DEFINITION

TAXATION

Is the enforced proportional contribution from persons or property

levied by the state by virtue of its sovereignty
For the support of the government and for all its public needs.

CONCEPT

An eNforced contribution
Proportional in character
Levied by the state
For support of the government and all its public needs

NATURE OF TAXATION ILS

Inherent prerogative of sovereignty, exists apart from the consti an without being
expressly conferred by the people.
Legislative in character
Subject to inherent and constitutional limitation
MARSHALL DICTUM HOLMES DICTUM
Power to tax is the power to destroy ( refers Power to tax is not the power to destroy when
to valid tax law) the court sits (refers to invalid/impoverish tax
law)
Refers to the unlimitedness /degree or vigor The power to tax knowS no limit except those
with which the taxing power may be provided in the constitution
employed to raise revenue

RECONCILIATION OF THE TWO VIEWS( Imposition, illegal, valid and invalid, almost
unlimited)
1. The imposition of a valid tax could not be judicially restrained MERELY BECAUSE IT WOULD
PREJUDICE TAXPAYERS PROPERTY
2. AN ILLEGAL TAX could be declared invalid and should not work to PREJUDICE A TAXPAYERS
PROPERTY
3. MARSHALLS view refers to a VALID TAX, while HOLMES view refers to an INVALID tax
4. Although the power to tax is almost unlimited, it must not be exercised in arbitrary manner. If
the abuse is so great as to destroy the NATURAL AND FUNDAMENTAL RIGHTS OF THE PEOPLE,
it is the DUTY OF THE JUDICIARY TO DECLAREW SUCH AN ACT UNCONSTITUTIONAL.
POWER OF TAXATION COMPARED WITH POLICE POWER AND EMINET DOMAIN (PABNTSB)

TAXATION POLICE POWER EMINENT DOMAIN

PURPOSE Raise revenue Promote public welfare Taking of private
through regulation property for public use
Amount of No limit Limited to cover the cost of No exaction
exaction regulation, issuance of license Compensaiton is paid
or issuances by the government
Benefits No special or direct benefit No direct benefit yet a healthy Direct benefit results
received other than that assurance economic standard of society Is in the form of JUST
of the general benefit of maintained compensation
security resulting from the
protection of his ,person,
property and the welfare
of all
Non- NIC subsists Contracts May be impaired Ccontracts may be
impairment impaired
of
contracts
Transfer of Taxes paid become part of No transfer but only restraint Property Is taken by
property the public fund on the exercise of property government for public
rights rights use
Scope Affects all PERSON, AFFECTS ALL PERSONS, AFFECTS ONLY THE
PROPERTY AND PRIVILEGES PROPERTIES,PRIVILEGES AND E PARTICULAR
VEN RIGHTS PROPERTY
comprehended
BASIS PUBLIC NECESSITY Public necessity and the right of Necessity of the public
the state and the public to self- for private property
protection and self-
preservation

Theory and basis of taxation

1. Lifeblood theory ( lifeblood, survive, paralyzed tax is the Lifeblood of the nation, without
rvenue the overment will not urvive, without taxes the government will be paralyzed for lack
of motive power to activate and operate it

2. NECESSITY THEORY BASED on the theory that existence of the government Is a necessity. It
cannot continue without the means to pay expenses. Hence the govt has a right to collect from
citizens and property within its power to contribute

3. Benefits-protection , reciprority theory ,

 The state demands taxes and receives in order to carry its functions and mandaytes, on th other
hand, the subject citizen will pay the portion demanded for it be secured in the enjoyment of
the benefits in an organized society.

CHRACTERISTICS OF TAXATION

1. COMPREHENSIVE, it covers PBAP RP , persons, business activities, professions,

rights and privileges
2. UNLIMITED tio v VRB , tax oe not ceae
3. PLENARY
4. SUPREME

f. purpose of taxation

PRIMARY RAISE REVENUE TO PROMOTE WELFARE AND PROTECTION OF THE PEOPLE

SECONDARY-

1. Reduction of inequalities- through the new progressive system of taxation

2. Encourage the growth of local industries tru tax exemption
3. Protect our local industry against unfair competition- TCC taxe the imported good
4. Implement the police power of the state and the eminent domain

h. distinguished from other forms of exactions ( BPE AI AP , BASIS, PAYMENT, EFFECT OF

NONPAYMENT, ASSIGNABILITY, INTEREST, AUTHORITY , PRECRIPTIOM

Tax Debt