Taxation Activity

Ybañez John Cedric
BSBA-2F
1.Define Taxation
A tax is a compulsory financial charge or some other type of levy imposed on a
taxpayer by a governmental organization in order to fund government spending
and various public expenditures. A failure to pay, along with evasion of or
resistance to taxation, is punishable by law.
2.Distinguish the theory and the basis of taxation?
Theory and basis of taxation • Theory – The existence of the government is a
necessity. – The government cannot continue without a means to pay its
expenses. ... Theory and basis of taxation • Basis – Taxation is based on the
reciprocal duties of protection and support between the government and its
people.
3.What are the theories of government cost allocation?Explain each.
Are economically equivalent to taxes.  Increasing cost allocation rates decreases
the profits of the center.  Increasing the cost allocation rate motivates profit-
maximizing managers to use less of the resource with higher cost allocation rates.
4.Differentiate vertical and horizontal equity
Horizontal equity is a tax principle whereby equals are treated as equals hence
individuals with the same income should pay an equal amount of tax. On the
other hand, vertical equity is a method of tax collection based on the income
amount whereby taxes paid increase with an increase in income.
5.Discuss the lifeblood doctrine.
Taxes are the lifeblood of the government and their prompt and certain
availability is an imperious need.” The phrase expresses the underlying basis of
taxation which is governmental necessity, for indeed, without taxation, a
government can neither exist nor endure.
6.Enumerate and explain the inherent powers of the state
Power of Taxation – An inherent power of the state exercised through legislature,
to impose burdens upon subjects and objects within its jurisdiction, for the
purpose of raising revenues to carry out the legitimate objects of the
government.Nature:
An inherent power of the state exercised through the legislature.

Police Power – This is the power vested in the Legislature by the Constitution to
make, ordain, and establish all manner of wholesome and reasonable laws,
statutes and ordinances, either with penalties or without, not repugnant to the
Constitution, for the good and welfare of the State and its subjects
.Power of Eminent Domain – This is the right of the State to acquire private
property for public use upon payment of just compensation and observance of
due process.Basis:
It is based on genuine necessity and that necessity must be of public character. It
must be reasonable and practicable such that it would greatly benefit the public
with the least inconvenience and expense to the condemning party ad property
owner consistent with such benefit.
7.Distinguish the three powers of the state and enumerate their similarities
Similarities
1.they are inherent in the state and maybe exercise by it without need of express
constitutional grant.
2.they are not only necessary but indenspensable .the states cannot continue or
effective unless it is able to exercise them.
Differences
1.the police power regulate both liberty and property
2.the police power and power of taxation maybe exercise only by the goverent.
8.Describe the scope of the power of taxation

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) .
9. Distinguish substantive due process from procedural due process.

Procedural due process, by contrast, asks whether the government has followed
the proper procedures when it takes away life, liberty or property. Substantive
due process looks to whether there is a sufficient substantive justification, a good
enough reason for such a deprivation. Consider this simple illustration.
10.Distinguish the concept of equality from the concept of uniformity in taxation

The principle of uniformity of taxation bears a close relation to the concept of
equality because similar items are taxed equally only if the mode of assessment is
the same or uniform. ... This requirement applies only to property taxes, not to
excise taxes.
11. Distinguish non-payment of debt versus non-payment of tax in terms of

consequences.
Tax evasion is a major issue in the U.S. today. The Brookings Institute reports that
one out of every six dollars owed to the IRS goes unpaid. [1] Other findings show
the amount of unpaid taxes is equal to three-quarters of the entire annual federal
budget deficit. Both business owners and individual taxpayers commit this crime.
Are you willing to risk the repercussions of not reporting or paying the IRS each
year? If so, click through this slideshow to see some of the consequences you
could face...
12.What institutions are exampt from real property tax in the constitution?
In this regard, the following are exempt from the payment of RPT: (a) real
property owned by the Republic of the Philippines or any of its political
subdivisions, except when the beneficial use thereof has been granted to a
taxable person, with or without consideration thereof; (b) charitable institutions,
churches,
13.Which of the constitutional limitations are also classified as inherent

limitations? Constitutional limitations are those presented for in the constitution
while Inherent limitations are those precincts that exist independently outside the
power of the constitution. Inherent Limitation 1. Purpose. Raising of funds
through taxes may be used for public purpose only.
14.Explain the stages of the exercise of taxation power.

The levying of taxes can be divided into three successive phases: (1) assessment,
or the definition of the exact amount subject to taxation under the statute; (2)
computation or calculation; and (3) enforcement.
15.Explain the concept of situs .

The place where something exists or originates specifically : the place where
something (such as a right) is held to be located in law.
16.Distinguish the Marshall doctrine from the Holmes doctrine
Government or state cannot survive without revenue from taxes. ... The power to
tax is the power to destroy (Marshall Dictum) but taxation power is also the
power to build (Holmes Doctrine). Taxation is also a Police Power of the state.
17. Discuss the Doctrine of strict construction of tax laws

The principle relating to the construction and interpretation of fiscal legislation
are in general those relating to the construction and interpretation of statutes. ...
In regard to tax legislation, Income Tax Acts in particular, the language imposing
the tax must receive a strict construction.
18. Explain double taxation,it’s elements and it’s types

Double taxation is a tax principle referring to income taxes paid twice on the same
source of income. It can occur when income is taxed at both the corporate level
and personal level.
Double taxation often occurs because corporations are considered separate legal
entities from their shareholders. As such, corporations pay taxes on their annual
earnings, just like individuals. When corporations pay out dividends to
shareholders, those dividend payments incur income-tax liabilities for the
shareholders who receive them, even though the earnings that provided the cash
to pay the dividends were already taxed at the corporate level.
Double taxation is often an unintended consequence of tax legislation. It is

generally seen as a negative element of a tax system, and tax authorities attempt
to avoid it whenever possible.
19. What are the categories of escapes from taxation ? Enumerate and explain
each means of escape under each category
) Those that result to loss of government revenue1.TAX EVASION: also known as
tax dodging refers to any act or trick that tends to illegally reduce or avoid the
payment of tax.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.3.TAX EXEMPTION: also known as tax holidayrefers to the immunity,
privilege orfreedom from being subject to a tax whichothers are subject to.B.)
Those that do not result to loss of government revenue1.SHIFTING: the process of
transferring tax burden to other tax payers.Forms of Shifting:a.Forward Shifting:
shifting of tax which follows the normal flow of distribution and is common with
essential commodities and services such as food and fuel.b.Backward shifting:
reverse of forward shifting and is common with non-essential commodities where
buyers have considerable market power and commodities with numerous
substitute products.c.Onward shifting: refers to any tax shifting in the distribution
channel thatexhibits forward shifting or backward shifting5 | P a g eRED
20. Distinguish tax amnesty from tax condonation

Like a tax exemption, a tax amnesty is never favored nor presumed in law, and is
granted by statute. The terms of the amnesty must be strictly construed against
the taxpayer and liberally in favor of the government. ... The condonation of a tax
liability is equivalent to and is in the nature of a tax exemption.
Exercise Drills
1.N
2.C
3.I
4.I
5.C
6.N
7.C
8.I
9.N

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Ybañez John Cedric

An inherent power of the state exercised through the legislature.

8.Describe the scope of the power of taxation

9. Distinguish substantive due process from procedural due process.

10.Distinguish the concept of equality from the concept of uniformity in taxation

11. Distinguish non-payment of debt versus non-payment of tax in terms of

13.Which of the constitutional limitations are also classified as inherent

14.Explain the stages of the exercise of taxation power.

15.Explain the concept of situs .

17. Discuss the Doctrine of strict construction of tax laws

18. Explain double taxation,it’s elements and it’s types

Double taxation is often an unintended consequence of tax legislation. It is

20. Distinguish tax amnesty from tax condonation

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