NAME: JOHANN ALDRIN UYCHINCO MM 3 - O TAXATION 1

1. What are the INHERENT POWERS of the State? Create a comparison matrix as to the
following: (i) exercising authority; (ii) purpose; (iii) persons affected; (iv) amount of imposition;
(v) effects; and (vi) benefits received.

CRITERIA POLICE POWER IMMINENT TAXATION

DOMAIN
Exercising Implemented by Implemented by Implemented by
Authority legislative and legislative branch or legislative branch
executive branches its delegate
Purpose To promote public To take private To raise revenue for
welfare, order, and property for public government
safety use expenditures
Person Affected General public, Owners of private Taxpayers
particularly those property (individuals and
violating the law entities subject to
taxation)
Amount of No direct monetary Just compensation for Determined by tax
Imposition imposition, but can the property taken laws based on
include penalties income, property, or
transactions
Effects Regulation or Transfer of Obligation to pay
restriction of rights ownership of taxes
and activities property to the state
Benefits Received General public Compensation for the Indirect benefit
benefits from law and loss of property through public
order, safety services and
infrastructure

2. Define “Taxation” as:

i. State Power:
 - Taxation is an inherent power of the state to impose and collect financial contributions from
individuals and businesses to fund the operations of the government and provide public services.

ii. Process:

- Taxation involves the legal procedure through which the government calculates, assesses,
and collects taxes from individuals and businesses. It includes the process of filing returns,
assessing tax liability, and collecting payment.

iii. Mode of Cost Distribution:

- Taxation serves as a means of distributing the cost of government among its citizens. It
ensures that everyone contributes to the maintenance and operations of the state in proportion
to their ability to pay, typically based on income, consumption, or property ownership.

3. Enumerate the different CHARACTERISTIC of taxation?

- Compulsory: Taxes are mandatory contributions, not voluntary payments.

- Proportionate: Taxation is generally based on the ability to pay, with higher earners paying
more.

- Legislative in Nature: Only the legislative branch of government has the authority to levy taxes.

- Territorial: Taxes are imposed within a specific jurisdiction and apply to persons or property
within that territory.

- Public Purpose: Taxes must be used for public purposes, not for the benefit of private individuals
or entities.

4. Enumerate the PURPOSE of taxation?

- Revenue Generation: The primary purpose is to raise funds necessary to run the government
and provide public services.

- Regulation: Taxes can be used to regulate activities by making certain behaviors more expensive,
such as sin taxes on alcohol and tobacco.
- Redistribution: Taxes can help reduce income inequality by redistributing wealth through
progressive taxation and social welfare programs.

- Economic Stability: Taxes can be used as a tool for stabilizing the economy, by influencing
inflation, investment, and consumption.

5. What are the different THEORIES of taxation?

- Benefit Principle: Taxes should be levied according to the benefits received by the taxpayer from
public services.

- Ability-to-Pay Principle: Taxes should be levied based on an individual’s or entity’s capacity to

pay, with wealthier individuals or businesses paying more.

- Equal Distribution Theory: Taxes should be distributed equally among the population
regardless of income or wealth.

- Social Contract Theory: Taxes are a part of the social contract where citizens agree to pay taxes
in exchange for public services and protection provided by the state.

6. What is “Lifeblood Doctrine” in taxation?

The Lifeblood Doctrine posits that taxation is essential to the existence of the state, as it provides
the necessary funds to carry out its functions. Without taxes, the government would be unable to
operate or provide public services, making taxation the “lifeblood” of the state.

7. Enumerate the INHERENT LIMITATIONS of taxation, discuss each limitation.

- Public Purpose: Taxes must be used for a public purpose, not for private benefit.

- Non-delegability: The power to tax is vested in the legislature and cannot be delegated.

- Exemption of Government Entities: The government and its agencies are generally exempt
from taxation.

- Territoriality: Taxation applies only within the jurisdiction of the state.

- International Comity: The state must respect the sovereignty of other states and not impose
taxes on their citizens or entities.

8. Enumerate the CONSTITUTIONAL LIMITATIONS of taxation, discuss each limitation

- Due Process: Tax laws must be clear, not arbitrary, and must follow the proper legal process.

- Equal Protection: Taxes must apply equally to all persons under similar circumstances,
preventing discriminatory taxation.
- Uniformity Rule: Taxes must be uniform within the same class of subjects.

- Freedom of Speech and Religion: Taxes cannot be used to suppress freedom of speech or
religion.

- No Appropriation for Religious Purposes: Taxes cannot be used to fund religious activities or
institutions.

- Non-Impairment of Contracts: Tax laws must not impair the obligation of existing contracts.

9. Discuss the STAGES of the exercise of power of taxation

- Legislation: The legislative body enacts tax laws specifying what will be taxed, how much, and
by what process.

- Assessment: The government assesses the tax liability of individuals or entities based on the
laws.
- Collection: The government collects the assessed taxes from taxpayers.

- Payment and Compliance: Taxpayers fulfill their obligation by paying the taxes.
- Enforcement: The government ensures compliance with tax laws through penalties or legal
actions against defaulters.

10. Discuss “SITUS” of taxation and provide examples on each situs rules

The “situs” of taxation refers to the place where a tax is levied. It is determined by the nature of
the tax:
- Income Tax: Situs is where the income is earned.

- Example: A Filipino citizen working in the Philippines earns income and is subject to
Philippine income tax. If a Filipino citizen earns income abroad but is a resident of the Philippines,
they are still subject to Philippine income tax on their worldwide income.

- Property Tax: Situs is where the property is located.

- Example: A residential property located in Tabaco City is subject to real property tax by the
local government unit (LGU) of Tabaco City, regardless of the owner’s place of residence.
- Business Tax: Situs is where the business operates or where the sales occur.

- Example: A corporation with its main office in Tabaco City, but with branch offices across the
Philippines, pays business taxes to the LGU where each branch operates. If a company sells
products in Manila, it is subject to Manila’s local business taxes and any applicable national taxes
like VAT.

- Estate Tax: Situs is where the decedent’s estate is located.

- Example: A Filipino citizen’s estate is subject to Philippines estate tax, regardless of where the
assets are held.

- Consumption Tax: Situs is where the goods are consumed.

- Example: A consumer buys electronics in a mall in Manila. The sale is subject to VAT in the
Philippines because the purchase and consumption occur within the country.