Basic Principles
of Taxation
-
History
Jacqueline M. Calaycay, RN, MSN
of Taxation
importance of taxation to the taxpayers and
to the government
Kinds and Characteristics of Taxes
Taxation System in the Philippines
History
During
the reign of Egyptian Pharaohs
Scribes
In
as tax collectors
Greece
A
tax referred to as Eisphora was imposed only in times of
war
In
Athens
A
monthly tax called Metoikon was collected to foreigners
Ancient
Greek Taxation
Taxation
was used as an emergency power. Additional
resources gained from war were used to refund tax
previously collected from the people
Earliest taxes in Rome
Taxes
known as Portoria were customs duties on imports and
exports
Augustus
Caesar introduced the inheritance tax to provide
retirement funds for the military. The tax was five percent on
all inheritances except gifts to children and spouses
In England
Taxes
were first used as an emergency measure
Taxes
on income or capital were a recent development as a
result of increasing government intervention in the economy
In the Philippines
The
pre-colonial society, being communitarian, did not have
taxes
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
Taxation
The system of compulsory contributions
levied by a government or other
qualified body on people, corporations
and property in order to fund public
expenditures.
An inherent power of the state to raise
income and to demand enforced
contributions for public purposes.
Purposes Taxation
to raise revenues for public needs so that persons can live in a civilized
society
The government increase taxes in order to stabilize prices and stimulate
greater production.
An instrument of fiscal policy influences the direction and structure of
money supply, investments, credits, production, interest rate, inflation,
prices and in general, of the national economy
Characteristics of a sound Tax
system
Fairness
Clarity and
Certainty
Convenience
Efficiency
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
Tax on all yearly profits arising form
property, possessions, trades or offices
Tax on a persons income, emoluments and
profits
Donors Tax
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
Value-added Tax (VAT)
Tax imposed and collected on every sale,
barter, exchange or transaction deemed sale of
taxable goods, properties, lease of goods,
services or properties in the course of trade as
they pass along the production and distribution
chain
Capital Gains Tax
Tax imposed on the gains presumed to have
been realized by the seller for the sale,
exchange or other disposition of real property
located in the Philippines, classified as capital
assets
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.
Withholding
tax
Withholding tax for
compensation income:
Commonly
referred to as pay
as you go or pay as you earn.
A method of collecting the
income tax at source upon
receipt of the income.
Shifting the incidence
of taxation
Shifting
taxation is the process of
passing the burden of the tax to others.
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 ones 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
Assignment
Write your answer in a 1 whole sheet of paper
Define the following:
1.
Poverty
Poverty line
Degradation
2.
Explain the causes of poverty
3.
What are the effects of poverty?
