Taxing power of the state
-power of the state to raise revenues for support of the government
-no taxes/revenue= no government= no people
-should not be used to destroy the source of revenue unless used as police power
-don’t kill the duck that lays the golden egg
Legal basis:
-to contribute for the support of the government because if given the choice people will not give freely
-necessity to have a government
Who exercises taxing power?
- Congress (inherent)
- President (tariff power)
-need express grant of congress
-must be within the framework of economic development
*universal charge is a police power not taxing power
3. LGU- including the barangay
-does not need express grant from congress because the constitution itself provides for such power
-SEC 5 ART 10 of the constitution is self executing
- can tax national government instrumentalities (branch of national agencies) found in their territory to be autonomous and to gain revenue
-in case of doubt construe it as against the taxing power of LGU and in favor of the national government
-those properties acquired in the proprietary capacity/ private property can be subject to tax but those acquired in sovereign capacity cannot be subjected to tax
*private entities maybe tasked o collect taxes but not impose taxes
*taxing power should not be exorbitant/ confiscatory
*it should not be used to destroy the property of a person except if used as a tool in POLICE POWER to protect public welfare
Double Taxation
- constitution is silent
-a person or property is taxed twice or more by the same taxing authority, same purpose, same period, same subject (SAPP)
-it only becomes unconstitutional if it violates the equal protection clause
Characteristics: uniform, equitable and progressive
-uniform: situated under the same circumstances
-equitable: according to the capacity to pay tax
-progressive: as income increases the tax rate also increases
In case of doubt as to if a person is subject to tax construe it as against the taxpayer and in favor of the state.
*Tax exemption by congress: needs majority votes of members of congress
*Tax treaty by president: 2/3 votes of members of senate
TAX EXEMPTION provided by CONSTITUTION
- Religious and charitable institutions (Sec 22)
-limited to property tax
-must be actually, directly and exclusively used for religious purposes
-even if the land is not owned by the church it is still exempt to property tax (but the rent of the church is subject to income tax)
-donations during offertory are subject to tax
- Educational institutions which are non stock and non profit
-property and revenue is exempt from tax
*proprietary educational institutional unless otherwise provided by law they enjoy the same exemption
Ex: Cebu has a law providing that such proprietary institutions be taxed so they should pay.
If there is no law then they are exempt.
Due Process of law= must not be confiscatory
Equal protection of clause= uniform, equitable, progressive
Non impairment clause= taxes prevails over contracts or non impairment clause
Tax exemption can be revoked if the grant is gratuitous or out of generosity.
Ex: personal exemption in income tax can be revoked
Tax exemption cannot be revoked if the grant is onerous or for valuable consideration.
Ex: companies in export processing zone are exempt from tax for the 1st 5 yrs, such exemption cannot be revoked
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