Download Introduction to Taxation

Introduction to Taxation
John V. Balanquit
Objectives
After the presentation, students should be
able to:
• Identify the elements of a state
• Define and distinguish the inherent powers
of a state
• Explain the nature of taxation
Objectives (continued)
• Enumerate and explain the similarities and
distinctions among the inherent powers
• Enumerate and explain the inherent and
constitutional limitations of a state
• Explain the importance, basis and purpose
of taxation
The State
• A civilized society characterized by urban
comfort as well as peace and order.
Elements of a State
•
•
•
•
People
Territory
Government
Sovereignty
Inherent Powers of a State
Police Power
• The power to protect citizens and provide
for safety and welfare of society
• A power limited by the due process clause
of the constitution
Inherent Powers of a State
Eminent Domain
• The power to take private properties for
public purpose
• Involves expropriation of private property
• Limited to the just compensation clause of
the constitution
Inherent Powers of a State
Taxation
• The power by which a sovereign state,
through its legislative body, raises and
accumulates revenue from its inhabitants
for public purpose
Nature of Taxation
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It is an inherent power
It is essentially a legislative function
It is for public purpose
It is territorial in operation
Nature of Taxation
• The government is generally tax exempt
• The strongest inherent power
• It is subject to inherent and constitutional
limitations
Similarities of the Inherent
Powers
• They are inherent powers
• They interfere with private rights and
properties
• They are legislative in nature
• They presuppose equivalent compensation
Similarities of the Inherent
Powers
• They exist independently from
constitutional provisions
• They are necessary attributes of
sovereignty
Distinctions Among the Inherent
Powers
• Taxation power is the strongest, because
much of the needed government revenue
are raised through taxation.
• Police power is broad in scope, taxation is
governed by special law, while police power
is governed by the general law
Distinctions Among the Inherent
Powers
• In exercise of police power the amount
imposed depends on whether the activity is
useful or not
• Taxation and police power are applied to
the community as a whole, eminent
domain affects only the particular owner of
real property.
Distinctions Among the Inherent
Powers
• eminent domain is affecting only the
particular person whose real property is
needed by the government in its priority
projects.
• Exercise of eminent domain is restricted by
Constitutional “ just compensation” clause
Distinctions Among the Inherent
Powers
• Police and eminent domain are superior to
the “non-impairment” clause of the
Constitution, taxation must observe this
provision.
• Eminent domain may be exercised by
private entities
Inherent Limitations to Taxation
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Taxes may be levied only for public purpose
Taxation cannot be delegated
Taxation is limited to territorial jurisdiction
Taxation is subject to international comity
The government is generally tax exempt
Constitutional Limitations
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Due process of law
Equal protection of law
Uniformity and equity in taxation
President’s veto power
Exemptions of certain institutions from
income and real property tax
Constitutional Limitations
• No public money shall be appropriated for
religious purposed
• Majority of all members of congress
granting tax exemption
• Non-imprisonment for not paying poll tax
• Tax collections are general funds of gov’t
Importance of Taxation
• It is essential for the continuous existence
of a nation
• The other inherent powers will be
paralyzed in the absence of taxation
• Government functions will cease without
taxation
Basis of Taxation
Necessity
• Taxation is the life blood of a government
• The government cannot exist without a
means to support its operations
Basis of Taxation
Reciprocal Duties
• Taxation is based on the benefits received
theory
• The government collects taxes while they
provide protection, proper business climate
and peace and order.
Purpose of Taxation
• Revenue Purpose
– To raise revenue
• Regulatory or Sumptuary Purpose
– To control consumption or production
• Compensatory Purpose
– To pay costs for benefits received
End of Lecture.
Thank You!