General Principles of Taxation

Study Notes

Definition: Taxation is the process through which the government raises revenue to cover necessary expenses while distributing the cost among beneficiaries of government services.
Sovereignty: Power of taxation is inherent in sovereignty, allowing states to impose taxes without requiring a constitutional grant.

Income Tax: Tax levied on net income or total income received within a taxable year.
Estate Tax: Imposed on the right of a deceased individual to transfer their estate to heirs. Includes lifetime transfers equivalent to testamentary dispositions.
Donor's Tax: Tax on gifts or transfers of property between living individuals without consideration.
Value-Added Tax (VAT): Tax on consumption related to the sale of goods and services and on imported goods in the Philippines.
Percentage Tax: Tax calculated as a percentage of the gross selling price or gross receipts from services or property transactions.
Excise Tax: Tax on specified goods manufactured for domestic sale, consumption, or importation, as well as on certain products produced in the Philippines.
Documentary Stamp Tax: Tax on documents and instruments related to the sale or transfer of rights or property.

Necessity Theory: Establishes that government requires funds to operate and has the right to compel contributions from citizens.
Benefits-Received Principle: Taxpayers gain general advantages and protection from government, reciprocating through tax payments.
Symbiotic Relationship Doctrine: Describes a mutual reliance between taxpayers and the government, with taxes enabling service provision.
Lifeblood Theory: Taxes are essential for government function and social welfare, thus should be collected efficiently.

Inherent Power: States possess the authority to tax by virtue of sovereignty without needing constitutional approval; limitations exist to ensure fair practice.
Legislative Character: Primarily under Congress's jurisdiction, but local bodies can levy taxes as permitted by the Constitution and relevant laws.
Limitations: Taxation is confined by inherent limitations (to prevent excessive taxation) and constitutional provisions, ensuring fairness and protection of taxpayers' rights.