Limitations on The Power of Taxation

The power of taxation, is however, subject to constitutional and inherent limitations. Constitutional limitations are those provided for in the constitution or implied from its provisions, while inherent limitations are restrictions to the power to tax attached to its nature. The following are the inherent limitations. 1. Purpose. Taxes may be levied only for public purpose; 2. Territoriality. The State may tax persons and properties under its jurisdiction; . !nternational "omity. the property of a forei#n State may not be taxed by another. $. %xemption. &overnment a#encies performin# #overnmental functions are exempt from taxation '. (on)dele#ation. The power to tax bein# le#islative in nature may not be dele#ated. *subject to exceptions+ Constitutional limitations. 1. ,bservance of due process of law and e-ual protection of the laws. *sec, 1, .rt. + .ny deprivation of life , liberty or property is with due process if it is done under the authority of a valid law and after compliance with fair and reasonable methods or procedure prescribed. The power to tax, can be exercised only for a constitutionally valid public purpose and the subject of taxation must be within the taxin# jurisdiction of the state. The #overnment may not utili/e any form of assessment or review which is arbitrary, unjust and which denies the taxpayer a fair opportunity to assert his ri#hts before a competent tribunal. .ll persons subject to le#islation shall be treated ali0e under li0e circumstances and conditions, both in the privile#es conferred in liabilities imposed. Persons and properties to be taxed shall be #roup, and all the same class shall be subject to the same rate and the tax shall be administered impartially upon them. 2. 1ule of uniformity and e-uity in taxation *sec 22*1+.rt 3!+ .ll taxable articles or properties of the same class shall be taxed at the same rate. 4niformity implies e-uality in burden not in amount. %-uity re-uires that the apportionment of the tax burden be more or less just in the li#ht of the taxpayers ability to bear the tax burden.

. (o imprisonment for non)payment of poll tax *sec. 25, .rt !!!+ . person cannot be imprisoned for non)payment of community tax, but may be imprisoned for other violations of the community tax law, such as falsification of the community tax certificate, or for failure to pay other taxes. $. (on)impairment of obli#ations and contracts, sec 15, .rt !!! . the obli#ation of a contract is impaired when its terms and conditions are chan#ed by law or by a party without the consent of the other, thereby wea0enin# the position or the ri#hts of the latter. !6 a tax exemption #ranted by law and of the nature of a contract between the taxpayer and the #overnment is revo0ed by a later taxin# law, the said law shall not be valid, because it will impair the obli#ation of contract. '. Prohibition a#ainst infrin#ement of reli#ious freedom Sec ', .rt !!!, it has been said that the constitutional #uarantee of the free exercise and enjoyment of reli#ious profession and worship, which carries the ri#ht to disseminate reli#ious belief and information, is violated by the imposition of a license fee on the distribution and sale of bibles and other reli#ious literatures not for profit by a non)stoc0, non)profit reli#ious corporation. 7. Prohibition a#ainst appropriations for reli#ious purposes, sec 28, *2+ .rt. 3!, "on#ress cannot appropriate funds for a private purpose, or for the benefit of any priest, preacher or minister or for the support of any sect, church except when such priest, preacher, is assi#ned to the armed forces or to any penal institutions, orphana#e or leprosarium. 9. exemption of all revenues and assets of non)stoc0, non)profit educational institutions used actually, directly, and exclusively for educational purposes from income, property and donor:s taxes and custom duties *sec. $ * and $+ art. ;!3. 2. "oncurrence by a majority of all members of "on#ress in the passa#e of a law #rantin# tax exemptions. Sec. 22 *$+ .rt. 3!. 8. "on#ress may not deprive the Supreme "ourt of its jurisdiction to review, revise, reverse, modify or affirm on appeal or certiorari, final jud#ments and orders of lower courts in all cases involvin# the le#ality of any tax, impost, assessment or any penalty imposed in the relation thereto.