Ad Valorem - a fixed proportion of the value of the property with respect to which the tax is assessed. 4. As to purpose a. general, fiscal, or revenue- imposed for the general purpose of supporting the government. Ex. Income tax, percentage tax b. special or regulatory- imposed for a special purpose, to achieve some social or economic objective. Ex. Protective tariffs or custom duties on imported goods intended to protect local industries. 5. As to scope or authority imposing the tax a. national- imposed by the national government ex. NIRC, custom duties b. municipal or local- imposed by municipal corporations or local governments ex. Real estate tax, 6. As to graduation of rates. a. proportional- based on a fixed percentage of the amount of the property, receipts or on other basis to be taxed ex. Real estate tax, VAT b. progressive and graduated- the rate of the tax increases as the tax base or bracket increases ex. Income tax, estate tax, donor’s tax c. regressive- the rate of tax decreases as the tax base or bracket increases. I. Nature of taxation -The nature of taxation refers to its basic concept or character. -taxation is estate power exercised through the country’s Legislative body. Tax laws are passed both in the House of Representatives and the Senate. -the principle of taxation states that taxes are collected to support the government in its expenses and services for the public welfare. II. Purpose of Taxation The purpose of taxation is to raise revenues from all possible sources to support government expenditures and services and to promote the general well- being and protection of its citizens. CANONS OF TAXATION (SOUND TAX SYSTEM) Fiscal adequacy – means that the taxes collected by the Bureau of Revenue must be sufficient enough to fund the necessary government expenditures and basic services in a given fiscal year. Administrative feasibility- means that the payment of taxes must be a taxpayer friendly. The payment of taxes must be accessible and convenient. The time for payment and manner of collection must not be burdensome to the taxpayer. Theoretical justice- refers to the ability to pay principle. This means that tax burden must be in proportion to the taxpayers. SITUS OF TAXATION (PLACE OR LOCATION) 1. INCOME TAX- this is paid either in the place where the income is earned or the place of residence of the taxpayer. 2. REAL PROPERTY TAX- this paid where the property is situated. 3. PERSONAL PROPERTY TAX- personal property, as mentioned can be tangible or intangible. Taxes on tangible properties are paid in the place where the property is located. On the other hand, the place of taxation of intangible properties is the owner’s domicile. 4. Business and occupation taxes- this is paid in the place where the business or occupation is located. LIMITATION ON TAXATION A. Inherit Limitations- rooted in the nature of taxation itself. These are specific limitations that are not affected by changes in the provision of the constitution. 1. The tax revenues must only be used for public purpose. 2. There should be proper delegation of legislative power of tax. 3. Government entities are exempted. 4. There are territorial jurisdictions. 5. There is an observance of international law. B. Constitutional limitations- taxation those limitations provided in the constitution. These limitations are more subject to change when a new constitution is approved. 1. Observance of due process law. 2. Equal protection of the law. 3. Uniformity and equity rule 4. Non imprisonment for non-payment of poll tax. 5. No appropriate for religious purposes. Double taxation- refers to an instance when the income, a property or a transaction was imposed with two or more taxes by taxing authority in the same year. AVOIDING TAXATION 1. Shifting- this is passing on of the tax burden from one person to another. 2. Capitalization- this done by reducing the price of a taxable product or services to lower the tax that will impose on its consumptions. 3. Tax avoidance- this refers to the availing by the taxpayer of legally allowable means in reducing or minimizing the tax due on certain properties, items and services. 4. Tax evasion- refers to the use of by the taxpayer of illegal means of escaping, defeating or lessening the tax due. 5. Tax exemptions- mean the bestowal of immunity by the taxing authority on a taxpayer from the obligation of tax payment. NATURE OF TAX -Tax is an onus, a Latin name for burden or obligation. -Tax is fee imposed upon individuals, properties, transaction and business entities to support the necessary expenses and services of the government. - Tax is an enforced proportional contribution from persons and property levied by the state by virtue of its sovereignty.
Posted on: Sun, 25 Aug 2013 06:36:01 +0000
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