1. DISCUSS THE INHERENT LIMITATIONS ON THE POWER OF TAXATION.

 Taxation is for a public purpose – taxes may be levied only for public purposes
o The proceeds of the tax must be used (a) for the support of the State or (b) for some recognized
objects of the government or directly to promote the welfare of the community
o Discuss Pascual v. Secretary of Public Works, 110 Phil. 331

 Taxation is inherently legislative

The legislative taxing power includes the authority:
 to determine the nature, object, extent, coverage, and situs of the tax imposition;
 to grant tax exemptions;
 to specify or provide for the administrative, as well as judicial remedies that either the
government or the taxpayers may avail themselves of in the proper implementation of
the tax measure

o Discuss exceptions to this limitation.

 Being thus legislative in nature, the power to tax may not be delegated, except
(a) to local governments (to be exercised by the local legislative bodies thereof) or political
subdivisions
(b) when allowed by the Constitution or
(c) when the delegation relates merely to administrative implementation that may call for some
degree of discretionary powers under a set of sufficient standards expressed by law or implied
from the policy and purpose of the act.

 Stated in another way, taxation may exceptionally be delegated, subject to such well-settled
limitations as
(d) the delegation shall not contravene any constitutional provision or the inherent limitations of
taxation;
(e) the delegation is effected either by the constitution or by validly enacted legislative measures or
statue; and;
(f) the delegated levy power, except when the delegation is by an express provision of the
constitution itself, should only be in favor of the local legislative body or the local or municipal
government concerned.

 Taxation is territorial – Taxation may be exercised only within territorial jurisdiction of the taxing authority.
Within the territorial jurisdiction, the taxing authority may determine the “place of taxation”.

 Taxation is subject to international comity. – a state must recognize the generally accepted tenets of
international law, among which are the principles of sovereign equality among states and of their freedom
from suit without their consent, that limit the authority of a government to effectively impose taxes on a
sovereign state and its instrumentalities, as well as on its property held, and activities undertaken, in the
capacity

2. WHAT ARE THE SOURCES OF REVENUE UNDER THE TAX CODE?

SEC. 21. Sources of Revenue. - The following taxes, fees and charges are deemed to be national internal
revenue taxes:
 (a) Income tax;
(b) Estate and donor's taxes;
(c) Value-added tax;
(d) Other percentage taxes;
(e) Excise taxes;
(f) Documentary stamp taxes; and
(g) Such other taxes as are or hereafter may be imposed and collected by the Bureau of Internal Revenue.

3. DEFINE INCOME.
All wealth that flows into the taxpayer other than as a mere return of capital. It includes all income
specifically described as gains and profits including gains derived from the sale or other disposition of capital
assets.

(Just in case ipa-differentiate) Revenue refers to all funds or income derived by the government whether
from tax or other sources. Revenue is to government as income is to private persons or corporations.

4. DEFINE SOURCE OF INC OME

Source of Income is the place (or country) where a particular item of income is deemed to originate or
where it is deemed to be generated. National rules vary, depending on which concept of source is used.

5. WHAT IS INCOME TAX?

 Income Tax is a tax on a person's income, emoluments, profits arising from property, practice of profession,
conduct of trade or business or on the pertinent items of gross income specified in the Tax Code of 1997
(Tax Code), as amended, less the deductions if any, authorized for such types of income, by the Tax Code, as
amended, or other special laws.

 Tax on all yearly profits arising from property, professions, trades or offices or a tax on a person’s income,
emoluments, profits and the like.

6. WHAT ARE THE FUNCTIONS OF INCOME TAX?

 Provide large amounts of revenues
 Offset regressive sales and consumption taxes
 Mitigate evils arising from the inequalities in the distribution of income and wealth which are
considered deterrents to social progress, by a progressive scheme of taxation.

7. WHAT IS SCHEDULAR TA X TREATMENT?

 It is a system that requires a separate return for each type of income and the tax is computed on per
return or per schedule basis and it provides for different tax treatment of different types of income.
 Schedular Tax System is a system in which income from different sources is taxed separately
8. WHAT IS GLOBAL TAX TREATMENT?
It is a system wherein taxpayers are required to report all income earned during taxable period in one income
tax return, which income shall be taxed under the same rule of income taxation. Single tax is imposed on all
income received or earned by person irrespective of the activities which produced the income.

9. WHAT IS GROSS INCOME?

 Income which by statutory definition or otherwise, is exempt from tax imposed by law. Stated otherwise,
gross income means all items of income less exclusions.

 Measures total income and revenue from all sources.

 Income, gain or profit subject to tax
 Income which by statutory definition or otherwise, is exempt from tax imposed by law. Stated
otherwise, gross income means all items of income less exclusions.

10. WHAT IS INCLUDED IN GROSS INCOME?

 Compensation for services in whatever form paid including but not limited to fees, salaries, wages,
commissions and similar items.
 Gross income derived from the conduct of trade or business or the exercise of profession
 Gains derived from dealings in property
 Interests
 Rents
 Royalties
 Dividends
 Annuities
 Prizes and winnings
 Pensions
 Partners’ distributive share from the net income of the general professional partnership