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Taxation > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

The Inherent Powers of the State

A

A. POLICE POWER
B. EMINENT DOMAIN
C. TAXATION POWER

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2
Q

the power to enact laws to promote the general welfare of the people

A

POLICE POWER

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3
Q

the power to take private property for public use upon payment of just compensation.

A

EMINENT DOMAIN

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4
Q

the power to take property (generally money) for the support of the government and the public purpose.

A

TAXATION POWER

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5
Q

PURPOSE OR OBJECTIVE OF TAXATION

A

Primary Purpose
Secondary Purpose

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6
Q

To raise revenue/funds to defray the necessary expenses of the government (also called Revenue Purpose).

A

PRIMARY PURPOSE

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7
Q

As a tool for general, social and economic welfare (also called regulatory/Sumptuary/Compensatory Purpose).

A

SECONDARY PURPOSE

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8
Q

theory on taxation

A
  1. necessity theory
  2. the benefits- protection theory
  3. lifeblood doctrine
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9
Q

The existence of government is necessity, it cannot continue without means to pay its expenses, for this reason, it has the right to compel all its
citizens and property to continue.

A

necessity theory

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10
Q

Taxes are what we pay for a civilized society. The government and the people have a reciprocal and mutual duties of support and protection to one another (symbolic relationship between the government and the taxpayer).

A

The benefits- Protection Theory

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11
Q

Taxes are the lifeblood of the government without it can neither
exist nor endure.

A

lifeblood doctrine

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12
Q

Are enforced proportional contributions from persons and property, levied by the State by virtue of its sovereignty for the support of the government and for all its public needs.

A

tax

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13
Q

Stages or Process of Taxation (LAP)

A
  1. Levy or Imposition
  2. Assessment and Collection
  3. Payment of Tax
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14
Q

The process involves the passage of tax law or ordinance through the legislature.

A

Levy or Imposition

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15
Q

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.

A

assessment and collection

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16
Q

This process involves the act of compliance by the taxpayer on contributing his share to pay the expenses of the government.

A

payment of tax

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17
Q

Basic Principles of a Sound Tax System

A
  1. fiscal adequacy
  2. administrative feasibility
  3. theoretical justice
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18
Q

The sources of government revenue must be sufficient to meet government expenditures and other public needs.

A

fiscal adequacy

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19
Q

Tax laws must be capable of convenient, just and effective administration- free from confusion and uncertainty.

A

administrative feasibility

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20
Q

A good tax system must be based on the taxpayer’s ability to pay. This suggests that taxation must be progressive conformably with the
constitutional mandate that congress shall evolve a progressive system of taxation.

A

theoretical justice

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21
Q

Limitation of the Taxing Power

A

inherent limitations

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22
Q

proceed from the very nature of the taxing power itself. The taxing power has very distinct and positive limitations some of which inherit in its very nature and exist whether declared or not declared in the written constitution.

A

inherent limitations

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23
Q

inherent limitations

A
  1. double taxation
  2. public purpose
  3. international comity or treaty
  4. Non- dilatability of the Taxing power
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24
Q

kinds of double taxation

A
  1. direct duplicate taxation
  2. indirect duplicate taxation
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25
Q

this is objectionable and prohibited because of violates the constitutional provision on uniformity and equality.

A

Direct Duplicate taxation

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26
Q

is not legally objectionable. It extends to all cases in which imposition but imposed by different taxation authorities.

A

Indirect Duplicate Taxation

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27
Q

a State cannot tax another State based on the on the principle of Sovereign imposing taxes on foreign ambassadors is not valid law.

A

International comity or treaty

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28
Q

taxation is purely legislative, hence the power cannot be delegated either to the executive or judicial department. The limitation arises from the doctrine of separation of powers among the three branches of the government.

A

Non- dilatability of the Taxing power

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29
Q

Exceptions to the rule against the delegation of the taxation power;

A
  1. Delegation to the President
  2. Constitutional Limitations on the Taxing Power
30
Q

subject to some limitations and restriction, to fix within specified limits, tariff rates and tonnage or wharfage duties and other duties and imposts.

A

Delegation to the President

31
Q

sources of tax law

A

i. Constitution
ii. Tax Codes such as the National Internal Revenue Code, Tariff and
Customs Code, and portion of the Local Government Code
iii. Statutes like RA 1125 (an Act Creating the Court of Tax Appeals), RA 7716 (E-VAT Law), RA 8424 (Tax Reform Act of 1997)
iv. Presidential Decrees
v. Executive Orders
vi. Court Decisions
vii. Revenue regulations promulgate by the Department of Finance
viii. Administrative issuance of the BIR like Revenue Memorandum Circulars,
and those of the Bureau of Customs like Customs Memorandum Orders
ix. BIR Rulings
x. Local Tax Ordinances
xi. Tax Treaties and Conventions with Foreign Countries

32
Q

tax law

A
  1. nature of internal revenue laws
  2. construction or interpretation of tax law in case of doubt or ambiguity
  3. application of tax law
33
Q

Tax laws are civil and not penal in
nature, although there are penalties provided for their violation. The purpose of tax laws in imposing penalties for delinquencies is to compel the timely payment of taxes or to punish evasion or neglect of duty in respect thereof.

A

nature of internal revenue laws

34
Q

APPLICATION OF TAX LAWS
General rule:

A

Tax laws are prospective in operation because the nature and amount of the tax could not be foreseen and understood by the taxpayer at the time the transactions which the law seeks to tax was completed.

35
Q

Classification of Tax
1. according to subject matter:

A

A) Personal, Poll or Capitation Tax
B) Property Tax
C) Excise Tax

36
Q

tax of a fixed amount imposed upon individual, whether citizens or not, residing within a specified territory without regard to their property or the occupation in which he may be engaged (e.g. basic community tax)

A

Personal, Poll or Capitation Tax

37
Q

tax imposed on property, whether real or personal, in proportion either to its value, or in accordance with some other reasonable method of apportionment (e.g. real estate tax)

A

Property Tax

38
Q

any tax which does not fall within the classification of a poll tax or a property tax. This is a tax on the exercise of certain rights and privileges (e.g. income tax, estate tax, donor’s tax, VAT)

A

excise tax

39
Q

Classification of Taxes
2. according to who bears the burden

A

a. direct tax
b. indirect tax

40
Q

imposed on the person obliged to pay the same and this burden cannot be shifted or passed on to another. (e.g. income tax, estate tax, donor’s tax)

A

Direct tax

41
Q

the payment is demanded from a person who is allowed to transfer the burden of taxation to another. (e.g. VAT)

A

indirect tax

42
Q

Classification of taxes
3. according to determination of amount

A

a. specific tax
b. ad valorem tax

43
Q

this is fixed amount based on volume, weight or quality of goods as measured by tools, instruments or standards. (e.g. excise tax on cigars and liquors)

A

Specific tax

44
Q

this imposition is based on the value of the property subject to tax. (e.g. VAT, income tax, donor’s tax and estate tax)

A

ad valorem tax

45
Q

Classification of Tax
4. according to purpose

A

a. fiscal/general/revenue tax
b. regulatory/special/sumptuary tax

46
Q

levied without a specific or pre-determined purpose. (e.g. Income tax, donor’s tax and estate tax)

A

Fiscal/General/Revenue Tax

47
Q

those intended to achieve some social or economic goals. (e.g. tariff and certain duties on imports)

A

Regulatory/Special/Sumptuary Tax

48
Q

Classification of Tax
5. According to Jurisdiction/Scope or Authority

A

a. national tax
b. local tax

49
Q

imposed by the National Government

A

national tax

50
Q

imposed by municipal corporations (e.g. real estate tax)

A

local tax

51
Q

Classification of Tax

A

a. proportional/flat rate tax
b. progressive/graduated tax
c. regressive tax

52
Q

unitary or single rate. (e.g. VAT)

A

Proportional/Flat Rate Tax

53
Q

– as the tax base grows, the tax rate increase. (e.g. income tax on individuals)

A

Progressive/Graduated Tax

54
Q

the tax rate increases as the tax base decreases.

A

Regressive Tax

55
Q

Systems of Income Taxation

A

a. Global System
b. Schedular system

56
Q

All items of gross income and deductions are reported in one income tax return and the applicable tax rate is applied on the tax based.

A

Global System

57
Q

Different types of income are subject to different sets of graduated or flat income tax rates.

A

Schedular System

58
Q

Other Doctrines/Rules in Taxation

A
  1. Equitable Recoupment
  2. Set-off taxes
  3. Taxpayer Suit
59
Q

Claim for refund which is prevented by prescription may be allowed to be used as payment for unsettled tax liabilities if both taxes arise from the same transactions in which overpayment is made and underpayment is due.

A

Equitable Recoupment

60
Q

Taxes are not subject to set-off or legal compensation because the government and the taxpayer are not mutual creditors and debtors of each other.

A

Set-off taxes

61
Q

This provides that a taxpayer suit can only be allowed of the act involves a direct and illegal disbursement of public funds derived from taxation.

A

Taxpayer Suit

62
Q

Escape from Taxation

A
  1. Evasion or Dodging
  2. Avoidance
  3. Shifting
  4. Capitalization
  5. Transactions
  6. Exemption
63
Q

the taxpayer uses unlawful means to evade or lessen the payment of tax.

A

Evasion or Dodging

64
Q

also called tax minimization, it is the reduction or totally escaping payment
of tax through legally permissible means.

A

AVOIDANCE

65
Q

basically, it is the transfer of tax burden to another. The imposition of tax is
transferred from the statutory taxpayer to another without violation the law.

A

SHIFTING

66
Q

SHIFTING

A

i. Impact
ii. Incidence .
iii. Three (3) kinds shifting

67
Q

is the point at which a tax is originally imposed

A

impact

68
Q

is the point at which the tax burden finally rests or settles down.

A

incidence

69
Q

Three (3) kinds shifting

A
  • Forward shifting
  • Backward shifting
  • Onward shifting
70
Q

the seller is willing to lower the price of the commodity provided the taxes will be shouldered by the buyer.

A

capitalization

71
Q

the manufactured absorbs the additional taxes imposed by the government without passing it to the buyers for fear of lost his/its market. Instead, he/it
increase quantity of production, thereby turning their units of production at a lower cost resulting to the transformation of tax into a gain through the medium of production.

A

transaction

72
Q

it is an immunity, privilege or freedom from payment of a charge or burden to which others are obliged to pay.

A

Exemption

Taxation (2 decks)

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