TAXATION AND REVENUE ADMINISTRATION Taxation •History of Taxation •Definition of taxation •Purpose and Importance •Essential Characteristics Bas is of Taxation Taxation •Theory and Basis •Nature of power of taxation Taxation •Aspect of Taxation •Effect Effectss of Taxation Taxation •Basic Principles of Taxation •The Philippines Taxation System Taxes •Kinds of Taxes
History
During the reign of Egyptian Pharaohs
In Greece
A tax referred to as Eisphora was imposed only in times of war
In Athens
Scribes as tax collectors
A monthly tax called Metoikon was collected to foreigners
Ancientt Greek Taxatio Ancien Taxation n
Taxation was used as an emergency power. Additional resources gained from war were used to refund tax previously collected from the people
History
During the reign of Egyptian Pharaohs
In Greece
A tax referred to as Eisphora was imposed only in times of war
In Athens
Scribes as tax collectors
A monthly tax called Metoikon was collected to foreigners
Ancientt Greek Taxatio Ancien Taxation n
Taxation was used as an emergency power. Additional resources gained from war were used to refund tax previously collected from the people
History
Earliest taxes in Rome
In England
Taxes known as Portoria were customs duties on imports and exports Augustus Caesar introduced the inheritance tax to provide retirement funds for the military military.. The tax was five percent on all inheritances except gifts to children and spouses Taxes were first used as an emergency measure Taxes on income or capital were a recent development as a result of increasing i ncreasing government government intervention in the economy
In the Philippines
The pre-colonial society, being communitarian, did not have taxes
History
In Modern Industrial Nations
The government designates a tax base (such as income, property holdings, or a given commodity) A Tax Law is a body of rules passed by the legislature by which the government acquires a claim on tax payers to convey, transfer and pay to the public authority
Definition of Taxation Taxation is the act of laying a tax..the process or means by which the sovereign, through its law making body raises revenue to defray the necessary expenses of government.
Definition of Taxation
It is a method of apportioning the cost of government among those who in some measure are privileged to enjoy its benefits and must therefore, bear it burdens.
Purpose and Importance
The purpose of taxation on the part of government is to provide funds which to promote the general welfare and protection of its citizens, and to enable it to finance its multifarious activities
Definition of taxes It is an enforced proportional contribution from persons and property levied by the law making body of the state by virtue of its sovereignty for the support of the government and all public needs.
Essential Characteristics of Tax
(1) It is an enforced contribution-A tax is not a voluntary payment or donation and its imposition is in no way dependent upon the will or assent of the persons taxed.
Essential Characteristics of Tax
(2) It is generally payable in money- It is understood to be a pecuniary burdenan exaction to be discharged alone in money which must be in legal tender.
Essential Characteristics of Tax
(3) Proportionate in Character-A tax is laid by some rule of apportionment according to which the persons or property share the public burden.
Essential Characteristics of Tax (4) It is levied on persons or property-A tax may also be imposed on acts or transactions or contracts.
Essential Characteristics of Tax (5) It is levied by the state which has jurisdiction over the person or property. The person and property must be subject to the jurisdiction of the taxing state. The taxing power of the state necessarily stops at its boundary lines.
Essential Characteristics of Tax (6) IT is levied by the law-making body of the state. The power to tax is a legislative power which only the legislative statutes or ordinances. The power to tax is also granted by the Constitutions and by the law to local government unit.
Essential Characteristics of Tax (7). It is levied for public purposes. Taxation involves and a tax constitutes, a change in burden imposed to provide income for public purposes the support of the government, the administration of the law, or the payment of public expenses.
Theory and Basis of Taxation
(1).The power of taxation proceeds upon the theory that the existence of government is a necessity; that it cannot continue without the means to pay its expenses; and that for these means, it has a right to compel all its citizens and property within its limit to contribute.
Theory and basis of taxation (2) The basis of taxation is found in the reciprocal duties of protection and support between the state and its inhabitants. In return for his contribution, the taxpayer receives benefits and protection from the government. This is the so called benefits received principles.
Nature of power of taxation
(1) It is inherent in sovereignty. The power of taxation is inherent in sovereignty being essential to the existence of the government. (2) It is legislative in character. The power to tax is legislative. It cannot be exercised by the executive or judicial branch of the government. (3) It is subject to constitutional and inherent limitation.
Aspect of Taxation (1) Levying or imposition of the tax which is a
legislative in act. (2) Collection of the tax levied which is essential
in character
Basic principles of a sound tax system
(1) Fiscal Adequacy, which means that the
sources of revenue should be sufficient to meet the demands of public expenditure. (2) Equality or theoretical justice, which means that the tax burden should be proportionate to the taxpayer's ability to pay. (3) Administrative feasibility, which means that the tax laws should be capable of convenient, just and effective administration.
Effects of Taxation
Personal Income Tax which is presumed to fall entirely on the legal taxpayers influences decisions to work, save, and invest. These decisions affect other people. Corporate Income Tax may simply result to lower corporate profits and dividends. It may reduce their income of all owners of property and businesses. The company may move toward raising the prices of their products.
Taxation in the Philippines
The legislative branch enacts laws to continually revitalize the taxation policy of the country
BIR (Bureau of Internal Revenue)
Mandated to comprehend the assessment and collection of all national internal revenue taxes, fees and charges so as to promote a sustainable economic growth
Taxation in the Philippines
Republic Act No. 8424 (Comprehensive Tax Reform Act of 1997)
Tax Payer: any person subject to tax whose sources of income is derived from within the Philippines TIN (Taxpayer Identification Number) is required for any individual taxpayer
Taxation in the Philippines
Tax Reforms:
Lower income tax rates to enhance the competitiveness of the Philippines in the region Removal of areas which provide avenues for tax avoidance and abuse Exemption of OFWs from payment of tax for income earned outside the Philippines Simplification of the tax system which encourages payments from tax payers including those from the underground economy
Taxation in the Philippines
Taxes are collected within a particular period of time know as taxable year
This is the calendar year or the fiscal year that covers an accounting period of 12 months ending on the last day of any month other that December.
Kinds of taxes
Income Tax
Donor’s Tax
Tax on all yearly profits arising form property, possessions, trades or offices Tax on a person’s income, emoluments and profits Tax imposed on donations inter-vivos or those made between living persons to take effect during the lifetime of the donor.
Estate Tax
Tax on the right of the deceased person to transmit property at death
Kinds of taxes
Excise Tax
Tax applicable to specified goods manufactured in the Philippines for domestic sale or consumption
Specific tax: imposed on certain goods based on weight or volume capacity or any other physical unit of measurement (Specific tax = volume x tax rate)
Alcohol products, petroleum products, tobacco products
Ad valorem tax: imposed on certain goods based on selling price or other specified value of the goods (Ad valorem tax = selling price x tax rate)
Mineral products, automobiles
Kinds of taxes
Documentary Tax
Tax on documents, instruments, loan agreements and papers, agreements evidencing the acceptance, assignments, sale or transfer of an obligation, rights or property incident thereto
Withholding tax
Expanded withholding tax:
A system of collecting taxes whereby the taxes withheld on certain income payments are intended to equal or at least approximate the tax due of the payer on said income.
Withholding tax
Final withholding tax:
A system of collecting taxes whereby the amount of income tax withheld by the withholding agent is constituted as a full payment of the income tax due form the payer on the said income. The payer is not required to file an income tax return for the particular income.
Shifting the incidence of taxation
Shifting taxation is the process of passing the burden of the tax to others. A tax can be shifted when the taxpayer is able to obtain a higher price for something he sells or when he pays a lower price for a commodity he purchases.
Tax Evasion
When there is fraud through pretension and the use of other illegal devices to lessen one’s taxes, there is tax evasion
Under-declaration of income Non-declaration of income and other items subject to tax Under-appraisal of goods subject to tariff Over-declaration of deductions
Tax Avoidance
It is the use by the taxpayer of legally permissible means of method in order to avoid or reduce tax liability. It is not punishable by law.
