GE 102 – Readings in Philippine History

- Refers to compulsory or coercive money collection by a levying

authority, usually a government.
- Is a means by which governments finance their expenditure by
imposing charges on citizens and corporate entities.
- Refers to the practice of a government collecting money from
citizens to pay for public services.
Note:
Taxation is different from any form of payment, taxation
does not require consent from the payer and the payment is not
directly tied to any goods bought or service rendered.
What are taxes?
-taxes are mandatory contributions of everyone to
raise revenue for nation-building. The revenues are used
to pay for doctors, teachers, soldiers, and other
government personnel and officials, as well as building
schools, hospitals, roads, and other infrastructures.
Why does the government collect tax?
- To provide basic services such as:
education
health
infrastructure, and
other social services for all.
WE ALL PAY TAXES!!!
 Income Tax is based on the ability-to-pay principle
wherein people with higher income should pay more.

 Consumption Tax is based on the amount of goods and

services utilized such that the more you consume, the
higher your tax you pay.
Note:
- Filipinos residing in the Philippines are
taxed based on income earned here and abroad.

- Filipinos living abroad are taxed based on their

income earned in the Philippines.

- Resident aliens and non-resident aliens in

the Philippines are taxed based on their income earned in
the country.
 The policy of taxation in the Philippines is governed chiefly by
the Constitution of the Philippines and three Republic Acts.
A. Constitution
- Article VI, Section 28 or the Constitution states that “the rule of taxation shall be
uniform and equitable” and that “Congress shall evolve a progressive system of
taxation.”

B. National Law
1. National Internal Revenue Code- enacted as Republic Act No. 8424 or
the Tax Reform Act of 1997
2. Subsequently amended by Republic Act No. 10963 or the Tax Reform
for Acceleration and Inclusion Act of 2017
3. Republic Act No. 7160 or the Local Government Code of 1991
1. Reduction and collection of all internal revenue taxes,
fees and charges;
2. Enforcement of all forfeitures, penalties, and fines
connected therewith, including the execution of
judgments in all cases decided in its favor by the Court of
Tax Appeals and the ordinary courts;
3. It shall also give effect to the administer supervisory and
police powers conferred to it by the National Internal
Revenue Code and special laws.
Direct Taxes are those that are paid from your income
and properties. Examples include personal and corporate
income taxes, property and capital taxes.
 Examples are Income Tax which includes, Compensation Income
(Compensation and self- employment income), Business Income (Capital
Gain), and Passive Income (Interests, royalties, prizes and other winnings, and
dividends)

Indirect Taxes are collected based on consumption.

Examples include excise taxes, VAT (Value-Added Tax),
percentage tax, and documentary stamp tax (DST).
Taxes can also be classified as to who imposes them:
 National Taxes, imposed by the national government of
the Philippines, which includes:
 Income tax;
 Estate tax;
 Donor’s tax;
 Value-added tax;
 Percentage tax;
 Excise tax; and
 Documentary Stamp tax
Local Taxes, one of the main sources of revenues of the
local government units is the real property tax, which is a
tax imposed on all types of real properties including lands,
buildings, improvements, and machinery.
Religious institutions

Charitable institutions

Non-profit, non-stock educational institutions

No-profit cemeteries

Government institutions

Foreign diplomats
Functions of the Contador de’ Resultas during the 17th and 18th
centuries:
 Chief Royal Accountant – functions were similar to the
Commissioner of Internal Revenue

 Chief Arbitrator – decisions on final matters were final except when

revoked by the Council of Indies
 Taxes that were collected from the inhabitants varied from tribute
or head tax of one gold maiz annually.

 The Spanish treasury had to subsidize the Philippines in the

amount of 250,000.00 per annum due to the poor financial
condition of the country, which can be primarily attributed to the
poor revenue collection system. (1521 – 1821)
  From the period 1898 to 1901, the country was ruled by American military
governors.
 In 1902, the first civil government was established under William H. Taft

July 2, 1904 The Bureau of Internal Revenue (BIR) was created under the term
of the second Civil Governor Luke E. Wright.
1909 – 1912 The second American collector was Ellis Cromwell.
1912 – 1914 The third American collector was William T. Holting.
(Collections by the Real Estate and License Divisions were confined to revenue
accruing to the City of Manila.)
1914 – 1918 The fourth American collector was James J. Rafferty.
 In line with the Filipinization policy of then US President McKinley, Filipino collectors
were appointed.

First three (3) Filipino BIR Collectors

1918 – 1922 Wenceslao Trinidad
1922 – 1934 Juan Posadas Jr.
1934 – 1938 Alfredo Yatao

 In 1937, the Secretary of Finance reorganized the Provincial Inspection Districts and
maintained in each province an Internal Revenue Office supervised by a Provincial Agent.
 Under the Japanese regime (1942 – 1945), the Bureau was combined
with the Customs Office and was headed by a Director of Customs and
Internal Revenue.

 On July 4, 1946, the Bureau was re-established separately when the

Philippines gained its independence from the United States.

 The country was divided into 31 inspection units, each of which was
under a Provincial Revenue Unit and City Revenue Agent in distilleries
and tobacco factories.
 1951 The withholding tax system was adopted by Republic Act 960.
(This method of collecting income tax upon receipt of the income resulted to the collection of
approximately 25% of the total income tax collected during the said period)

1954 – 1957 • Major reorganizations took place in the Bureau which created various offices,
including the setting up of regional offices in Cebu and Davao in 1955.
• The Bureau’s organizational set-up expanded beginning 1956 in line with the
regionalization scheme of the government.

January 1957 • The position title of the head of the Bureau was changed from Collector to
Commissioner.
• The last Collector and first Commissioner of the BIR was Jose Aranas.
1958 The Tax Census Division was established to consolidate all statements of assets,
income and liabilities into a National Tax Census.
June 19, 1959 The Rewards Law (RA No. 233) was passed to strictly enforce the payment of taxes
and to further discourage tax evasion.
(Informers were rewarded the 25% equivalent of the revenue collected from the tax evaded)

1964 • The Philippines was sub-divided again into 15 regions and 72 inspection districts.
• The Tobacco Inspection Board and Accountable Forms Committee were also
created directly under the Office of the Commissioner.
Marcos Administration
 Blue Master Program

 Voluntary Tax Compliance Program

 Tax Account Number (TAN)

 Promulgated the National Internal Revenue Code of 1977

Corazon Aquino Administration
 “Operation: Walang Lagay”

 Value Added Tax was introduced

 TAN was replaced by the Taxpayer Identification Number

(TIN)
Ramos Administration
 Action Centered Transformation Program (ACTS)

 Tax Computerized Project (TCP)

 Established the computerized Integrated Tax System

Estrada Administration
 Economic Recover Assistance Payment (ERAP) Program

 Institutionalized the raffle promo “Humingi ng Resibo, Manalo

ng Libo-libo”

 Large Taxpayers Service

 Excise Taxpayers Service

 Full Integrated Tax System (ITS) Rollout Acceleration Program

Arroyo Administration
- Commissioner, Atty. Rene Banez (2001)
 Voluntary Assessment Program and Compromise
Settlement Program
 Electronic and Payment System (eFPS)
- Commissioner Guillermo L. Parayno, Jr. (2002)
 Voluntary Assessment and Abatement Program (VAAP)
 Reconciliation of Listings for Enforcement (RELIEF)
System
 Run After Tax Evaders (RATE)
Arroyo Administration
- Commissioner Jose Mario C. Bunag, (2006)

 Nationwide Rollout of Computerized System (NRCS)

 National Program Support for Tax Administration

Reform (NPSTAR)
Arroyo Administration
- Commissioner Lilian Hefti, (2007)
 Computer-Assisted Audit Tools and Techniques (CAATTs)

- Commissioner Sixto S. Esquivias IV, (2008)

 Oplan Kandado Program

 Taxpayer Feedback Mechanism

- Commissioner Joel L. Tan-Torres

 Institutionalized several programs to improve revenue collections

Aquino Administration
- the BIR, under Commissioner Henares focused on the
filing of tax evasion cases. The BIR collected more than half
of the total revenues of the government.

Duterte Administration
- PRRD signed in to law Republic Act 10963 or the Tax
Reform for Inclusion and Acceleration Act of 2017
 Redesigning the tax system to be simpler, fairer, and more
efficient for all… lessen the overall tax burden of the poor and the
middle class.

 TheTax Reform for Acceleration and Inclusion

(TRAIN) is the first package of the comprehensive tax reform
program (CTRP), which corrects a number of deficiencies in
the tax system.
Filipino contributes in funding more
 Through TRAIN, every
infrastructure and social services to eradicate extreme
poverty and reduce inequality towards prosperity for all.
EDUCATION tax reform will be able to fund investments
in education, achieving a more conducive learning
environment with the ideal teacher-to-student ratio and
classroom-to-student ratio:
 Achieve 100% enrollment and completion rates
 Build 113,553 more classrooms

 Hire 181,980 more teachers between 2017-2020

HEALTHCARE SERVICES with the tax reform, we can
invest more in our country’s healthcare by providing better
service and facilities:
 Upgrade 704 hospitals and establish 25 local hospitals
 Achieve 100% PhilHealth coverage at higher quality of
services
 Upgrade and/or relocate 263 rural and urban health units
to disaster-resilient facilities
 Build 15,988 new barangay health stations
 Build 2,424 new rural health units and urban health centers
 Between 2017-2022, hire an additional 2,424 doctors, 29,466
nurses, 1,114 dentists, 3,288 pharmacists, 2,682 medical
technologists, 911 public health associates, and 2,497 UHC
implementers
INFRUSTRUCTURE PROGRAMS additional revenue

raised will be used to fund infrastructure programs of DPWH such

as major highways, expressways, and flood control

projects… Improve the country’s investment needs, promoting
better lives for Filipinos.
TAX REFORM FOR ACCELERATION AND INCLUSION
(TRAIN)
 The first package of the Comprehensive Tax Reform
Program (CTRP)
 To correct a number of deficiencies in the tax system to
make it simpler, fairer, and more efficient.
Major Features of the TRAIN:
1. Lowering the Personal Income Tax
2. Simplifying the Estate and Donor’s Tax
3. Expanding the Value-Added Tax
4. Increasing the Excise Tax of Petroleum Products
5. Increasing the Excise Tax on Automobiles
6. Excise Tax on Sweetened Beverages
Fin.