Nature of The Power of Taxation As An Inherent Power

Nature of the power of taxation as an inherent power
Power to tax, being inherent in an independent state for its existence and survival by the
furtherance of its multifarious functions, the same does not require delegation from the
supreme law of the land. However, exercise of such power upon the inhabitants is
subject to limitations imposed by the power, by its very nature, or by the Supreme law of
the land, the Philippine Constitution. To tax a subject matter, person, property or excise,
there must be a valid law imposing the same. Validity of a tax measure presupposes the
fact that it has overcome the test and scrutiny against it. Tax measures duly passed by
the legislative department, the Congress or the local legislative under its delegated
power, enjoy the presumption of validity and he who controverts has the duty of proving
that the same is otherwise.
By nature, power to tax is inherent in a sovereign estate so that the grant of which is not
necessary but the exercise is provided safeguards and limitations. This means that the
state needs not be empowered by its constitution or any mandate for it to be allowed to
tax. Such power co-exists with the state and thus, grant is not necessary. What are
being provided by the supreme law of the land, the Constitution, are the guidelines and
the limit on the exercise of the power. It wishes to curtail the exercise in such a way as
not to abuse and misuse said power to the detriment of the majority and to the
advantage of the selected few.
Under our tax system, compliance is initially voluntary on the part of the taxpayers.
Nevertheless, the government through the administrative agency empowered to
administer the tax, the BIR , is clothed with such remedies, under proper procedures, to
imposed correct amount of taxes due to the government upon finding that the
compliance based on the declarations in the return is insufficient. It can issue deficiency
assessment and impose such measures provided under the law within the prescribed
period to see to it that taxes are paid and that tax measures are complied with. This
does not however follow that a taxpayer being assessed is doing an illegal business
because non-payment of the tax does not make the business illegal.
Scope of the taxing power
To give a more meaningful power, power of taxation is essentially unlimited and

plenary. This means that the state can tax on anything, anytime, anywhere, and at any
amount. Example is the issue on taxing short messaging (SMS or commonly known as
text message through mobile phones). The author in on the humble view that there
could be nothing wrong on taxing this item as it primarily belongs to the state. What
keeps them perhaps in the meantime is the impact to the poor and underprivileged
depending primarily on the medium to communicate their loved ones from other places.
This follows however, that the limitations and guidelines for the said purpose had been
properly observed.
Limitations of taxing power
While the power does not emanate from a grant, as the same is necessarily inherent
upon the existence of the state, exercise of the power is subject to those limitations
inherent upon it and those expressly provided for by the Constitution as follows:
Inherent limitations. These limitations are those limitations that emanates from the very
nature of the power of taxation. They are very basic and are built-in with the power.
Some may be similar to the constitutional limitation but the constitutional limitation
seems to be supreme as they are the most specific, thus, specifically intended to rule
the application or exercise of the power of taxation. Hereunder are the INHERENT
LIMITATIONS:
• Levy for public purpose. To levy a tax means to impose or to charge or to collect a
tax from those to whom it is addressed. Technically however, to levy is to pass on laws
or ordinances imposing a tax or duty upon specific group of taxpayers. Under this
concept, the impelling reason for the imposition of the tax must be the welfare of the
public, in general. This follows that the proceeds from such imposition shall inure to the
benefit of the public.
In one case, a certain imposition was successfully passed for the purpose of upholding
the welfare of the sugar industry. It was questioned on the ground that there is no
PUBLIC purpose since the sugar industry does not allegedly represent the public. The
issue was resolved in favor of the validity of the imposition. While sugar industry does
not represent the entire public as the proceeds would not add to the general budget of
the national government, nevertheless, the industry itself admits of a public nature
whose circumstances and effects directly affect the public. The requirement of direct
purpose does not admit of a direct public benefit from the imposition.
• Non-delegation of legislative power to tax. To delegate is to pass on or to entrust to

another a certain duty or obligation. Power to tax is lodged with the legislative
department. To my mind, this is because the legislative branch is theoretically the
representative of the people and they are directly aware and in common contact with
the instances and situations of their districts making them the ones knowledgeable of
how best their district could be affected by the new taxes imposed. Likewise, this is
premised on the legal maxim “delegate potestas, non delegari potest” which means,
what has been delegated cannot be re-delegated so as not to hamper the objective of
the delegation. However, there are at least two (2) instances where delegation is
possible (a) delegation to the President of some tariff powers, and (b) Local government
unit’s fiscal autonomy for their self serving needs.
• Exemption of government entities. Government is the people, by (not BUY) the
people, for (not POOR) the people. Government exists for the people and whatever
amount it makes, came from the people and such amount it use to finance its various
activities to address the general welfare of its inhabitants. It is not constituted to engage
in any trade or business but to deliver basic services and serve everyone within.
Analytically, taxing the government itself will not generate more revenue. The money
will only rotate and so no effect, at all, would be made. Suffice it to say however, there
exist no express prohibition
• International comity has something to do with the friendly interaction and

participation of different estates. This adheres to some amount of submission and
compliance of certain international rules and covenants for mutual benefits and
enjoyment of the states and its inhabitants. Bilateral agreements, conventions and
international treaties fall under this category.
• Territorial jurisdiction relates to the area of jurisdiction and responsibility of a

particular estate. Independent states power of taxation is generally confined only within
its jurisdiction to give due respect and as courtesy to other states. A state, as a rule, can
only impose and implement tax laws and rules within its jurisdiction in accordance with
its wishes. Outside its jurisdiction, it is without power to do so. But then, it can tax on
citizens or entities of other states doing a trade or business or deriving income within
the jurisdiction of its state. See the case of Spratley islands for better picture. Issue on
who owns spratley had long been outstanding for each party claims jurisdiction in
accordance with its of the parties belief that it rightfully belongs to it.

Nature of The Power of Taxation As An Inherent Power

Uploaded by

Copyright:

Available Formats

Nature of The Power of Taxation As An Inherent Power

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Nature of The Power of Taxation As An Inherent Power

Uploaded by

Copyright:

Available Formats

Nature of the power of taxation as an inherent power

Scope of the taxing power

To give a more meaningful power, power of taxation is essentially unlimited and

• Non-delegation of legislative power to tax. To delegate is to pass on or to entrust to

• International comity has something to do with the friendly interaction and

• Territorial jurisdiction relates to the area of jurisdiction and responsibility of a

You might also like