TAXATION

OBJECTIVE
At the end of the chapter, the
students should be able to:
1. define tax, know its significance
in national development;
2.enumerate
the
essential
characteristics of tax
3. know the principles of a sound
taxation;
4. distinguish tax from other
income-generating sources.

INTRODUCTION
Historically, taxation has played a
critical role in the lives of men and
women and their countries destinies.
As early as the 10th century, the
underprivileged
classes-slaves,
vassals, peasants and conquered
peoples-were already giving tributes,
both in cash and in kind. This had
forced them to support the ruling
classes, whether they were the free
citizens of Athens and Rome, the
lords and the feudal barony, or courts
of the kings and emperors.

In ancient Greece and Rome,

taxes on income and wealth were
practically unknown. There were,
however , income from mines,
tributes from wealthy citizens
which filled the coffers of the
treasury for all revenue needs,
but these were not considered as
taxes imposed as a direct charge
upon
the
people.
For
the
government to survive, voluntary
contributions were given to the
State
for
its
use
and
maintenance.

In the middle ages, taxes of any kind

had little space in the agrarian feudal
system. Rents were collected from the
farmers. The landlords collected rents
from
the
landholdings
at
their
pleasure. The excess of these rents
were then given to the State as their
share on the hierarchical basis to form
part of the revenue for the use of the
State. From the 14th century, as the
feudal system was gradually broken up
by dissipation of the public domain, by
the growth of commerce and industry
and
by
decentralization
of
government.

These rent-like revenues slowly gave

way to taxes. During this period,
land, which was the primary source of
wealth, became the primary source of
taxation. They began to realize that
the State soul no longer exist without
the imposition of taxes on the people
finance the needs of the State.
Throughout the ages, the
public
domain was the chief source of public
revenue, and taxation consisted
largely of exercise on domestic
consumption and custom duties on
foreign trade.

Taxes on imports from foreign

trade began as early as 14th
century with the growth of foreign
and domestic relations between
nations. As civilization progressed,
the nation of the world had to
devise ways and means of raising
taxes for their maintenance and
support. Within the expansion of
trade relation among nations, the
direct
bulk
of
government
revenues were derive from taxes
on articles of trade and commerce.
France and Spain were then

Taxes from income of individuals did not

give way until the early part of 18 th
century, when Great Britain adopted an
income tax in 1798 and a death transfer
tax in 1796. What flourished during this
period was taxes on customs levied on
articles of trade and commerce.
As civilization advanced and the need
for a more representative government
was established, taxes took on a new
twist. The need for taxation has been
emphasized-the individual is now taking
part in contributing a share of his
earnings for the support of the
government.

MEANING OF TAXATION
TAXATION is the act of imposing
tax, the process or means by which
the sovereign, law-making body,
raises revenue to defray the
necessary
expenses
of
the
government.
MEANING OF TAXES
TAXES
are
the
enforced
proportional contributions from
persons and property levying by
the law-making body of the state
by virtues of its sovereignty for

PURPOSE AND IMPORTANCE

Government
needs funds to
finance its tasks of promoting the
general welfare and protection
of its citizens. Revenues from
taxation is the life-blood of the
nation. Thus, a nation of faithful
taxpayers assures a healthy
economy for everybody to enjoy.
Conversely,
evasion
or
nonpayment of taxes undermines the
nations progress.

CHARACTERISTICS OF TAX
1. It is an enforced contribution.
2. It is generally payable in the form of money.
3. It is proportionate in character.
4. It is levied in person or property.
5. It is levied by the State.
6. It is levied by the law-making body.
7. It is levied for public purpose.
NATURE AND POWER OF TAXATION
1. It is inherent in sovereignty.
2. It is legislative in character.
3. It is subject to constitutional and inherent
limitations.

BASIC PRINCIPLES OF A SOUND TAX

SYSTEM
1. Fiscal Adequacy
2. Equality or theoretical justice
3. Administrative feasibility
CLASSIFICATION OF TAXES
A. According to Subject
1. Personal, poll or capitalization. ex.
Residence tax
2. Property Tax. ex. Real Estate Tax
3. Excise Tax. Ex. Donors tax, income
tax,
business
tax,
estate
tax,
privilege tax

According to Purpose
1. General, Fiscal, or Revenue. Ex. Income
tax and sales tax.
2. Special or Regulatory. Ex. Protective
tariffs or custom duties.
According to Scope
1. National. Ex. National internal revenue
taxes.
2. Municipal or local. Ex. Real property
tax.
According to Determination of Amount
1. Specific. Ex. Taxes on distilled spirits,
cigarettes
2. Ad valorem. Ex. Real estate tax most
custom duties.

According to its Effect to Taxpayer

1. Direct. Residence tax. Corporate
tax. Income tax.
2. Indirect Tax. Privilege tax. Sales
tax. Amusement tax
According to Graduation Rate
1. Proportional. Ex. Sales tax. Real
property
2. Progressive or Graduated.
Imposed in accordance to the
specified bracket.
3. Regressive.

The Success and Failure in the

Im plem entation ofCARP
l. The Problem and Its Background

1. Introduction
historical background
2. Statement of the Problem
a. What is CARP? What are the
legal bases of CARP?
b. What are the Problems
surrounding the Implementation of
CARP?

c. What are the success and failure

in the implementation of CARP from
1998-2008?
ll. Presentation, Analysis and
Interpretation of Data
1. Presentation of Data
a. present answer for question #1
b. present answer for question #2
c. present answer for question #3
2. Analysis and Interpretation of
Data
a. present analysis and
interpretation for

lll. Findings, Conclusion and

Recommendation
1. Findings
2. Conclusion and
Recommendations
Chapter lV. Bibliography/References