Principles

of Taxation
LEADER: CARNAJE, ALLAINE KAYE M.
ADELANTAR, CIARRA JOY S.
ALMIRANTE, ROVI MAY M.
ESTEVA, KATE B.
PRINCIPLES OF
TAXATION
 Definition
 Nature, Scope, Classification and
Essential Characteristic
 Aspects, Process, Objectives, Importance
of Taxation
 Principles of Sound Tax system
 Inherent Powers of the State
 Limitations of the Power of Taxation
 Tax Evasion vs. Tax Avoidance
 Situs/ Place of Taxation
 Impact of Taxation
 Tax vs. Other Charges
 Ethical Tax Compliance
 Taxation
Taxation is defined as the
process or means by which the
sovereign, thought its lawmaking
body, rises income to defray the
necessary expenses of the
government.
 Taxation as a State power, a legislative process, and a
mode of government cost distribution.

1. As a state power
Taxation is an inherent power of the State to enforce a
proportional contribution from its subjects for public purposes.
2. As a process
Taxation is a process of levying taxes by the legislature
of the State to enforce proportional contributions from its
subjects for public purpose.
3. As a mode of cost distribution
Taxation is a mode by which the State allocates its costs
or burden to its subject who are benefited by its spending.
 The Theory of
Taxation
Every government provides a vast array of public
services including defense, public order and safety,
health, education, and social protection among others.
A system of government is indispensable to
every society. Without it, the people will not relish the
benefits of a civilized and orderly society. However, a
government cannot exist without a system of funding.
The government's necessity for funding is the theory of
taxation.
 The Basis of Taxation
The government provides benefits to the people in the form of
public services, and the people provide the funds that finance the
government. This mutuality of support between the people and the
government is referred to as the basis of taxation.
This mutuality is illustrated as:
Public Services

Government People

Taxes
 Nature of
Taxation
1. Inherent in sovereignty- It means that
taxation exists as an incident or attribute
thereof, being essential to the existence of
every government. The power to tax can
therefore be exercised even without the
constitution or any law expressly conferring
such power.
2. Legislative in character - This power can
be exercised by the lawmaking body
(Congress) not the executive or the judicial
branch of the government, except when
delegated by the national legislative body to
a local legislative body or to the executive
branch, subject to limitations may be
provided by the law;
3. Subject to constitutional and inherent
limitations- Taxation is subject to certain
limitations. Most of the limitations are
specifically provided in the constitution or
implied therefrom while the rest are
inherent and they are those which spring
from the nature of the power of taxation
itself although, they may or may not be
provided in the constitution.
Scope of Taxation
The scope of taxation is widely
regarded as comprehensive, plenary,
unlimited and supreme.
CLASSIFICATION OF TAXES
1. As to subject matter or object
a. Personal, poll or capitation - Tax of a fixed amount imposed on
individuals, whether citizens or not, residing with a specified
territory without regard to their property or the occupation in which
they may be engaged.
b. Property - Tax imposed on a property, whether real or personal, on
proportion either to its value or in accordance with some other
reasonable method of appointment.
c. Excise - Tax imposed upon the performance of an act, the
enjoyment of a privilege or the engaging in an occupation.
2. As to who bears the burden
a. Direct - Tax demand from persons who are intended or bond by law to pay the tax.
b. Indirect - Tax which the taxpayer can shift to another.
3. As to determination of amount
a. Specific - Tax imposed based on a physical unit of measurement, as by head or
number, weight, or length or volume.
b. Ad valorem - Tax of a fixed proportion of the value of property; needs an independent
appraiser to determine its value.
4. As to purpose
a. General, fiscal or revenue - Tax with no particular purpose or object for which the
revenue is raised, but is simply raised for whatever need may arise.
b. Special regulatory - Tax imposed for a special purpose regardless of whether revenue
is raised or not, and is intended to achieve some social or economic end.
5. As to authority imposing the tax or scope
a. National - Tax imposed by the government.
b. Municipal - Tax imposed by municipal governments for specific needs.

6. As to graduation or rate
a. Proportional - Tax based on a fixed percentage of the amount of property income of
other basis to be taxed.
b. Progressive or graduated - Tax rate increases as the tax base increase.
c. Regressive - Tax rate decreases as the tax base increase.
ESSENTIAL CHARACTERISTICS
OF A TAX
• It is enforced contribution
• It is levied by the lawmaking body
• It is proportionate in character
• It is generally payable in money
• It is imposed for the purpose of raising
revenue
• It is to be used for public purpose
 ASPECTS OF TAXATION
1. Levy or imposition
2. Assessment and collection
Levy or Imposition
This process involves the enactment of a tax law by Congress
and is called impact of taxation. It is also referred to as the legislative
act in taxation.
Congress is composed of two bodies:
1. The House of Representatives, and
2. The Senate
 As mandated by the Constitution, tax bills must originate from the
House of Representatives. Each may, however, have their own versions
of a proposed law which is approved by both bodies, but tax bills cannot
originate exclusively from the Senate.

2. Assessment and Collection

The tax law is implemented by the administrative branch of the
government. Implementation involves assessment or the determination
of the tax liabilities of taxpayers and collection. This stage is referred to
as incidence of taxation or the administrative act of taxation.
 OBJECTIVES OF
TAXATION
Taxation is much more than just a means of raising revenue
for the government. It is also one of the major means by which the
national government attempts to achieve various economic and social
objectives. These objectives include shifting wealth from the rich to
the poor, maintaining price stability, stimulating economic growth,
and encouraging full employment.
Congress tends to use tax provisions in two (2) different ways:
1. Some tax rules are enacted for the purpose of mitigating certain
undesirable economic and social conditions already existing.
2. Other tax rules provide incentives for certain desirable activities.
THEORIES OF COST ALLOCATION
In distributing the costs or burden, the government regards
the following general considerations in the exercise of its
taxation power:
1. BENEFIT RECEIVED THEORY – presupposes that
the more benefit one receives from the government, the
more taxes he should pay.
2. ABILITY TO PAY THEORY – PRESUPPOSES that
taxation should also consider the taxpayer’s ability to
pay. Taxpayers should be required to contribute based
on their relative capacity to sacrifice for the support of
the government.
 ASPECTS OF THE ABILITY TO
PAY THEORY
1. VERTICAL EQUITY proposes that the extent of
one’s ability to pay is directly proportional to the level
of his tax base.

EXAMPLE: A has P200,000 income while B has

P400,00. In taxing income, the government should tax
B more than A because B has greater income; hence,
a greater capacity to contribute.
2. HORIZONTAL EQUITY requires consideration of
the particular circumstances of the taxpayer.

EXAMPLE: Businessmen A and B both have

P300,000 income. A incurred P200,000 in business
expenses while B incurred only P50,000 business
expenses. The government should tax B more than A
because he has lesser expenses and thus greater
capacity to contribute taxes.

✓ Vertical equity is a gross concept while horizontal

equity is a net concept.
 The Lifeblood
Doctrine
Taxes are essential and indispensable to the continued
substance of the government. Without taxes, the government would
be paralyzed for lack of motive power to activate or operate it. (CIR
vs. Algue)
Taxes are the lifeblood of the government, and their prompt
and certain availability are an imperious need. Upon taxation
depends the government's ability to serve the people for whose
benefit taxes are collected. (Vera vs. Fernandez)
 Implication of the Lifeblood
Doctrine in Taxation
1. Tax is imposed even in the absence of a Constitutional grant.
2. Claims for tax exemption are constructed against taxpayers.
3. The government reserves the right to choose the objects of taxation.
4. The courts are not allowed to interfere with the collection of taxes.
5. In income taxation:
a. Income received in advance is taxable upon receipt.
b. Deduction for capital expenditures and prepayments is not allowed as
effectively defers the collection of income tax.
c. A lower amount of deduction is preferred when a claimable expense is subject to limit.
d. A higher tax base is preferred when the tax object has multiple tax bases.
PRINCIPLES OF A SOUND
TAX SYSTEM
1. Fiscal Adequacy. Sources of revenue are
sufficient to meet government expenditure;
2. Equality or theoretical justice. The tax imposed
must be proportional to taxpayer’s ability to pay; and
3. Administrative feasibility. The law must be
capable of convenient, just and effective
administration.
 Inherent Powers of the State
A government has its basic needs and rights which co-exist with its
creation. It has rights to sustenance, protection, and properties. The
government sustains itself by the power of taxation, secures itself and the
well-being of its people by police power, and secures its own properties to
carry out its public services by the power of eminent domain.
These rights, dubbed as “power” are natural, inseparable, and
inherent to every government. No government can sustain or effectively
operate without these powers. Therefore, the exercise of these powers by
the government is presumed understood and acknowledged by the people
from the very moment they establish their government. These powers are
naturally exercisable by the government even in the absence of an express
grant of power in the Constitution.
 The Inherent Powers
of the State
1. Taxation power
Taxation power is the power of the State to enforce
proportional contribution from its subjects to sustain itself.
2. Police power
Police power is the general power of the State to enact
laws to protect the well-being of the people.
3. Eminent domain
Eminent domain is the power of the State to take private
property for public use after paying just compensation.
 Comparison of the three powers of the
State
Point of Difference Taxation Police Power Eminent Domain
Exercising Government Government Government and private
Authority utilities
Purpose For the support of the To protect the general For public use
government welfare of the people
Persons Affected Community or class of Community or class of Owner of the property
individuals individuals
Amount of Unlimited (Tax is based Limited (Imposition is No amount imposed. (
Imposition on government needs.) limited to cover cost of The government pays
regulation.) just compensation.)
Importance Most important Most superior Important
Relationship with Inferior to the 'Non- Superior to the “Non- Superior to the “Non-
the Constitution impairment Clause” of the impairment Clause” of the impairment Clause” of
Constitution Constitution the Constitution
Limitation Constitutional and Public interest and due Public purpose and just
inherent limitations process compensation
Similarities of the Three Powers of
the State
1. They are all necessary attributes of sovereignty.
2. They are all inherent to the State.
3. They are all legislative in nature.
4. They are all ways in which the State interferes with private rights and
properties.
5. They all exist independently of the Constitution and are exercisable by the
government even without Constitutional grant. However, the Constitution
may impose conditions or limits for their exercise.
6. They all presuppose an equivalent form of compensation received by the
persons affected by the exercise of the power.
7. The exercise of these powers by the local government units may be limited
by the national legislature.
 The Limitations
of the Taxation
Power
A. Inherent limitations
1. Territoriality of taxation
2. International comity
3. Public purpose
4. Exemption of the government
5. Non-delegation of the taxing power
B. Constitutional Limitations
1. Due process of law
2. Equal protection of the law
3. Uniformity rule in taxation
4. Progressive system of taxation
5. Non-imprisonment for non-payment of debt or poll tax
6. Non-impairment of obligation and contract
7. Free worship rule
8. Exemption of religious or charitable entities, non-profit
cemeteries, churches and mosque from property taxes.
9. Non-appropriation of public funds or property for the benefit of
any church, sect or system of religion
10. Exemption of religious or charitable entities, non-profit
cemeteries, churches and mosque from property taxes
11. Concurrence of a majority of all members of Congress for the
passage of a law granting tax exemption
12. Non-diversification of tax collections
13. Non-delegation of the power of taxation
14. Non-impairment of the jurisdiction of the Supreme Court to
review tax cases
15. The requirement that appropriations, revenue, or tariff bills
shall originate exclusively in the House of Representatives
16. The delegation of taxing power to local government units.
Inherent Limitation of Taxation

TERRITORIALITY OF TAXATION
Public services are normally provided within the
boundaries of the State. Thus, the government can only demand
tax obligations upon its subjects or residents within its territorial
jurisdiction. There is no basis in taxing foreign subjects abroad
since they do not derive benefits from our government.
furthermore, extraterritorial taxation will amount to encroachment
of foreign sovereignty.
INTERNATIONAL COMITY

In the UN Convention, countries of the world agreed to one

fundamental concept of co-equal sovereignty wherein all nations are
deemed equal with one another regardless of race, religion, culture,
economic condition or military power.
No country is powerful than the other. It is by this principle
that each country observes international comity or mutual courtesy
or reciprocity between them. Hence,
1. Governments do not tax the income and properties of the
governments.
2. Governments give primacy to their treaty obligations over
their own domestic tax laws.
 Embassies or consular offices of foreign governments in the
Philippines including international organizations and their non-Filipino
staff are not subject to income taxes or property taxes. Under the
National Internal Revenue Code (NIRC), the income of foreign
government and foreign government-owned and controlled corporations
are not subject to income tax.
When a state enters into treaties with other states, it is bound to
honor the agreements as a matter of mutual courtesy with the treaty
partners even if the same conflicts with its local tax laws.

PUBLIC PURPOSE
Tax is intended for the common good. Taxation must be
exercised absolutely for public purpose. It cannot be exercised to further
any private interest.
EXEMPTION OF THE GOVERNMENT

The taxation power is broad. The government can exercise the

power upon anything including itself. However, the government
normally does not tax itself as this will not raise additional funds but
will only impute additional costs.
Under the NIRC, government properties and income from
essential public functions are not subject to taxation. However,
income of the government from its properties and activities conducted
for profit including income from government owned and controlled
corporations is subject to tax.
NON-DELEGATION OF THE TAXING POWER

The legislative taxing power is vested exclusively in

Congress and is non-delegable pursuant to the doctrine of
separation of the branches of the government to ensure a system
of checks and balances.
The power of lawmaking, including taxation, is delegated
by the people to the legislature. So as not spoil the purpose of
delegation, it is held that what has been delegated cannot be
further delegated.
CONSTITUTIONAL LIMITATIONS
OF TAXATION

OBSERVANCE OF DUE PROCESS OF LAW

No one should be deprived of his life, liberty, or property
without due process of law. Tax laws should neither be harsh
nor oppressive.
Aspects of due process:
1. Substantive due process
Tax must be imposed only for public purpose, collected only under authority of
a valid law and only by the taxing power having jurisdiction. An assessment without a
legal basis violates the requirement of due process.
2. Procedural due process
There should be no arbitraries in assessment and collection of taxes, and the
government shall observe the taxpayer's right to notice and hearing. The law
established procedures which must be adhered to in making assessments and in
enforcing collections.
Under the NIRC, assessments shall be made within three years from the due
date of filing of the return or from the date of actual filing, whichever is later.
Collection shall be made within five years from the date of assessment. The failure of
the government to observe these rules violates the requirement of due process.
EQUAL PROTECTION OF THE LAW

No person shall be denied the equal protection of the law.

Taxpayers should be treated equally both in terms of rights
conferred and obligations imposed.
This rule applies where taxpayers are under the same
circumstances and conditions. This requirement would mean
Congress cannot exempt sellers of “balot” while subjecting sellers
of “penoy” to tax since they are essentially the same goods.
UNIFORMITY RULE IN TAXATION
The rule of taxation shall be uniform and equitable. Taxpayers
under dissimilar circumstances should not be taxed the same. Taxpayers
should be classified according to commonality in attributes, and the tax
classification to be adopted should be based on substantial distinction.
Each class is taxed differently, but taxpayers falling under the same class
are taxed the same. Hence, uniformity is relative equality.
PROGRESSIVE SYSTEM OF TAXATION
Congress shall evolve a progressive system of taxation. Under the
progressive system, tax rates increase as the tax base increases. The
Constitution favors progressive tax as it is consistent with the taxpayer's
ability to pay. Moreover, the progressive system aids in an equitable
distribution of wealth to society by taxing the rich more than the poor.
NON-IMPRISONMENT FOR NON-PAYMENT OF DEBT OR POLL TAX

As a policy, no one shall be imprisoned because of his

poverty, and no one shall be imprisoned for mere inability to pay
debt.
However, this Constitutional guarantee applies only when
the debt is acquired by the debtor in good faith. Debt acquired in
bad faith constitutes estafa, a criminal offense punishable by
imprisonment.
NON-IMPAIRMENT OF OBLIGATION AND CONTRACT
The State should set an example of good faith among its
constituents. It should not set aside its obligations from contracts by the
exercise of its taxation power. Tax exemptions granted under contract
should be honored and should not be cancelled by a unilateral government
action.
FREE WORSHIP RULE
The Philippine government adopts free exercise of religion and
does not subject its exercise to taxation. Consequently, the properties and
revenues of religious institutions such as tithes or offerings are not subject
to tax. The exemption however, does not extend to income from properties
or activities of religious institutions that are proprietary or commercial in
nature.
 EXEMPTION OF RELIGIOUS, CHARITABLE OR
EDUCATIONAL ENTITIES, NON-PROFIT CEMETERIES, CHURCHES
AND MOSQUES, LANDS, BUILDINGS, AND IMPROVEMENTS FROM
PROPERTY TAXES.
The Constitutional exemption from property tax applies for
properties actually, directly, and exclusively (i.e. primarily) used for
charitable, religious, and educational purposes.
In observing this Constitutional limitation, the Philippines follows the doctrine
of use wherein only properties actually devoted for religious, charitable, or
educational activities are exempt from real property tax.
Under the doctrine of ownership, the properties of religious, charitable, or
educational entities whether or not used in their primary operations are exempt from
real property tax. This, however, is not applied in the Philippines.
 NON-APPROPRIATION OF PUBLIC FUNDS OR
PROPERTY FOR THE BENEFITS OF ANY CHURCH, SECT, OR
SYSTEM OF RELIGION.
This constitutional limitation is intended to highlight the
separation of religion and the State. To support freedom of religion,
the government should not favor any particular system of religion by
appropriating public funs or property in support thereof.
It should be noted, however, that compensation to priests,
imams, or religious ministers working with the military, penal
institutions. orphanages, or leprosarium is not considered religious
appropriation.
EXEMPTION FROM TAXES OF THE REVENUES AND ASSETS OF NON-
PROFIT, NON-STOCK EDUCATIONAL INSTITUTIONS INCLUDING
GRANTS, ENDOWMENTS, DONATIONS, OR CONTRIBUTIONS FOR
EDUCATIONAL PURPOSES
The Constitution recognizes the necessity of education in state building
by granting tax exemption on revenues and assets of non-profit educational
institutions. This exemption, however, applies only on revenues and assets that
are actually, directly, and exclusively devoted for educational purposes.
Consistent with this constitutional recognition of education as a
necessity, the NIRC also exempts government educational institutions from
income tax and subjects private educational institutions to a minimal 10%
income tax.
CONCURRENCE OF A MAJORITY OF ALL MEMBERS OF CONGRESS
FOR THE PASSAGE OF A LAW GRANTING TAX EXEMPTION
Tax exemption law counters against the lifeblood doctrine as it deprives the
government of revenues. Hence, the grant of tax exemption must proceed only upon a
valid basis. As a safety net, the Constitution requires the vote of the majority of all
members of Congress in the grant of tax exemption.
In the approval of an exemption law, an absolute majority or the majority of all
members of Congress, not a relative majority or quorum majority, is required. However,
in the withdrawal of tax exemption, only a relative majority is required
NON-DIVERSIFICATION OF TAX COLLECTIONS
Tax collections should be used only for public purpose. It should never be
diversified or used for private purpose.
NON-DELEGATION OF THE POWER OF TAXATION
The principle of checks and balances in a republican state requires
that taxation power as part of lawmaking be vested exclusively in Congress.
However, delegation may be made on matters involving the
expedient and effective administration and implementation of assessment
and collection of taxes. Also, certain aspects of the taxing process that are
non-legislative in character are delegated.
Hence, implementing administrative agencies such as the
Department of Finance and the Bureau of Internal Revenue (BIR) issues
revenue regulations, ruling, orders, or circulars to interpret and clarify the
application of the law. But even so their functions are merely intended to
interpret or clarify the proper application of the law. They are not allowed to
introduce new legislations within their quasi legislative authority.
NON-IMPAIRMENT OF THE JURISDICTION OF THE SUPREME
COURT TO REVIEW TAX CASES
Notwithstanding the existence of the Court of Tax Appeals, which is a special
court, all cases involving taxes can be raised to and be finally decided by the Supreme
Court of the Philippines.
APPROPRIATIONS, REVENUE, OR TARIFF BILLS SHALL ORIGINATE
EXCLUSIVELY IN THE HOUSE OF REPRESENTATIVES, BUT THE
SENATE MAY PROPOSE OR CONCUR WITH AMENDMENTS
Laws that add income to the national treasury and those that allows spending
therein must originate from the House of Representatives while Senate may concur
with amendments. The origination of a bill by Congress does not necessarily mean
that the House bill must become the final law. It was held constitutional by the
Supreme Court when Senate changed the entire house version of a tax bill.
EACH LOCAL GOVERNMENT UNIT SHALL EXERCISE
THE POWER TO CREATE ITS OWN SOURCES OF
REVENUE AND SHALL HAVE JUST SHARE IN THE
NATIONAL TAXES
This is a constitutional recognition of the local autonomy of
local governments and an express delegation of the taxing power.
 Tax evasion vs. Tax Avoidance
1. TAX EVASION- also known as tax dodging, refers to any act or
trick that tends to illegally reduce or avoid the payment of tax. One
way that people try to evade paying taxes is by failing to report all
or some of their income. Sometimes people do not report income
gained through illegal activities such as gambling and selling
stolen goods. Other times they do not report all the tips they
collect or the money they earn through legal activities such as
garage sales, baby-sitting, tutoring, or yard work. Such money-
making activities are part of the underground economy, which
exists as a way to avoid paying taxes. If taxpayers fail to pay what
officials say they owe, the IRS can assess a penalty, in addition to
collecting the back taxes.
2. TAX AVOIDANCE- also known as tax minimization, refers to
any act or trick that reduces or totally escapes taxes by any
legally permissible means. IRS regulations allow eligible
taxpayers to claim certain deductions, credits, and adjustments
to income. For instance, some homeowners can claim a
deduction for interest they pay on a home mortgage. Working
parents may be able to claim a credit for child-care expenses.
There are also deductions based on the number of family
members. These are only a few of the many ways people can
legally limit the tax they pay. However, the taxpayer must be
able to prove that he or she qualifies. Many people pay more
federal income tax than necessary because they misunderstand
tax laws and fail to keep good records.
THE DIFFERENCE BETWEEN TAX EVASION AND
TAX AVOIDANCE LARGELY BOILS DOWN TO TWO
ELEMENTS: LYING AND HIDING.

‘’Tax avoidance is structuring your affairs so

that you pat the least amount of tax due.
Tax evasion is lying on your income tax form
or any other form,’’ says beverly hills,
california – based tax attorney Mitch Miller.
 Situs of Taxation

Situs- is the place of taxation. It is the tax

jurisdiction that has the power to levy taxes
upon the tax object. Situs rules serve as frames
of reference in gauging whether the tax object
is within or outside the tax jurisdiction of the
taxing authority.
EXAMPLES OF SITUS RULES:
1. Business tax situs: Businesses are subject to tax in
the place where the business is conducted.

Illustration:
A taxpayer is involved in car dealership abroad and
restaurant operation in the Philippines.
The restaurant business will be subject to business
tax in the Philippines since the business is conducted
herein, but the car dealing business is exempt because the
business is conducted abroad.
2. Income tax situs on services: Service fees are subject to
tax where they are rendered.

Illustration:
A foreign corporation leases a residential space to a
non-resident Filipino citizen abroad.
The rent income will be exempt from Philippine
taxation as the leasing service rendered abroad.
3. Income tax situs on sale of goods: The gain on sale is
subject to tax in the place of sale.
Illustration:
While in China, a non-resident OFW citizen agreed with a
Chinese friend to sell his diamond necklace to the latter. They
stipulated that the delivery of the item the payment will be made
a week later in the Philippines. The sale was consummated as
agreed.
The contract of sale is consensual and is perfected by the
meeting of the minds of the contracting parties. The perfection of
the contract of sale is in China. The situs of taxation is China.
The gain on the sale of the necklace will be taxable abroad and
exempt in the Philippines.
4. Property tax situs: Properties are taxable in their
location.

Illustration:
An overseas Filipino worker has a residential lot in the
Philippines.
He will still pay real property tax despite his absence
in the Philippines because his property is located herein.
5. Personal tax situs: Persons are taxable in their place of
residence.

Illustration:
Ahmed Lofti is a Sudanese studying medicine in the
Philippines.
Ahmed will pay personal tax in the Philippines even if he
is an alien because he is residing in the Philippines.
 DOUBLE TAXATION
Double Taxation occurs when the same taxpayer is taxed
twice by the same tax jurisdiction for the same thing.
Elements of double taxation
1. Primary element: Same object
2. Secondary Elements:
a. Same type of tax
b. Same purpose of tax
c. Same taxing jurisdiction
d. Same tax period
 TYPES OF DOUBLE TAXATION
1. Direct double taxation
This occurs when all the element of double
taxation exists forboth impositions.
Examples:
a. An income tax of 10% on monthly sales and a 2%
income tax on the annual sales (total of monthly
sales)
b. A 5% tax on bank reserve deficiency and another
1% penalty per day as a consequence of such
reserve deficiency
2. Indirect double taxation
This occurs when at least one of the secondary
elements of double taxation is not common for both impositions.
Examples:
a. The national government levies business tax on the sales
or gross receipts of business while the local government
levies business tax upon the same sales or receipts.
b. The national government collects income tax from a
taxpayer on his income while the local government collects
community tax upon the same income.
c. The Philippine government taxes foreign incomes of
domestic corporations and resident citizens while a foreign
government also taxes the same income (international
double taxation).
 TAX vs. OTHER
CHARGES
1. TAX FROM TOLL
Toll is a sum of money for the use of something,
generally applied to the consideration which is paid for the use
of a road, bridge or the like, of a public nature.
A toll is a demand of proprietorship, is paid for the use
of another’s property and may be imposed by the government
or private individuals or entities; while tax is a demand of
sovereignty, is paid for the support of the government and
may be imposed only by the State.
2. TAX FROM SPECIAL ASSESSMENT
Special assessment is an enforced proportional
contribution from owners of lands for special benefits
resulting from public improvements.
Special assessment is levied only on land, is not
a personal liability of the person assessed, is based
wholly on benefits and is exceptional both as to time
and place. Tax is levied on persons, property, or
exercise of privilege, which may be made a personal
liability of the person assessed, is based on necessity
and is of general application
3. TAX FROM PERMIT OR LICENSE FEE
Permit of license fee is a charge imposed under the police power for
purposes of regulation.
License fee is imposed for regulation and involves the exercise of police
power while tax is levied for revenue and involves the exercise of the taxing power.
Failure to pay a license fee makes and act or a business illegal while failure to pay
a tax does not necessarily make an act or business illegal.
4. TAX FROM DEBT
A debt is generally based on contract, assignable and may be paid in kind
while a tax is based on law, cannot generally be assigned and is generally payable
in money. A person cannot be imprisoned for non-payment of debt while he can be
for non-payment of tax (except poll tax).