Asynchronous Class:  Constitutional & Legal earners (e.g.

,
Constraints – Must align VAT).
TAXATION: MIDTERM with constitutional  By Subject: Personal
REVIEW POINTERS principles. (Individual Income Tax)
 Economic Impact – vs. Business (Corporate
Over-taxation can Tax).
Activity: With reference and in discourage investment and  By Purpose: General
addition to my previously sent economic growth. (used for government
review topic materials to you, Study  Administrative operations) vs. Special
the following: Feasibility – Collection (earmarked for specific
must be efficient and cost- projects).
1. Characteristics, Objectives & effective.  By Jurisdiction: National
Limitations of Taxation  Social Acceptability – (BIR-administered taxes)
Excessive taxation may vs. Local (LGU-imposed
A. Characteristics of Taxation lead to resistance and tax taxes like real property
evasion. tax).
 Compulsory
Contribution – Imposed 2. Types of Taxes & Tax 3. Taxation Principles &
by the government Classifications Limitations
without direct consent.
 Legally Mandated – A. Types of Taxes A. Principles of Taxation (Adam
Based on laws and Smith’s Canons of Taxation)
regulations (e.g., National 1. Direct Taxes – Levied on
Internal Revenue Code). individuals and businesses 1. Equity (Fairness) –
 Non-Punitive – Not a based on income or Taxes should be based on
penalty but a tool for property. the taxpayer’s ability to
revenue collection. o Examples: pay.
 No Direct Benefit – Income Tax, 2. Efficiency – Should
Taxpayers do not receive Property Tax, minimize economic
direct compensation but Estate Tax distortion and
benefit from public 2. Indirect Taxes – administrative costs.
services. Collected by an 3. Simplicity – Must be easy
 Based on Ability-to-Pay intermediary (e.g., to understand and comply
– Progressive taxation businesses) and passed to with.
ensures fairness in the government. 4. Certainty – Tax
contribution. o Examples: obligations should be
Value-Added predictable and clear.
B. Objectives of Taxation Tax (VAT), 5. Flexibility – Should adapt
Sales Tax, to economic and social
Excise Tax, changes.
1. Revenue Generation –
Primary source of Customs Duties
government funding. B. Limitations of Taxation
2. Economic Stabilization – B. Tax Classifications
Helps control inflation  Legal Limitations:
and deflation. Constitutional constraints,
 By Incidence:
3. Wealth Redistribution – due process requirements.
o Progressive –
Addresses income  Economic Limitations:
inequality through Higher tax rate
as income Cannot overburden
progressive taxes. taxpayers or stifle
4. Encouraging or increases (e.g.,
Income Tax). economic growth.
Discouraging Behavior –  Administrative
Tax incentives for o Proportional –
Fixed rate Limitations: Must be
investments, sin taxes on cost-effective and
harmful goods. regardless of
income level enforceable.
5. National Development –
Funds infrastructure, (e.g., Corporate
education, healthcare, and Income Tax). 4. Tax Laws & Government
public services. o Regressive – Agencies
Higher burden
on low-income A. Tax Laws
C. Limitations of Taxation
  National Internal  Bureau of Customs  Compliance &
Revenue Code (NIRC) – (BOC) – Regulates Reporting – Filing tax
Governs taxation in the customs duties and import returns, withholding tax
Philippines. taxes. obligations.
 Local Government Code  Department of Finance  Tax Planning &
– Grants LGUs the power (DOF) – Oversees tax Avoidance – Legal ways
to impose local taxes. policy and fiscal to minimize tax liability.
 Special Tax Laws – VAT management.  Tax Incentives &
Law, Excise Tax Law,  Local Government Units Exemptions – Benefits
Expanded Withholding (LGUs) – Handle real for businesses and
Tax, etc. property tax, business individuals.
permits, etc.  Impact on Business &
B. Government Agencies  International Bodies – Economy – How taxation
Responsible for Taxation IMF, OECD, WTO affects investment and
(influence global tax consumption.
policies).  Legal Consequences of
 Bureau of Internal Tax Evasion – Penalties,
Revenue (BIR) – interest, and legal action
Administers national 5. Application of Taxation
Concepts for non-compliance.
taxes.

1. Rationale of Income Management: Helps businesses'

Taxation regulate economic profits.
fluctuations through o Property Tax
Income taxation is imposed by fiscal policies. o Estate Tax
governments to generate o Capital Gains
revenue for public services and 2. Concept of Income Taxation Tax: Applied
economic development. The to profits from
rationale behind taxation Income taxation is the process of asset sales.
includes: levying a tax on an individual's o VAT
or corporation's earnings. Key o Excise Tax
 Revenue Generation: concepts include: o Withholding
Primary source of Tax:
government funds for  Taxpayer: Any Deducted at
infrastructure, individual or entity the source of
education, healthcare, subject to tax. income.
and defense.  Tax Base: The amount o Final Tax: A
 Redistribution of upon which tax is definitive tax
Wealth: Helps address imposed (e.g., gross on certain
income inequality by income, net income). income types,
imposing higher taxes  Tax Rate: The requiring no
on higher earners. percentage applied to further filing.
 Economic Regulation: the tax base to
Encourages or determine tax liability. 3. Objectives of Income
discourages certain  Types of Income Tax: Taxation
economic behaviors o Personal
through tax incentives Income Tax: The key objectives of income
or penalties. Levied on taxation are:
 Social Justice: Ensures individuals'
that individuals and earnings.
businesses contribute  Revenue Collection:
o Corporate To fund government
fairly to national Income Tax:
development. expenditures and
Imposed on development projects.
 Control of Inflation
and Demand
  Economic Growth  Due Process of Law: own additional income
and Stability: Tax Tax laws must be fair, taxes.
policies influence reasonable, and follow  Special Laws and
economic progress by legal procedures. Regulations: Includes
managing inflation and  Equal Protection tax incentives,
investment levels. Clause: Taxes should exemptions, and sector-
 Social and Economic be applied equally to specific tax policies.
Equity: Promotes similarly situated
fairness through individuals.
progressive tax  Public Purpose
systems. Requirement: Taxes
 Encouragement of should be used for
Investments and public benefit.
Savings: Tax  Non-delegation of
incentives boost Taxing Power: Only
business investments the legislative branch
and capital formation. can impose taxes.
 Foreign Relations and  Exemptions and
Trade Balance: Aligns Privileges: Certain
tax policies with institutions (e.g.,
international charities, religious
agreements and trade groups) may receive tax
practices. exemptions.
 Prohibition of
4. Situs of Income Taxation Confiscatory
Taxation: Taxes
The situs (place of taxation) should not be excessive
determines which country has to the point of
the right to tax income. It confiscating property.
depends on:
6. Income Tax Laws
 Source Principle:
Income is taxed where Income taxation is governed by
it is earned. various laws, including:
 Residence Principle:
Taxpayers are taxed  National Internal
based on their Revenue Code
residency status. (NIRC): The primary
 Citizenship Principle: tax law in many
Some countries tax jurisdictions.
individuals based on  Tax Reform Laws:
their citizenship, Amendments and
regardless of residency. updates to existing tax
 Mixed Principle: codes, such as reduced
Combines different tax rates or new
taxation principles to classifications.
determine liability.  International Tax
Treaties: Agreements
5. Limitations on the Power of between countries to
Taxation prevent double taxation
and promote tax
Governments' power to impose cooperation.
taxes is subject to constitutional  Local Government
and legal restrictions, including: Taxation: Some
regions impose their