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Taxation in the Philippines
Cheryl Anne Demafi les
SS02 Economics
What is Tax?
TAXATION is defined in many ways.Commonly heard definitions include:
It is the process by which the sovereign, through its law making body, races revenues
use to defray expenses of government.It is a means of government in increasing its
revenue under the authority of the law, purposely used to promote welfare and
protection of its citizenry.It is the collection of the share of
individual and organizational income by a government under the authority of the law.
Taxation is the inherent power of the state to impose
and demand contribution upon persons, properties, or
rights for the purpose of generating revenues for
public purposes.
The power of taxation upon necessity and is
inherent in every government or sovereignty.
Concept of Tax
Distinction of Tax
Tax distinguished from Toll- A tax is demand of sovereignty, while toll is
demand for proprietorship.- A tax is paid for the use of the government’s
property, while a toll is paid for the use of another’s property.
- A tax may be imposed by the government only, while a toll is enforced by the government or a private individual or entity.
Tax distinguished from Penalty- A tax is intended to raise revenue, while penalty is
designed to regulate conduct.- A tax may be imposed by the government only
while a penalty may be imposed by the government or a private individual.
Tax distinguished from Debt- A tax is base on law, while a debt is based on
contract.- A tax may not be assignable, while a debt is
assignable.- A tax is generally payable in cash, while debt is
payable in cash or in kind.- A person may be imprisoned for a non-payment
of taxes, but any person may not be imprisoned for non-payment of debt.
What is the History of Tax?
To support the colony, several taxes and monopolies were
established. The buwis (tribute), which could be paid in cash or kind,
with tobacco, chickens, produce, gold, blankets, cotton, rice, or other products depending on the region of
the country.
Also there was the bandalâ (from the Tagalog word mandalâ, a round stack
of rice stalks to be threshed), an annual forced sale and requisitioning
of goods such as rice
-Polo y Servicious
Purposes and Significance of
TaxPrimary purpose: generates funds or revenues use to defray expenses
incurred by the government in promoting the general welfare of its
citizenry.Public expenditure
Other purposes: to equitably contribute to the
wealth of the nation
Characteristics of Tax
It is enforced contribution. Its payment is not voluntary nature, and the imposition is not dependent upon the will of the person taxed.
It is generally payable in cash. This means that payment by checks, promissory notes, or in kind is not accepted.
It is proportionate in character. Payment of taxes should be base on the ability to pay principle; the higher income of the tax payer the bigger amount of the tax paid.
It is levied (to impose; collect) on person or property. There are taxes that are imposed or levied on acts, rights or privileges. Ex. Documentary tax.
It is levied by the state which has jurisdiction over the person or property. As a general rule, only persons, properties, acts, right or transaction with in the jurisdiction of the taxing state are subject for taxation.
It is levied by the law making body of the state. This means that a prior law must be enacted first by the congress before assessment and collection may be implemented of the 1987 constitution.
It is levied for public purposes. Taxes or imposed to support the government for implementation of projects and programs.
1. As to subject matter• Personal, Poll or Capitation Tax (ex.
Residence Tax)• Property Tax. (ex. Real State Tax)
2. As to who bears the burden• Direct Tax (ex. Income Tax)• Indirect Tax (ex. Buying of goods and
services (RVAT) )
Classification of Taxes
3. As to purpose General Tax (ex. Almost All
Taxes)Special Tax
4. As to scopeNational Tax (ex. National
Revenue Taxes)Local Tax
MODYUL 22 ANG PAMBANSANG BADYET.pdf
Principles of Taxation
Fiscal adequacy. Means that the sources of revenue taken as a whole should be sufficient to meet the expanding expenditures of the government regardless of business, export taxes, trade balances, and problems of economic adjustment. Revenues should be capable expanding or contracting annually in response to variations of public expenditures.
Equality or Theoretical Justice. Means the taxes levied must be base upon the ability of the citizen to pay.
Administrative Feasibility. This principle connotes that in a successful tax system, such tax should be clear and plain to taxpayers, capable of enforcement by an adequate and well-trained staff of public office, convenient as to the time and manner payment, and not unduly burdensome upon on discouraging to business activity.
Consistency or Compatibility with Economic Goals. This refer to the tax laws that should be consistent with economic goals or programs of the government. This are the basic services intended for the masses.
Tax ExemptionoReligious InstitutionsoCharitable InstitutionsoNon-Profit, Non-Stock
Educational InstitutionsoNon-profit CemeteriesoGovernment InstitutionsoForeign Diplomats
How to pay Tax?
How to Compute Income Tax in the Philippines
Computing income tax expense and payable is different for individuals and corporations. Taxable corporations may be taxed using a fixed income tax rate.
On the other hand, if you are a self-employed professional or an owner of a single proprietorship business, your income tax expense is computed using a graduated tax rate. It is a progressive tax which the tax rate increases as the taxable base amount increases. This means that the higher taxable income you have, the higher your income tax expense is.
Personal Excemption1. Single or divorced without dependent
P50,000
2. Head of the Family
P50,000
3. Married individuals
P50,000
Government Budget and Expeditures
In National Income Accounting, government spending,
government expenditure, or government spending on goods
and services includes all government consumption and
investment by a state.
DBM Files\2012 Annual Report.pdf
Government acquisition of goods and services for current use to directly satisfy individual or collective needs of the members of the community is called government final consumption expenditure (GFCE.) Government acquisition of goods
and services intended to create future benefits, such as
infrastructure investment or research spending, is called gross
fixed capital formation, or government investment, which
usually is the largest part of the government
Issues on Public
Finance
• Taxation• Budget Deficit• Privatization
Budget Deficit
DBM Files\Budget Deficit Financing.pdf
Kapag lumabis ang gastos sa kita ng pamahalaan,nagiging malaki ang
kakulangan at naaapektuhan ang katatagan ng pamahalaan.Ito ay tinatawag na depisit sa
badyet o budget deficit.
Privatization
Source:
Internet:www.dbm.gov.ph
www.tradingeconomics.comOthers: National Statistical Coordination Board (NSCB)Batayang Ekonomiks