CHAPTER 1 GENERAL PRINCIPLES AND CONCEPTS OF TAXATION

 Inherent Powers – naturally exist as essential force in order that a government can command,
maintain peace and order, and survive, irrespective of any Constitutional provision.

INHERENT POWERS OF A SOVEREIGN STATE

 Police Power – inherent power of the sovereign state to legislate for the protection of health,
welfare and morals of the community.

This power is restricted by the “due process clause” of all Constitution which provides that no
person may be deprived of “life, liberty, or property, without due process of law.

The police power of the state may be exercised through taxation because taxes may be levied
for the promotion of the welfare of the public.

Examples of police power are preservation of natural resources, segregation of lepers from the
public, imprisonment of convicted criminals, and regulation of various professions.

 Eminent Domain – power of the sovereign state to take private property for public purpose.

The constitution limits the exercise of the power by providing that property may not be taken
without just compensation.

Just compensation means paying the owner the full monetary equivalent of the property taken
for public use.

 Taxation Power – the power to enforce contributions to support the government, and other
inherent powers of the state.

Taxation is a power by which an Independent state, through its law making body, raises
and accumulates revenue from its inhabitants to pay the necessary expenses of the
government.
Taxation is a process or act of imposing a charge by the governmental authority on
property, individuals or transactions to raise money for public purposes.
Taxation is a means by which the sovereign state through its law making body demands
for revenue in order to support its existence and carry out its legitimate objectives.

NATURE OF TAXATION POWER

 Inherent power of sovereignty
 Essentially a legislative function
 For public purposes
 Territorial in operation
 Tax exemption of government
 The strongest among the inherent powers of the government
 Subject to constitutional and inherent limitations