Module No.
1 General Principles of Taxation
(Inherent Powers of Sovereign State)
Where the budget does came from? The main sources of such budget are Taxes which are enforced contributions
from the citizens.
The government is born with the three inherent powers. Without these powers the government cannot exist nor
survive, it cannot even facilitate and maintain peace and order.
1. Police power
2. Power of the Eminent Domain
3. Taxation Power
POLICE POWER
Intended to safeguard not only the welfare but also the health and morals of the community. It is usually exercise
to promote public welfare by restraining and regulating the use of liberty and property.
POWER OF EMINENT DOMAIN
Wherein the sovereign state has the right to take private property even without the consent of the owner, as long
as it is for the public purpose. To limit the exercise of the power, the Constitution provides that the owner of the
property should be paid with just compensation.
POWER OF TAXATION
It is enforced burden or charges upon individuals, properties and property rights for the use and support of the
government to be able to discharge its functions. It is also way of collecting and apportioning the cost of the
government among those who are privilege.
SEVEN NATURE OF TAXATION POWER
1. Inherent power of sovereignty that says even without specific provisions from Constitutions, the
government can compel its citizens to contribute through taxes;
2. Essentially a legislative function wherein the power to make laws as well as how to collect taxes are given
to the Congress;
3. For public purpose, since Taxes are enforced contributions from the citizen, the used of the same shall be
for the common good of the people and no individual shall be primarily benefitted by the public funds;
4. Territorial in Operation that explains why the taxing authorities must observe “tax situs”;
5. Tax exemption of the Government, wherein government entities that performs governmental functions are
exempted otherwise taxable;
6. Strongest among the Inherent Powers of the Government, the power to tax is unlimited, complete, with
wide extent of application and with highest degree; and
7. Subject to Inherent and Constitutional limitations.
DIFFERENCES OF THE THREE INHERENT POWER
1. Regulation:
a. police power regulates both liberty and property
b. power of eminent domain and power of taxation affect only property rights
2. Implementation:
a. police power and power of taxation can only be implemented by the government
b. power of eminent domain may exercise by some public utilities
3. Imposition:
a. no limitation on the imposition of tax
b. exercise of police power the amount is limited to cover the expenses incurred in the police
surveillance and regulation
c. no imposition in the power of eminent domain
4. Intention:
a. power of taxation and power of eminent domain is for public purpose
b. property taken in the exercise of the police power is destroyed because it is damaging
Module 2 Constitutional Limitations
Constitutional Limitations is the provision of a constitution that restricts the powers of a governmental branch,
officer, or unit.
1. Due process of Law – to protect the individual from foul exercise of the taxing power of the state.
2. Equal Protection of Law – the provision says that “no person and of the same class of person shall be
denied of the same protection of law enjoyed by other persons under same circumstances.
3. Rule of Uniformity and Equity in Taxation – equality in Taxation can be describe through progressive
system of taxation and its implementation shall be fair, just and proportionate to one’s ability to pay.
4. Non –imprisonment for non-payment of poll tax – poll tax is tax imposed on a person as a resident
within territory of the taxing authority without regard to his property, business or occupation. A very good
example of poll tax is the community tax or Cedula.
5. President’s veto power - veto power refers to the Executive‟s power to refuse to sign into a bill that has
been passed by a legislature. It may be for a particular item or items in an appropriation, revenue or tariff
bill but it should not affect the items to which the President does not object.
6. No appropriation for religious purposes – the constitution prohibits the appropriation of funds for
religious purposes for the State shall have no official religion or shall not set up a church whether or not
supported by public funds.
7. Exemption of religious, charitable or educational entities, non-profit, cemeteries and churches from
taxation – the provision applies only to real property taxes. To be exempted, the real property must be
exclusively used for religious, educational and charitable purposes.
8. Concurrence by a majority of all the members of the Congress for the passage of law granting ant tax
exemption – states that majority of the attendees as a quorum is not required instead majority of all the
members of the Congress.
9. Supreme Court’s final judgment in all tax cases – the Supreme Court shall have the power to review,
revise, reverse, modify or affirm on appeal the law but the power to review is limited only to the
interpretation and application of tax laws.
10. Non-impairment of the obligations of contracts – According to Art III, Section 10 of the Constitution, “No
law impairing the obligations of contracts shall be passed. “Impairment‟ happens when a law nullifies
substantial contractual rights.
