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Taxation is the inherent power by which the sovereign state imposes financial burden upon persons and
property as a means of raising revenue in order to defray the necessary expenses of the government.
The primary purpose of taxation is to raise revenue in order to satisfy government needs.
a. Necessity, because government cannot exist and function without the means to pay its
expenditures; and
b. Reciprocal duties of protection and support between the state and its inhabitants.
a. Levy - refers to the legislative act of imposing the tax and is exercised by Congress; and
b. Collection – refers to administrative act of collecting the tax and is exercised by the Executive
branch of government, more particularly:
1. Bureau of Internal Revenue – National taxes
2. Bureau of Customs – Customs duties; and
3. Local Government Units – Local taxes and real property taxes.
Note: Fees and charges are also collected by other appropriate governmental agencies.
Taxation is the inherent power of the sovereign state to impose financial burden on persons and
property as a means of raising revenue in order to defray the necessary expenses of the government.
Eminent domain is the inherent power of the sovereign state to take private property for public use upon
payment of just compensation.
Police power is the inherent power of the sovereign state to enact laws to promote public health, public
morals, public safety and general welfare of the people.
According to US Chief Justice John Marshall, “the power to tax involves the power to destroy.” But
according to US Justice Oliver Wendell Holmes, “the power to tax is not the power to destroy while
the court sits.”
The inherent limitations, which are so-called because they exist without the need of any written legal
mandate, include the following:
The significant constitutional limitations, which are so-called because they are expressly embodied in the
Philippine Constitution, include the following:
a. No person shall be deprived of life, liberty, and property without due process of law, nor shall
any person be denied of equal protection of the laws;
b. No person shall be imprisoned for debt or non-payment of poll tax;
c. No law impairing the obligation of contracts shall be passed;
d. The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive
system of taxation.
e. Charitable institutions, churches, and parsonages or convents appurtenant thereto, mosques,
non-profit cemeteries and all lands, buildings, and improvements actually, directly, and
exclusively used for religious, charitable, or educational purposes shall be exempt from taxation;
f.