Taxation

Power of the government to generate revenue from its citizens in exchange for a
civilized society or for public services.
Unjust Enrichment
The Doctrine of Unjust Enrichment is a principle derived from equity and
fairness. It holds that no one should be allowed to unjustly enrich themselves at the
expense of another. When applied to the government, this doctrine means that the
state should not collect or retain taxes, fees, or revenues if it is not legally entitled to do
so.

Symbiotic Relationship
It means that taxes are what we pay for civilized society. Citizens benefit from
public services provided by the government. The government, in turn, relies on taxes
paid by citizens to fund these services and carry out its functions.

Taxation is inherent attribute of sovereignty po because taxes are the lifeblood

of the State. So without it, the state cannot survive. If the state does not have taxes
cannot perform it’s functions on protecting the citizens or giving citizens public services.
It is a fundamental power that arises from the nature of the state's authority and its
ability to govern and regulate its people. Without these taxes, the state cannot govern

Non-Revenue Purpose
Taxation serves as a tool to achieve social, economic, and regulatory objectives.
It helps regulate undesirable behavior through measures like "sin taxes" on alcohol and
tobacco, promoting public health.

Attributes
Fiscal Adequacy- must be adequate to the expenditures or expenses of the
government
Administrative Feasibility- It must be inconvenient to the taxpayer to pay taxes
Theoretical Justice- It must be proportionate to the capability of the taxpayer to pay
taxes
Theory and Basis of Taxation
Lifeblood Theory- without taxes, the government will not operate.

Necessity Theory- the government cannot continue to operate without taxes to pay for
expenses
Benefits-Protection Theory (Symbiotic Relationship)- it means that the government
and taxpayer have reciprocal obligations and benefits to one another. Citizens benefit
from public services provided by the government. The government, in turn, relies on
taxes paid by citizens to fund these services and carry out its functions
Jurisdiction over subject an objects- Since taxation po is an inherent attribute of
sovereignty, then those subjects or objects under the jurisdiction of a sovereignty is
covered by the power to tax of the state

Construction and interpretation of tax laws, rules, and regulations

Retroactive effect does not apply if it is prejudicial to the tax payers
General Interpretative Rule can be relied upon by the Tax Payers
Tax Exemptions
Waiver of the Government’s right to collect taxes
If exempted from tax, Revenue Regulations cannot collect even if there is a
possibility of a refund.
Construed against the tax payer
Prospectivity of tax laws
General Rule: Tax is applied prospectively
Exemption: Express provision of the Law
Imprescriptibility of taxes
The concept of imprescriptibility of taxes refers to the idea that the government's
authority to impose taxes is perpetual and does not expire unless explicitly limited by
law.
Double taxation
Direct Double Taxation (Prohibited)
Both taxes must be imposed:
On the same property or subject matter
For the same purpose
By the same taxing authority
Within the same jurisdiction
During the same taxing period
The two taxes are of the same kind or character.
Indirect Double Taxation
Two or more pecuniary imposition on the same subject matter

Escape from taxation

Shifting of tax burden

This is when the statutory taxpayer transfers the economic burden of the tax to
another party, typically the end buyer in order to minimize the statutory taxpayer’s
financial impact without evading the law.

Tax avoidance
Tax avoidance refers to the use of legal methods to minimize tax liability. It
involves exploiting loopholes, ambiguities, or provisions in tax laws to reduce the
amount of tax owed by the tax payer while staying within the boundaries of the law.

Tax evasion
Using illegal scheme to avoid or minimize tax
Exemption from taxation
Meaning of and Basis of Tax Exemption
Since taxation is inherently legislative, tax exemptions po is also based on
Express Provision of the Law. The tax payer claiming for an exemption should clearly
prove that he is exempted from tax
Nature of Tax Exemption
Tax exemption involves releasing a tax payer from the obligation to pay certain
taxes, either partially or fully, based on criteria given by law

Kinds of Tax Exemption

Grounds for Tax Exemption

Tax exemptions are commonly granted to promote social welfare, economic
development, education, public health, religion, charity, and cultural preservation or
improvement. They aim to reduce or diminish the tax burden on entities or activities that
serve the public interest, for the sake of national development and societal benefit.

Revocation of Tax Exemption

Since Tax Exemptions are privileges given to tax payers, the government may
revoke the tax exemption if the conditions under which they were granted are no longer
met. Like for example, if the tax payer failed to comply with the legal requirements for
tax exemption or the change of the purpose or mission of the activities or businesses of
the tax payer
Compensation and Set-off
Taxes cannot be a subject of compensation since the government and the
taxpayer are not creditors and debtors of each other. It is an obligation of the tax payer
to the state.
There is no offsetting of taxes against the claims that the taxpayer may have
against the government.

Doctrine of Equitable Recoupment

it enables taxpayers to seek relief from a tax they believe they have overpaid by
using the overpayment to offset future tax obligations or by reducing the amount of tax
they owe

Tax Amnesty
This allows the taxpayer to settle their obligation with less penalties, interest,
without facing legal consequences. So it is not an absolute pardon, but merely the
reducing of the obligations of the tax payer in a limited period

Definition of Taxes
Taxes are mandatory pecuniary obligation imposed by the government on a
taxpayer to fund its operations and various public expenditures. Taxes are fundamental
source of revenue for governments in order to serve the public.

Essential Characteristics of Taxes/Requisites of a Valid Tax

It should be for a public purpose

It should come from by the legislative branch of the government
It should be proportionate to the capability of the tax payer
It is a pecuniary burden
Kinds of Taxes
Direct Taxes
Those taxes that are exacted from the very person who should pay them,
meaning, it is given to those statutory taxpayers

Indirect Taxes
These are taxes that can be shifted to another taxpayer. Like for example is
when the tax is imposed upon goods reaching the consumer who pays for it.

The power to tax is concerned with generating revenue for the government to
fund public services. In contrast, police power focuses on regulating private behavior to
protect public health, safety, morals, and general welfare. But the power to tax can be
used as a police power of the state in instances of promoting public protection… like for
example, giving higher tax to tobacco industries because it is affects the public health of
the people. Power of eminent domain, on the other hand, is the authority of the
government to take private property for public use, with fair compensation to the owner.