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The Power to protect citizens and provide for safety and welfare society.
Power
Co-extensive with sovereignty to demand contributions for
public purposes to support the government Process It passes a legislative act through the enactment of tax laws by the Congress which will be implemented by the Executive branch through the BIR Means A way of collecting and apportioning the cost of government among those who are privileged to enjoy its benefits
Inherent power of sovereignty Essentially a legislative function For public purpose Territorial in operation Tax exemption of government The strongest among the inherent powers Subject to constitutional and inherent limitations
Taxation is as old as government itself. Its existence commences with the four elements of a state- people, territory, sovereignty and government. From the moment a state is born, it automatically possesses the power to collect taxes from its inhabitants. The government having sovereignty can enforce contributions upon its citizens even without a specific provision in the Constitution authorizing it.
The law-making body of the government and its political subdivisions exercise the power of taxation. The powers to enact laws and ordinances, and to impose and collect taxes are given to the Congress.
The tax revenues are for a public purpose if utilized for the benefit of the community in general. An alternative meaning is that tax proceeds should be utilized only to attain the objectives of government. Public use is no longer confined to the traditional notion of use by the public but held synonymous with public interest, public benefit, public welfare, and public convenience. (Commissioner of Internal Revenue v. Central Luzon Drug Corporation, G.R. No. 159647, April 16, 2005)
PUBLIC Purpose
Territorial in Operation
exercised within the territorial jurisdiction of a taxing authority except when there exists a privity of relationship between the taxing State and the object of tax. Where privity of relationship exists, the state can still exercise its taxing powers over its citizens outside its territory.
The State immunity from taxation is inherent in its power to impose tax. Tax exemption applies only to government entities through which the government immediately and directly exercises its governmental functions.
Taxation power is the strongest of all inherent powers of the government because, without money, the government can neither survive nor dispense any of its other powers and functions effectively.
Taxes may be levied only for public purpose Being inherently legislative, taxation may not be delegated Tax power is limited to territorial jurisdiction of the State Taxation is subject to international comity Government entities are generally exempt
Inherent Limitations