Introduction To Taxation PDF

INTRODUCTION TO TAXATION COMPARISON OF INHERENT POWERS OF THE STATE  Introduction to Taxation  Inherent Powers of the State  Police Power – the power of the State for promoting public welfare by restraining and regulating the use of liberty and property. I...

INTRODUCTION TO TAXATION COMPARISON OF INHERENT POWERS OF THE STATE  Introduction to Taxation  Inherent Powers of the State  Police Power – the power of the State for promoting public welfare by restraining and regulating the use of liberty and property. It may be exercised only by the government. The property taken in the exercise of this power is destroyed because it is noxious or intended for a noxious purpose.  Power of Taxation – the power by which the State raises revenue to defray the necessary expenses of the government.  Power of Eminent Domain – the power of the State to acquire private property for a public purpose upon payment of just compensation.  Introduction to Taxation PARTICULARS TAXATION EMINENT DOMAIN POLICE POWER Authority May be exercised only May be exercised by: May be exercised (who by: the government; only by: exercises the the government; or its political subdivisions; the government; or Power) its political subdivisions. or may be granted to its political public service subdivisions. companies or public utilities. Purpose The property (generally in To facilitate the taking of The use of the the form of money) is private property for property is taken for the support of public use. “regulated” for the the government. purpose of promoting the general welfare; it is not compensable.  Introduction to Taxation PARTICULARS TAXATION EMINENT DOMAIN POLICE POWER Persons Operates upon: Operates on: Operates upon: Affected a community; an individual as the owner a community; or class of individuals. of a particular or a class of property. individuals. Effect The money contributed There is a transfer of the There is no transfer becomes part of the right to property. of title. At most, there public funds. is restraint on the injurious use of property. Benefits Protection and benefits Market value of the Indirect benefits Received he receives. property The person affected The enjoyment of the He receives the market receives indirect privileges of living in an value of the benefits as may organized society, property taken from him. arise from the established and maintenance of a safeguarded by the healthy economic devotion of taxes to public standard of society. purpose.  Introduction to Taxation PARTICULARS TAXATION EMINENT DOMAIN POLICE POWER Amount of Generally, there is no No amount imposed but Amount imposed Imposition limit on the amount of tax rather the owner is should just be that may be imposed. paid the market value of commensurate to property taken. cover the cost of regulation, issuance of a license or surveillance Relationship Subject to constitutional Inferior to the impairment Relatively free from to limitations, including the prohibition; constitutional Constitution prohibition against government cannot limitations and is impairment of the expropriate private superior to the obligation of contracts. property, which under a impairment of contract had contract provision. previously bound itself to purchase from the other contracting party.  Introduction to Taxation  Similarities among the Inherent Powers of the State  They are inherent in the State.  They exist independently of the Constitution although the conditions for their exercise may be prescribed by the Constitution.  Ways by which the State interferes with private rights and property.  Legislative in nature and character.  Presuppose an equivalent compensation received, directly or indirectly, by the persons affected. CONCEPTS AND PURPOSE OF TAXATION  Introduction to Taxation  Definition and Concept  Revenue Raising Measure o Raises income to defray the necessary expenses of government o The process or means by which the sovereign, through its law- making body, raises income to defray the necessary expenses of government; a method of apportioning the cost of government among those who in some measure are privileged to enjoy its benefits and must, therefore, bear its burdens [51 Am. Jur. 34; 1 Cooley 72-93].  Introduction to Taxation  Definition and Concept  As a Power o It refers to the inherent power of the state to demand enforced contributions for public purposes. o It is described as a destructive power that interferes with the personal and property rights of the people and takes from them a portion of their property for the support of the government. [Paseo Realty & Development Corporation v. CA, G.R. No. 119286 (2004)]  Introduction to Taxation  Purpose  Revenue-Raising (Fiscal Purpose) o The primary purpose is to generate funds for the State to finance the needs of the citizenry and to advance the common weal. [Napocor v. Province of Albay G.R. No. 87479, 4 June 1990.] o A government can run its administrative set up only through public funding which is collected in the form of tax. o Fees may be properly regarded as taxes even though they also serve as an instrument of regulation. If the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then the exaction is properly called a tax.  Introduction to Taxation  Purpose  Non-revenue/special or regulatory (Sumptuary / Compensatory) o Taxation is often employed as a device for regulation by means of which certain effects or conditions envisioned by governments may be achieved. o Taxes may be levied with a regulatory purpose to provide means for the rehabilitation and stabilization of a threatened industry which is affected by public interest as to be within the police power of the state.  Introduction to Taxation  Purpose - Thus, taxation can: 1. Promote general welfare of the people as an implement of police power. The so-called “sin taxes” on alcohol and tobacco manufacturers help dissuade the consumers from excessive intake of these potentially harmful products. [Southern Cross Cement Corporation v. Cement Manufacturers Association of the Philippines, et al., G. R. No. 158540 (2005)] 2. Strengthen anemic enterprises or provide incentives to greater production through grant of tax exemptions or the creation of conditions conducive to their growth.  Introduction to Taxation  Purpose - Thus, taxation can: 3. Protect local industries against foreign competition by imposing additional taxes on imported goods, or encourage foreign trade by providing tax incentives on imported goods. 4. Be a bargaining tool by setting tariff rates first at a relatively high level before trade negotiations are entered into with another country. 5. Halt inflation in periods of prosperity to curb spending power; ward off depression in periods of slump to expand business.  Introduction to Taxation  Purpose - Thus, taxation can: 6. Reduce inequalities in wealth and incomes, as for instance, the estate, donor's and income taxes, their payers being the recipients of unearned wealth or mostly in the higher income brackets. Progressivity is based on the principle that those who are able to pay more should shoulder the bigger portion of the tax burden. [MAMALATEO] 7. Encourage economic growth through the grant of incentives or exemptions, which encourage investment and thereby stimulate economic activity  Introduction to Taxation  Purpose - Thus, taxation can: 8. Taxes may be levied to promote science and invention [see RA. No. 5448] or to finance educational activities [see RA. No. 5447] or to improve the efficiency of local police forces in the maintenance of peace and order through grant of subsidy [see RA. No. 6141]. 9. To push for the government’s health measure, just like what happened in the landmark legislation on sin taxes in 2012 [see R.A. No. 10351].  Introduction to Taxation  Nature  Inherent in sovereignty o The power to tax is an attribute of sovereignty. o It is a power emanating from necessity because it imposes a necessary burden to preserve the State's sovereignty xxx [Phil. Guaranty Co., Inc. v. Commissioner, G.R. No. L- 22074 (1965)].  Introduction to Taxation  Nature  Essentially a legislative function o The power to tax is peculiarly and exclusively legislative and cannot be exercised by the executive or judicial branch of the government [1 Cooley 160-161]. o Hence, only Congress, our national legislative body, can impose taxes. The levy of a tax, however, may also be made by a local legislative body subject to such limitations as may be provided by law. It includes the authority to: a. Determine the nature, purpose, extent, coverage, apportionment, situs, and method of collection of the tax; b. Grant tax exemptions or condonations; and c. Specify or provide for the administrative as well as judicial remedies that either the government or the taxpayers may avail themselves in the proper implementation of the tax measure.  Introduction to Taxation  Nature  Subject to constitutional and inherent Limitations o The power to tax is said to be the strongest of all the powers of government. o It is unlimited, plenary, comprehensive and supreme. o In the absence of constitutional restrictions, the principal checks on its abuse rest on the responsibility of members of Congress to their constituents. However, the power of taxation is subject to constitutional and inherent limitations [MAMALATEO]. o These limitations are those provided in the fundamental law or implied therefrom, while the rest spring from the nature of the taxing power itself although they may or may not be provided in the Constitution.  Introduction to Taxation  Elements of Taxation  Enforced proportional contribution from persons and properties - Its imposition is in no way dependent upon the will or assent of the person taxed. It is not contractual, either express or implied, but positive acts of government;  Imposed by the State by virtue of its sovereignty; and  Levied for the support of the government [Republic v. COCOFED, G.R. Nos. 147062-64 (2001)].  Introduction to Taxation  Characteristics of Taxing Power (Power of Taxation)  It is comprehensive. Covers persons, businesses, activities, professions, rights, and privileges.  It is unlimited. A tax does not cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed. The power to impose taxes is one so unlimited in force and so searching in extent, that the courts scarcely venture to declare that it is subject to any restrictions whatever, except such as rest in the discretion of the authority which exercises it. [Tio v. Videogram Regulatory Board, G.R. No. 75697 (1987)]  It is plenary or complete. Under NIRC, the BIR may avail of certain remedies to ensure the collection of taxes. Taxes, being the lifeblood of the government, should be collected without unnecessary hindrance, every precaution must be taken not to unduly suppress it. [Republic v. Caguioa G.R. No. 168584 (2007)]  It is supreme. It is supreme insofar as the selection of the subject of taxation is concerned, but it does not mean that it is superior to the other inherent powers of the State.  Introduction to Taxation  Characteristics of Tax 1. Enforced contribution 2. Proportionate in character – Laid by some rule of apportionment which is usually based on ability to pay. “The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation.” [Sec. 28 (1), Art. VI, 1987 Constitution]; 3. Levied for public purpose. Revenues derived from taxes cannot be used for purely private purposes or for the exclusive benefit of private persons. [Gaston v. Republic Planters Bank, G.R. No. 77194 (1988)]; and  Introduction to Taxation  Characteristics of Tax 4. Generally payable in the form of money – Although the law may provide payment in kind (e.g. backpay certificates under Sec. 2, R.A. No. 304, as amended); 5. Personal to the taxpayer; 6. Levied on persons, property, rights, acts, privileges, or transactions;  Introduction to Taxation  Characteristics of Tax 7. Levied by the State which has jurisdiction or control over the subject to be taxed; 8. Levied by the law-making body of the State. The power to tax is a legislative power but is also granted to local governments, subject to such guidelines and limitations as law may be provided by law. “Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments.” [Sec. 5, Art. X, 1987 Constitution];  TAX DISTINGUISHED FROM OTHER FORMS OF EXACTIONS  Introduction to Taxation  Tax as Distinguished from Other Forms of Exactions TAXES TARRIFF All embracing term to include A kind of tax imposed on articles various kinds of enforced which are traded internationally contributions upon persons for the attainment of public Purposes. Tariff may be used in one of three (3) senses: 1. A book of rates drawn usually in alphabetical order containing the names of several kinds of merchandise with the corresponding duties to be paid for the same; or 2. The duties payable on goods imported or exported; or 3. The system or principle of imposing duties on the importation (or exportation of goods).  Introduction to Taxation  Tax as Distinguished from Other Forms of Exactions TAXES TOLL Paid for the support of the government Paid for the use of another’s property. Demand of sovereignty Demand of proprietorship Generally, no limit on the amount collected as Amount paid depends upon the cost of long as it is not excessive, unreasonable or construction or maintenance of the public confiscatory improvement used. Imposed only by the government Imposed by the government or by private individuals or entities. A toll is a sum of money for the use of something, generally applied to the consideration which is paid for the use of a road, bridge or the like, of a public nature. [1 Cooley 77]  Introduction to Taxation  Tax as Distinguished from Other Forms of Exactions  License or permit fee is a charge imposed under the police power for purposes of regulation.  License is in the nature of a special privilege, of a permission or authority to do what is within its terms. It makes lawful an act which would otherwise be unlawful.  A license granted by the State is always revocable. [Gonzalo Sy Trading v. Central Bank of the Phil., G.R. No. L-41480 (1976)]  Introduction to Taxation  Tax as Distinguished from Other Forms of Exactions Importance of the distinctions 1. It is necessary to determine whether a particular imposition is a tax or a license fee because some limitations apply only to one and not to the other, and for the reason that exemption from taxes may not include exemption from license fee. 2. The power to regulate as an exercise of police power does not include the power to impose fees for revenue purposes. [Progressive Development Corp. v. Quezon City, G.R. No. L-36081 (1989)]  Introduction to Taxation  Tax as Distinguished from Other Forms of Exactions Importance of the distinctions 3. An exaction, however, may be considered both a tax and a license fee. This is true in the case of car registration fees which may be regarded as taxes even as they also serve as an instrument of regulation. If the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then the exaction is properly called a tax. [Phil. Airlines, Inc. v. Edu, G.R. No. L- 41383 (1988)] 4. But it is possible that a tax may only have a regulatory purpose. The general rule, however, is that the imposition is a tax if its primary purpose is to generate revenue, and regulation is merely incidental; but if regulation is the primary purpose, the fact that incidentally revenue is also obtained does not make the imposition a tax. [Progressive Development Corp. v. Quezon City, supra]  Introduction to Taxation  Tax as Distinguished from Other Forms of Exactions LICENSE AND REGULATORY TAXES FEES Imposed under the taxing power of the state for Levied under the police power of the state. purposes of revenue. Forced contributions for the purpose of maintaining Exacted primarily to regulate certain businesses or government functions. occupations. Generally unlimited as to amount Should not unreasonably exceed the expenses of issuing the license and of supervision. Imposed on persons, property and the right to Imposed only on the right to exercise a Privilege exercise a privilege. Failure to pay does not necessarily make the act or Failure to pay makes the act or business business illegal. illegal. Penalty for nonpayment: Surcharges; or Imprisonment (except poll tax).  Introduction to Taxation  Tax as Distinguished from Other Forms of Exactions  A special assessment is not a personal liability of the person assessed, i.e., his liability is limited only to the land involved. It is based wholly on benefits (not necessity).  A charge imposed only on property owners benefited is a special assessment rather than a tax notwithstanding that the statute calls it a tax.  The rule is that an exemption from taxation does not include exemption from special assessment. But the power to tax carries with it the power to levy a special assessment. Note: The term "special levy" is the name used in the present Local Government Code (RA. No. 7160). A province, city, or municipality, or the National Government, may impose a special levy on lands especially benefited by public works or improvements financed by it. [Sec. 240, RA 7160]  Introduction to Taxation  Tax as Distinguished from Other Forms of Exactions Characteristics of a Special Assessment:  Levied only on land;  Not a personal liability of the person assessed;  Based wholly on benefits (not necessary); and  Exceptional both as to time and place.  Introduction to Taxation  Tax as Distinguished from Other Forms of Exactions TAXES SPECIAL ASSESSMENT Levied not only on land Levied only on land Imposed regardless of public improvements Imposed because of an increase in value of land benefited by public improvement Contribution of a taxpayer for the support of the Contribution of a person for the construction of government a public improvement It has general application both as to time and Exceptional both as to time and locality place  Introduction to Taxation  Tax as Distinguished from Other Forms of Exactions TAXES DEBT Based on laws Generally based on contract, express or implied. Generally cannot be assigned Assignable Generally paid in money May be paid in kind Cannot be a subject of set off or compensation Can be a subject of set off or compensation (see Art. 1279, Civil Code)  Introduction to Taxation  Tax as Distinguished from Other Forms of Exactions TAXES DEBT Imprisonment is a sanction for nonpayment A person cannot be imprisoned for nonpayment of tax, except poll tax of debt (except when it arises from a crime) Governed by the special prescriptive periods Governed by the ordinary periods of provided for in the NIRC prescription Does not draw interest except only when Draws interest when it is so stipulated or where delinquent there is default Imposed only by public authority Can be imposed by a private individual A tax is not a debt in the ordinary sense of the word.  Introduction to Taxation  Tax as Distinguished from Other Forms of Exactions TAXES PENALTY Violation of tax laws may give rise to imposition Any sanction imposed as a punishment for of penalty violation of law or acts deemed injurious Primarily intended to raise revenue Designed to regulate conduct May be imposed only by the government May be imposed by the government or private individuals or entities Cannot be a subject of set off or compensation Can be a subject of set off or compensation (see Art. 1279, Civil Code) Penalty is a sanction imposed as a punishment for violation of law or acts deem injurious. The violation of tax may give right to imposition of penalty. THEORY AND BASIS OF TAXATION  Theory and Basis of Taxation  Lifeblood theory  The underlying basis of taxation is governmental necessity, for without taxation, a government can neither exist nor endure.  Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. It is said that taxes are what we pay for civilized society. Without taxes, the government would be paralyzed for lack of the motive power to activate and operate it [CIR v. Algue, G.R. No. L-28896 (1988); See also CIR v. Pineda, G.R. No. L-22734 (1967)].  Theory and Basis of Taxation  Necessity theory  The power of taxation proceeds upon the theory that the existence of the government is a necessity; that it cannot continue without means to pay its expenses; and that for those means it has the right to compel all citizens and property within its limits to contribute.  The power to tax is an attribute of sovereignty. It is a power emanating from necessity. It is a necessary burden to preserve the State’s sovereignty and a means to give the citizenry: o an army to resist an aggression; o a navy to defend its shores from invasion; o a corps of civil servants to serve; o public improvement designed for the enjoyment of the citizenry and those which come within the State's territory; and o facilities and protection which a government is supposed to provide. [Phil. Guaranty v. CIR, G.R. No. L-22074 (1965)]  Theory and Basis of Taxation  Necessity theory  The obligation to pay taxes rests upon the necessity of money for the support of the state. For this reason, no one is allowed to object to or resist the payment of taxes solely because no personal benefit to him can be pointed out. [Lorenzo v. Posadas, G.R. No. L-43082 (1937)]  Theory and Basis of Taxation  Benefits-protection Theory (Symbiotic Relationship)  This principle serves as the basis of taxation and is founded on the reciprocal duties of protection and support between the State and its inhabitants.  Despite the natural reluctance to surrender part of one's hard earned income to the taxing authorities, every person who is able to, must contribute his share in the running of the government. The government for its part is expected to respond in the form of tangible and intangible benefits intended to improve the lives of the people and enhance their moral and material values. This symbiotic relationship is the rationale of taxation and should dispel the erroneous notion that it is an arbitrary method of exaction by those in the seat of power. [CIR v. Algue, supra]  JURISDICTION OVER SUBJECT AND OBJECTS  Jurisdiction over Subject and Objects  The limited powers of sovereignty are confined to objects within the respective spheres of governmental control. These objects are the proper subjects or objects of taxation and none else. 1. Tax laws cannot operate beyond a State’s territorial limits; 2. The gov’t cannot tax a particular object of taxation which is not within its territorial jurisdiction; 3. Property outside the State’s jurisdiction does not receive any protection of the State; and 4. If a law is passed by Congress, it must see to it that the object or subject of taxation is within the territorial jurisdiction of the taxing authority. PRINCIPLES OF A SOUND TAX SYSTEM  Principles of a Sound Tax System  Fiscal adequacy  The sources of tax revenue should coincide with, and approximate the needs of, government expenditures. The revenue should be elastic or capable of expanding or contracting annually in response to variations in public expenditures.  Principles of a Sound Tax System  Administrative feasibility  Tax laws should be capable of convenient, just and effective administration. Each tax should be: o capable of uniform enforcement by government officials, o convenient as to the time, place, and manner of payment, o enforced with the least inconvenience to the taxpayer; and o not unduly burdensome upon or discouraging to business activity.  Principles of a Sound Tax System  Theoretical justice or equality  The tax burden should be in proportion to the taxpayer’s ability to pay. This is the so-called ability to pay principle. Taxation should be uniform as well as equitable [Section 28(1), Art. VI, 1987 Constitution] The State must evolve a progressive system of taxation.  Taxation is said to be equitable when its burden falls on those better able to pay; taxation is progressive when its rate goes up depending on the resources of the person affected.  Note: The non-observance of the above principles will not necessarily render the tax imposed invalid except to the extent those specific constitutional limitations are violated. [DE LEON]  Principles of a Sound Tax System  Theoretical justice or equality  A tax law will retain its validity even if it is not in consonance with the principles of fiscal adequacy and administrative feasibility because the Constitution does not expressly require so. These principles are only designed to make our tax system sound. However, if a tax law runs contrary to the principle of theoretical justice, such violation will render the law unconstitutional considering that under the Constitution, the rule of taxation should be uniform and equitable. [Dimaampao, Tax Principles and Remedies (2015)]  STAGES OR ASPECTS OF TAXATION  Stages or Aspects of Taxation  Legislative Act: Levy or imposition  This process involves the passage of tax laws or ordinances through the legislature. The tax laws to be passed shall determine: o Those to be taxed (person, property or rights); o How much is to be collected (the rate and the base of tax); and o How taxes are to be implemented (the manner of imposing and collecting tax).  It also involves the granting of tax exemptions, tax amnesties or tax condonation.  Stages or Aspects of Taxation  Legislative Act: Levy or imposition  Scope of legislative power to tax: o Discretion as to purpose for which taxes shall be levied. o Discretion as to subjects of taxation. o Discretion as to amount or rate of tax.  Stages or Aspects of Taxation  Executive Act: Assessment and collection  This process involves the act of administration and implementation of tax laws by the executive through its administrative agencies such as the Bureau of Internal Revenue or Bureau of Customs.  Stages or Aspects of Taxation  Taxpayer’s Act: Payment  This process involves the act of compliance by the taxpayer in contributing his share to pay the expenses of the government. Payment of tax also includes the options, schemes or remedies as may be legally open or available to the taxpayer.  Stages or Aspects of Taxation  Taxpayer’s and Executive Act: Refund  A claim for refund must first be filed with the Commissioner of Internal Revenue. A suit or proceeding may be filed within two years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment. The Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return, such payment appears clearly to have been erroneously paid. [Sec. 229, NIRC] REQUISITES OF A VALID TAX  Requisites of a Valid Tax 1. It must be for a public purpose; 2. Rule of taxation should be uniform; 3. The person or property taxed is within the jurisdiction of the taxing authority; 4. Assessment and collection is in consonance with the due process clause; AND 5. The tax must not infringe on the inherent and constitutional limitations of the power of taxation. KINDS OF TAXES  Kinds of Taxes  As to object  Personal, Poll or Capitation Tax o tax of a fixed amount imposed on persons residing within a specified territory, whether citizens or not, without regard to their property or the occupation or business in which they may be engaged (e.g. community (formerly residence) tax).  Kinds of Taxes  As to object  Property Tax o tax imposed on property, real or personal, in proportion to its value or in accordance with some other reasonable method of apportionment (e.g., real estate tax). The obligation to pay the tax is absolute and unavoidable and is not based upon the voluntary action of the person assessed.  Kinds of Taxes  As to object  Privilege/Excise Tax o it is said that an excise tax is a charge imposed upon: i. the performance of an act, ii. the enjoyment of a privilege, or iii. the engagement in an occupation, profession, or business. The obligation to pay excise tax is based on the voluntary action of the person taxes in performing the act or engaging in the activity which is subject to the excise. The term “excise tax” is synonymous with “privilege tax” and the two are often used interchangeably (e.g., income tax, value added tax, estate tax, donor’s tax).  Kinds of Taxes  As to burden or incidence  Direct Taxes o taxes which are demanded from persons who also shoulder them; taxes for which the taxpayer is directly or primarily liable, or which he cannot shift to another. The liability for the payment of the tax (incidence) and the burden (impact) of the tax falls on the same person. (e.g., income tax, estate tax, donor’s tax, community tax).  Kinds of Taxes  As to burden or incidence  Indirect Taxes o taxes which are demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another, falling finally upon the ultimate purchaser or consumer; taxes levied upon transactions or activities before the articles subject matter thereof, reach the consumers who ultimately pay for them not as taxes but as part of the purchase price. Thus, the person who absorbs or bears the burden of the tax is other than the one on whom it is imposed and required by law to pay the tax. Practically all business taxes are indirect (e.g., VAT, percentage tax, excise taxes on specified goods, customs duties).  Kinds of Taxes  As to tax rates  Specific Tax o a tax of a fixed amount imposed by the head or number or by some other standard of weight or measurement. It requires no assessment (valuation) other than the listing or classification of the objects to be taxed (e.g., taxes on distilled spirits, wines, and fermented liquors; cigars and cigarettes).  Kinds of Taxes  As to tax rates  Ad Valorem Tax o a tax of a fixed proportion of the value of the property with respect to which the tax is assessed. It requires the intervention of assessors or appraisers to estimate the value of such property before the amount due from each taxpayer can be determined. The phrase “ad valorem” means literally, “according to value.” (e.g., real estate tax, excise tax on automobiles, non-essential goods such as jewelry and perfumes, customs duties.  Kinds of Taxes  As to tax rates  Mixed Tax o a tax that has both the characteristics of specific tax and ad valorem tax.  Kinds of Taxes  As to purpose  General or Fiscal Tax o levied for the general or ordinary purposes of the Government, i.e., to raise revenue for governmental needs (e.g., income tax, VAT, and almost all taxes).  Special/Regulatory/Sumptuary Tax o levied for special purposes, i.e., to achieve some social or economic ends irrespective of whether revenue is actually raised or not (e.g., protective tariffs or customs duties on imported goods to enable similar products manufactured locally to compete with such imports in the domestic market).  Kinds of Taxes  As to scope (or authority imposing the tax)  National Tax o taxes imposed by the national government, through Congress and administered by the Bureau of Internal Revenue (BIR) or the Bureau of Customs (BOC) (e.g., national internal revenue taxes, customs duties, and national taxes imposed by laws).  Municipal or Local Tax o taxes imposed by local governments, through their respective Sanggunians, and administered by the local executive through the local treasurer (e.g., business taxes that may be imposed under the Local Government Code, professional tax).  Kinds of Taxes  As to graduation  Progressive Tax o The rate of tax increases as the tax base or bracket increases, e.g., income tax, estate tax, donor’s tax.  Regressive Tax o The rate of tax decreases as the tax base or bracket increases. There is no regressive tax in the Philippines.  Kinds of Taxes  As to graduation  Proportionate Tax o The rate of tax is based on a fixed percentage of the amount of the property, receipts or other basis to be taxed, e.g., real estate tax, VAT, and other percentage taxes.  Digressive Tax o A fixed rate is imposed on a certain amount and diminishes gradually on sums below it. The tax rate in this case is arbitrary because the increase in tax rate is not proportionate to the increase of tax base. Thanks! Does anyone have any questions? CREDITS: This presentation template was created by Slidesgo, including icons by Flaticon, infographics & images by Freepik