Taxation is an inherent power of the state to raise revenue for public purpose

Taxation distinguished from other inherent Powers and impositions

POLICE POWER

As to purpose

Taxation is levied for the purpose of raising revenue. Police Power is exercised
to promote public welfare through regulation.

As to amount of exaction

The amount gathered in the exercise of Taxation contemplates of no limits; in

Police Power, the exaction is limited to the cost of regulation, issuance of the license
or surveillance.

As to the benefits received by the taxpayer

In taxation, no special or direct benefit is received by the taxpayer other than

the fact that the government secures to the citizen that general benefit resulting
from the protection of his person and property and the welfare of all.

Similarly, no direct benefits are received through the exercise of Police Power,
yet a healthy economic standard of society is maintained.

As to superiority of contracts

Taxation recognizes the obligations imposed by contracts . This limitation

does not apply to Police Power.
o

Taxation and the Power of Eminent Domain

As to purpose

Taxation is exercised in order to raise public revenue; Eminent domain or

expropriation is the taking of property for public use

As to compensation

Payment of taxes accrue to the general benefit of the citizens of the taxing
state; in eminent domain, just compensation is given the owner of the expropriated
property.

Taxation applies to all persons, property and excises that may be subject
thereto; in Eminent domain, only particular property is comprehended.

Taxes are the enforced proportional contributions from persons and property levied
by the state by virtue of its sovereignty, for the support of the government and for
all its public needs.

Requisites of a Valid Tax

1.
The person or property taxed should be within the jurisdiction of the taxing
authority
2.
The assessment and collection of certain kinds of taxes guarantee against
injustice to individuals, especially by providing notice and opportunity for hearing;

It should be for public purpose

1.

The rule of taxation shall be uniform and equitable; and

2.
The tax must not impinge on the inherent and constitutional limitations on
the power of taxation.

Characteristics of Taxes

1.
An enforced contribution. Taxes are mandatory. It is a matter of duty an
cannot be subject of bargain. It cannot e based on payable when able flexible
engagement.
2.
It is a pecuniary burden payable in money, but backpay certificates may be
used in payment of tax.
3.
It is levied by the legislative body of the state. Taxes are obligations created
by law.
4.

It is levied for a public purpose.

5.
It is personal to the taxpayer. A corporations tax delinquency cannot be
enforced against its stockholders. A corporation is vested by law with a personality
that is separate and distinct from those of persons composing it as well as that of
any other legal entity to which it may be related. Stockholders may be held liable
for the unpaid taxes of a dissolved corporation, if it appears that the corporate
assets have passed into their hands without the payment of taxes.
II.

Theory and Basis of Taxation

Necessity Theory and Lifeblood Doctrine the existence of the government is

a necessity. It has the right to compel all citizens and property within its limits to
pay taxes. Taxes constitute the lifeblood of the nation and are greatly needed to
support the government and its widely expanding services to the people.
o
The existence of the government is a necessity; it cannot exist nor endure
without the means to pay its expenses; and for those means, the government has

the right to compel all its citizens and property within its limits to contribute in the
form of taxes.

The Benefits-Protection Theory/ Theory of reciprocity/ Symbiotic a citizen

pays from his property portion demanded in order that he may, by means thereof
be secured in the enjoyment of the benefits of organized society. The government
on its part is expected to respond in the form of tangible and intangible benefits
intended to improve the lives of the people and enhance their material and moral
values. (Taxation Law Compendium Dizon, 2013)
o
Taxes are what we pay for civilized society. Without taxes, the government
would be paralyzed for the lack of the motive power to activate and operate it.
Hence, despite the natural reluctance to surrender part of their hard-earned income
to the government, every person who is able to must contribute his share in the
running of the government. The government, for its part, is expected to respond in
the form of tangible and intangible benefits intended to improve the lives of the
people and enhance their moral and material values. This symbiotic relationship is
the rationale of taxation and should dispel the erroneous notion that it is arbitrary
method of exaction by those in the seat of power. (Commissioner v. Algue, 158
SCRA 9)

Social Contract Theory. In an organized society, the members thereof

( eventually the governed and the government) agree to define and limit the rights
and duties of each. And since the taxpayer reaps the benefit, he should bear the
burden.