TAXATION

Definition, Nature and Basis of Taxation

Taxation is the process
or means by which the sovereign, through its lawmaking body,
raises income to defray the necessary expenses of the government.
Taxation, ,, . po*.,
of the State, is inherent in sovereignty.
r s'rvs'vr, vr
Taxes are the lifeblood of the government
and their prompt and certain availability are
an imperious need (Commissioner
vs. Pinedo, 21 SCRA i.05). A government
cannot
continue to exist and operate without financial means. This inherent power gives
the
government
the right to tax citizens and properties
within its jurisdiction.
Taxation is indispensable and inevitable price for civilized society; without taxes, the
government
would be paralyzed (commissioner
vs. Algue, lnc., L-2ggg6, Feb. 17,lggg,
1s8 SCRA 9).
lndeed, the collection of taxes remains one of the primary
undertakings of any
government
in order to provide
sufficient funds with which a nation's economy may be
sustained and developed. ln this light, it has become the enduring goalof
every tax
authority, be it one that serves a developed or a developing nation,
,to
seek and
implement strategies and technologies that shall support the continuing improvement
of their collection systems. ln the Philippines,
the premier
tax agency is the Bureau of
lnternal Revenue (BlR).
Upon taxation depends the Government's
ability to serve the people
for whose benefit
taxes are collected (vero
vs. Fernandez, Sg SCRA 199). The ultimate beneficiaries in the
process
are both the government
and the citizens. The state collects taxes.in the.
exercise of its sovereign rights for the support of the government,
for the administration
uof
tl: laws,
.and
as a means for the continued operation of the various legitimate
tunctions of the state.
:;.
Objectives of Taxation
jr
Taxation is much more than just
a means of raising revenue for the govern,ment.
lt is
also one of the major means by which the nationil government
attJmpts to achieve
various economic and social objectives. These objectives include shifting wealth from
the rich to the poor,
maintaining price
stabirity, stimurating econr;l; g;;;th,
and
encouraging full employment.
:
ln its efforts to achieve'these
objectives, congress tendsito use tax provisions
in two
different ways. First, some tax rules are enacted for the purpose
of mitigating certain
undesirable economic ahd social conditions already existing. For instance, low-income
individuals often pay little or no national income taxes becairr.
"tinu
.;;il system
of exclusions, deductions, and credits of current law. Second, other tax rules provide
incentives
for
depreciation
provides inct
employment
All too ofter
cross-purpos
rapid deprec
lead to incre
rates maY al
and thus actt
Perhaps it is
exhibit
'con
enacted, nu
many circul
congression
statutorY la'
are carefulll
State Powt
1. Taxatio
the nec
2. Eminen
upon
p
"
3. Police I
morals,
Aspects o'
1. Levyinl
PhilipP
7. Collecl
Basic Prir
L. Fiscal
expen
2. Equali
ability
3. Admir
admir