CHAPTER 1 – Introduction to Taxation

WHAT IS TAXATION

- Taxation is a process or means by which the sovereign, through its lawmaking body, raises income to
defray the necessary expenses of the government.

- Taxation may be defined as a State power, a legislative process, and a mode of government cost
distribution

The Theory of Taxation

The government’s necessity for funding is the theory of taxation

The Basis of Taxation

The mutuality of support between the people and the government is referred to as the basis of
taxation

Receipt of benefits is conclusively presumed

TAXES

-The enforced proportional contributions from persons and property levied by the lawmaking body of
the State by virtue of its sovereignty for the support of the government and all public needs; raise
revenue for public purpose.

PURPOSES OF TAXATION

1. Primary purposes provide funds or property; promote the general welfare and protection;
finance it’s multifarious activities
2. Secondary purposes strengthen anemic enterprises; protect local industries; reduce inequalities
in wealth and income; prevent inflation

THEORIES OF COST ALLOCATION

Taxation is a mode of allocating government costs or burden to the people.

1. Benefit received theory presupposes that the more benefit one receives from the government,
the more taxes he should pay.
2. Ability to pay theory presupposes that taxation should also consider the taxpayer’s ability to
pay. Taxpayers required to contribute based on their relative capacity.
a. Vertical equity proposes that the extent of one’s ability to pay is directly
proportional to the level of his tax base.
b. Horizontal equity requires consideration of the particular circumstance of the
taxpayer
 The Lifeblood Doctrine

-Taxes are essential and indispensable

-Without taxes, the government would be paralyzed

-Taxes are the lifeblood of the government

Implication of the lifeblood doctrine in taxation (1-5)

THEORY AND BASIS OF TAXATION

1. Theory – existence of the government is necessity; it cannot continue without means to pay its
expenses; right to compel within its limits to contribute
2. Basis – reciprocal duties of protection and support between the State and its inhabitants;
benefit-received principle

BASIC PRINCIPLE OF A SOUND TAX SYSTEM

1. Fiscal adequacy. The sources of revenue should be sufficient to meet the demends of public
expenditures
2. Equality or Theoretical Justice. The tax burden should be proportionate to the taxpayer’s ability
to pay (Ability-to-Pay Principle)
3. Administrative Feasibility. The tax laws should be capable of convenient just, an effective
administration

INHERENT POWERS OF THE STATE

No government can sustain or effectively operate without these powers

1.Taxation power is the power of the state to enforce proportional contribution form its subjects to
sustain itself

2. Police power is the general power of the State to enact laws to protect the well being

3. Eminent domain is the power of the State to take private property for public use after paying just
compensation

Comparison of the three powers of the State

-Exercising Authority, Purpose, Persons affected, Amount of Imposition, Importance,

Relationship with the Constitution, Limitation

Similarities (1-7)

SCOPE OF THE TAXATION POWER

Regarded as comprehensive, plenary, unlimited and supreme.

Taxation has its own inherent limitations and limitations imposed by the Constitution.

THE LIMITATION OF THE TAXATION POWER

A. Constitutional Limitations. Found in the constitution or implied from its provisions.

1. Due process – No one should be deprived of his life, liberty or property without due process
of law

Aspects of Due process:

a. Substantive due process. Imposed public purpose; under authority of valid law;
taxing power having jurisdiction
b. Procedural due process. No arbitrariness; observe the taxpayer’s right. Collection
shall be made within 5 years from the date of assessment
2. Equal protection of the law – No person shall be denied the equal protection of the law.
3. Uniformity rule in taxation – Taxpayers under dissimilar circumstance should not be taxed
the same. The rule of taxation shall be uniform and equitable
4. Progressive system of taxation
5. Non-imprisonment for non-payment of poll tax – No person shall be imprisoned for debt or
non-payment of a poll tax. No one shall be imprisoned because of his poverty, and no one
shall be imprisoned for mere inability to pay debt
6. Non-impairment of obligations of contracts
7. Free worship rule/Non-infringement of religious freedom
8. No appropriation for religious purposes
9. Exemption of religious, charitable or educational entities, mom-profit cemeteries and
churches from taxation
10. Exemption of revenues and assets of non-stock, non-profit educational institutions and
donations for educational purposes
11. Concurrence of a majority of all members of Congress for the passage of a law granting tax
exemption
12. Non-diversification of tax collections
13. Non delegation of the power of taxation
14. Non-impairment of the jurisdiction of the Supreme Court to review tax cases
15. The requirement that appropriations, revenue or tariff bills shall originate exclusively in the
House of Representatives
16. The delegations of taxing power to local government units
B. Inherent limitations. Restrict the power although not embodied in the constitution.
1. Requirement that levy must be for a public purpose
2. Non-delegation of the legislative power to tax
3. Exemption from the taxation of government entities
4. Internal comity
5. Territorial jurisdiction
DELEGATIONS OF POWER OF TAXES

A. Delegation to the President

B. Delegation to Local Government
C. Delegation to administrative Agencies

ASPECTS OF TAXATION

1. Levy (Legislative Act). Determines the person or property to be taxed

2. Assessment and Collection (incidence/administrative act of taxations). Prescribe the manner of
enforcing the obligation

CANNONS OF A TAX

Quality of Good Taxation

1. Proportionate to one’s ability to pay

2. Certain and not arbitrary
3. Convenient to pay
4. Economical to collect

SITUS OF TAXATION

Situs is the place of taxation. It is the tax jurisdiction that has the power to levy taxes upon the tax object

1. Business tax situs. Businesses are subject to tax in the place where the business is conducted
2. Income tax situs on services. Service fees are subject to tax where they are rendered
3. Income tax situs on sale of goods. The gain on sale is subject to tax in the place of sale
4. Property tax situs. Persons are taxable in their place of residence
5. Personal tax situs. Persons are taxable in their place of residence

OTHER FUNDAMENTAL DOCTRINES IN TAXATION

1. Marshall Doctrine – “The power to tax involves the power to destroy.”

2. Holme’s Doctrine – “Taxation power is not the power to destroy while the court sits”
3. Prospectivity of tax laws – generally prospective in operation
4. Non-compensation or set-off – Taxes are not subject to automatic set-off or compensation. The
rule is important to allow the government sufficient period to evaluate the validity of the claim
5. Non-assignment of taxes – tax obligations cannot be assigned or transferred to another entity by
contract
6. Imprescriptibility in taxation – Prescription is the lapsing of a right due to the passage of time
7. Doctrine of estoppel – any misrepresentation made by one party toward another who relied
therein in good faith
8. Judicial Non-interference – courts are not allowed to issue injunction against the government
pursuit to collect tax
9. Strict construction of Tax laws – “Taxation is the rule, exemption is the exception”
 -Vague tax laws are constructed against the government and in favor of the taxpayers
-Vague exemption laws are construed against the taxpayer and in favor of the government

DOUBLE TAXATION
Occurs when the same taxpayer is taxed twice by the same tax jurisdiction for the same thing
1. Direct double taxation – all the element of double taxation exists for both impositions
2. Indirect double taxation – at least one of double taxation is not common for both impositions
How can double taxation be minimized?(a-d)

ESCAPES FROM TAXATION

Available to the taxpayer to limit or even avoid the impact of taxation
A. Those that results to loss of government revenue
1. Tax evasion(tax dodging). Any act or trick that tends to illegally reduce or avoid the payment
of tax
2. Tax avoidance(tax minimization). Reduces or totally escapes taxes by any legally permissible
means
3. Tax exemption(tax holiday). Immunity, privilege or freedom from being subject to a tax
B. Those that do not result to loss of government revenue
1. Shifting – process of transferring tax burden to other taxpayer
a. Forward shifting – follows normal flow of distribution
b. Backward shifting – reverse of forward shifting
c. Onward shifting – distribution channel that exhibits forward or backward shifting
2. Capitalization – adjustment of the value of an asset caused by changes in tax rates
3. Transformation – elimination of wastes or losses by the taxpayer

TAX AMNESTY

General pardon granted by the government for erring taxpayers to give them a chance to reform and
enable them to have a fresh start to be part of a society with a clen slate

TAX CONDONATION

Forgiveness of the tax obligation of a certain taxpayer under certain justifiable grounds. (Tax remission)

TAXPAYER’S SUIT

A taxpayer has sufficient personally and interest to seek judicial assistance with a view of restraining
what he believes to be an attempt to unlawfully disburse public funds

SOURCES OF TAXES

1. The Constitution – merely regulate the exercise of the power of taxation

2. Statutory enactments – tax laws passed by the Congress
3. Administrative rulings and regulations – less general interpretation of tax laws
4. Judicial decisions – decisions of the Court of Tax Appeals and the Supreme Court applying and
interpreting tax laws
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Chapter 2 – Tax, Tax Laws and Tax Administration

TAXATION

ESSENTIAL ELEMENTS OF TAX

1. Enforced contribution
2. Generally payable in money
3. Proportionate in character
4. Levied on persons, property, of the exercise of a right or privilege
5. Levied by the state which has jurisdiction over the subject or object of taxation
6. Levied by the lawmaking body of the state
7. Levied for public purposes

CLASSIFICATION OF TAXES

1. As to purpose
a. Fiscal or revenue tax – a tax imposed for general purpose
b. Regulatory – a tax imposed to regulate business, conduct, acts or transactions
c. Sumptuary – a tax levied to achieve some social or economic objectives
2. As to subject matter
a. Personal, poll or capitation – a tax on persons who are residents of a particular territory
b. Property tax – a tax on properties, real or personal
c. Excise or privilege tax – a tax imposed upon the performance of an act, enjoyment of a
privilege or engagement in an occupation
3. As to incidence
a. Direct tax - The impact and incidence of taxation rest upon the taxpayer. The tax is
collected from the person who is intended to pay the same. Statutory taxpayer is not
the economic tax payer
b. Indirect tax – tax is paid by aby person other than the one who is intended to pay the
same. Statutory taxpayer is not the economic taxpayer

Statutory taxpayer – person named by the law to pay the tax

Economic taxpayer – one who actually pays the tax

4. As to amount
a. Specific tax – a tax of a fixed amount imposed on a per unit basis such as per kilo, liter or
meter, etc.
b. Ad valorem – a tax of a fixed proportion imposed upon the value of the tax object
 5. As to rate
a. Proportional tax – flat or fixed rate tax; emphasizes equality as it subjects all taxpayers
with the same rate without regard to their ability to pay
b. Progressive or graduated tax – increases rates as the tax base increase; equitable
taxation because it gets more tax to those who are more capable; lessen gap of rich and
poor
c. Regressive tax - decreasing tax rate as tax base increase; total reverse of progressive tax;
anti-poor; directly violates the Constitutional guarantee of progressive taxation
d. Mixed tax – combination of any of the above tax
6. As to imposing authority
1. National Tax – imposed by the national government
a. Income tax – annual income, gains or profits
b. Estate tax – decedent upon death
c. Donor’s Tax – living donor
d. Value Added Tax – consumption tax collected by VAT business tax payers
e. Other percentage Tax – consumption tax collected by non-VAT business
taxpayers
f. Excise tax – tax on sin products and non-essential commodities;
differentiated with the privilege tax
g. Documentary stamp tax – tax on documents, instruments, loan agreements
and papers evidencing the acceptance, assignment, sale or transfer of an
obligation, right or property incident thereto
2. Local tax – imposed by the municipal or local government
a. Real property tax, professional tax; Business taxes fees and charges;
community tax; tax on banks and other financial instituitions

DISTINCTION OF TAXES WITH SIMILAR ITEMS

Tax vs Revenue

- Tax imposed by the government for public purpose

- Revenue refers to all income collections of the government

Tax vs License Fee

- Tax emanates from taxation power and is imposed upon any object; imposed after the
commencement of a business or profession; post-activity imposition
- License fee emanates from police power and imposed to regulate the exercise of a privilege;
imposed before engagement in those activity; pre-activity imposition

Tax vs Toll

- Tax levy of government and demand of sovereignty; upon the needs of the government
- Toll is a charge for the use of other’s property and demand of ownership; upon the value of the
property leased. Government and private entities impose toll, but private entities cannot
impose taxes
Tax vs Debt

- Tax arises from lax; non-payment of tax leads to imprisonment; cannot set-off; generally payable
in money; tax draw interest only when the taxpayer is delinquent;
- Debt arises from private contracts; non-payment of debt does not lead to imprisonment; can be
subject to set-off; can be paid in kind; draws interest when it is so stipulated by the contracting
parties or legal delay

Tax vs Special assessment

- Tax imposed upon persons, properties or privilege; levied without expectation of a direct
proximate benefit
- Special assessment levied by the government on lands adjacent to a public improvement;
appreciation in land value caused by the public improvement

Tax vs Tariff

- Tax is amount imposed upon persons, privilege, transactions or properties

- Tariff is the amount imposed on imported or exported commodities

Tax vs penalty

- Tax imposed for the support of the government

- Penalty imposed to discourage an act

TAX SYSTEM

Refers to the methods or scheme of imposing, assessing and collecting taxes

According to imposition:

1. Progressive – employed in the taxation of income of individuals and transfers or properties by

individuals
2. Proportional – employed in taxation of corporate income and business
3. Regressive – not employed in the Philippines

According to Impact

1. Progressive tax system – emphasizes direct taxes; encourages economic efficiency; impacts
more upon the rich
2. Regressive tax system – emphasizes indirect taxes; impact upon the bottom end of the society;
anti-poor

TAX COLLECTION SYSTEMS

1. Withholding systems – the payor of the income withholds or deducts the tax on the income
before releasing the same to the payee
a. Withholding tax on compensation – withheld by the employer
 b. Expanded withholding tax – prescribed on certain income payments and creditable
against any income tax
c. Final withholding tax - prescribed on certain income payments and not creditable
against any income tax
d. Withholding tax on government payments – withheld by the national government
2. Voluntary compliance system – taxpayer determines has income, reports the same through
income tax returns
3. Assessment or enforcement system – government identifies non-compliant taxpayer

TAX ADMINISTRATION

refers to the management of the tax system

Chief Officials of the Bureau of Internal Revenue (1 commisioner, 4 Deputy Commisioners)

POWERS OF THE BUREAU OF INTERNAL REVENUE (1-7)

POWERS OF THE COMMISIONER OF INTERNAL REVENUE (1-16)

Non-delegated power of the CIR (1-4)

Rules in assignments of revenue officers to other duties(1-3)

Agents and Deputies for Collection of National Internal Revenue Taxes(1-3)

OTHER AGENCIES TASKED WITH TAX COLLECTIONS OR TAX INCENTIVES RELATED FUNCTIONS

1. Bureau of Customs(BOC)
2. Board of Investments(BOI)
3. Philipppine Economic Zone Authority(PEZA)
4. Local Government Tax Collecting Units

TAXPAYER CLASSIFICATION FOR PURPOSES OF TAX ADMINISTRATION

A. As to payment(Page 49)
1. Value added Tax
2. Excise Tax
3. Income Tax
4. Withholding Tax
5. Percentage Tax
6. Documentary stamp tax
B. As to financial conditions and results of operations
1. Gross receipts or sales
2. Net worth
3. Gross purchases
4. Top corporate taxpayer listed and published by the SEC

Automatic classification of taxpayers as large taxpayers(1-10)

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Chapter 3 – Introduction to Income Taxation

CONCEPT OF INCOME

- Income is regarded as the best measure of taxpayers’ ability to pay tax

- Referred to as “gross income” under NIRC
- A taxable item of income is reffered to as an “item of gross income: or “inclusion in gross
income”
- Gross income. Certain items of gross income less deductions and personal exemptions allowable
ny law; defined as any inflow of wealth to the taxpayer from whatever source

ELEMENTS OF GROSS INCOME

1. It is a return on capital that increases net worth.

Capital – any wealth or property

Gross income – return on wealth or property that increases the taxpayer’s net worth

Return on capital – increases net worth in income subject to income tax

Return of capital – merely maintains net worth

Capital items deemed with infinite value

-have infinite value and incapable of pecuniary valuation

1. Life – value of life is immeasurable by money
2. Health – any compensation received in consideration for the loss of health
3. Human Reputation – value of one’s reputation cannot be measured financially

Recovery of lost capital – decrease net worth; merely maintains net worth while the recovery

Recovery of lost profit – increases net worth; return of capital

Taxable recovery of lost profits – through insurance, indemnity contracts or legal suits
constitutes a taxable return on capital

2. It is a realized benefit.
Benefit- any form of advantage derived by the taxpayer
1. Receipt of a loan- properties increase
2. Discovery of lost properties- obligation to return the same
3. Receipt of money or property

Realized – means earned, requires degree of undertaking or sacrifice

Requisites of a realized benefit(1-20)

 Types of transfers

1. Bilateral/ exchange – sale, barter

2. Unilateral – succession, donation; “gratuitous transactions”
3. Comples transactions – partly gratuitous ad partly onerous; “trasnfers for less than
full and adequate consideration”

What is meant by another entity? Natural persons are living persons while juridical persons are
those created by law

Benefits in the absence of transfers unrealize gains or holding gains (a-f)

Rendering of services. Exchange but does not cause a loss of capital

Basis of exemption of unrealized income income received in non-cash considerations is taxable

at the fair value of the property received

Mode of receipt/Realization Benefits

1. Actual receipt. Involves actual physical taking of the income in the form of cash or property
2. Constructive receipt. Involves no actual physical taking of the income but the taxpayer is
effectively benefited

Inflow of wealth without increase in net worth not increase his net worth is not income due to
the total absence of benefit

NOT EXEPTED BY LAW, CONTRACT OR TREATY(1-8)

TYPES OF INCOME TAXPAYERS

A. Individuals
1. Citizen
a. Resident citizen. Filipino citizen
b. Non-resident citizen. Establishes to the satisfaction; leaves the Philippines; works
and deprive income; previously non-resident citizen
2. Alien
a. Resident alien. Residing Philippines but is not a citizen thereof
b. Non-resident alien. Definite purpose, stay therein
i. Engaged in trade or business
ii. Not engaged
3. Taxable estates and trusts

GENERAL CLASSIFICATIO RULE FOR INDIVIDUALS

1. Intentions
2. Length of stay

Taxable Estates and Trusts

 1. Estate. Refers to the properties, rights and obligations of a deceased person
2. Trust. Arrangement whereby one person transfers property to another person

B. Corporations. Include partnerships and profit/non-profit insitutions

1. Domestic corporation. Organized in accordance with Philippine Law
2. Foreign corporation. Foreign law
a. Resident foreign corporation(RFC). Conducts business in the Philippines
b. Non-resident(NRFC). Not conduct business in the Philippines
3. Special Corporations. Domestic or foreign corporations which are subject to special tax rules
or preferential tax rates

OTHER CORPORATE TAXPAYERS

1. Partnership owned by two or more persons

a. General professional partnership(GPP). Common profession
b. Business partnership. Formed for profit
2. Joint venture business undertaking for a particular purpose
a. Exempt joint ventures. For the purpose of undertaking construction projects
b. Taxable joint ventures. All other joint ventures are taxable as corporations
3. Co-ownership joint ownership of a property formed

GENERAL RULES IN INCOME TAXATION

The Residency and Citizenship Rule. Taxable on all income

Basis of the extraterritorial taxation. Resident citizens and domestic corporations derive most
of the benefits

The issue of international double taxation NIRC allows a tax credit for taxes paid in foreign
countries

SITUS OF INCOME

Place of differentiated form the source of income. Situs is important in determining income is taxable

INCOME SITUS RULES

Types of income Place of taxation(situs)

1. Interest income Debtor’s residence

2. Royalties intangible is employed
3. Rent income Location of the property
4. Service income place service rendered

OTHER INCOME SITUS RULES

A. Gain on sale of properties

1. Personal property
a. Domestic securities – earned in the Philippines
b. Other personal properties – earned where the property is sold
 2. Real property- earned where the property is located
B. Dividend income from
1. Domestic corporation – presumed earned within
2. Foreign corporation
a. Resident foreign corporation – depend on the pre-dominance test
b. Non-resident foreign corporation- earned abroad
C. Merchandising income – earned where the property is sold
D. Manufacturing income – earned where the goods are manufactured and sold

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Chapter 4 – Income Tax Schemes, Accounting Periods, Accounting Methods and Reporting

INCOME TAXATION SCHEMES

A. Final income taxation.

- Characterized by final taxes where taxes are withheld or deducted at source
- Final taxation is applicable only to certain passive income

Passive income earned with very minimal or even without active involvement (interest income,
dividends from domestic corporations, Royalties)

Active income requiring considerable degree (Compensation, Business and professional income)

B. Capital gains taxation

- Imposed on the capital gain on the sale, exchange and other disposition or certain capital assets
- Capital gains taxation applies only two type sof capital assets: domestic stocks and real property

Capital assets all other assets other than ordinary assets

Ordinary assets directly used in the business (inventory, supplies, PPE)

Capital gains arise from sale, exchange and other disposition of capital assets

Ordinary gains arise from sale, exchange and other disposition of ordinary assets

C. Regular income taxation – covers all other income:

1. Active income
2. Gains from dealings in properties
a. Dealings in ordinary assets
b. Dealings in other capital assets not subject to capital gains tax
3. Other income, active or passive, not subject to final tax

Items of gross income from these sources are measures using an accounting period, accumulated
accounting period, and reported through an income tax return

ACCOUNTING PERIOD
Length of time over which income is measured and reported

1. Regular accounting period – 12 months in length

a. Calendar Year(jan 1 -dec 31). Available to both corporate taxpayers and individual
taxpayers
b. Fiscal Year( any 12 month period that ends any day, other than Dec 31). Available
only to corporate income taxpayers and NOT allowed to individual income taxpayers

Deadline of Filing the Income Tax Return

Under the NIRC, the return is due for filing on the fifteenth day of the fourth moth ff the
close taxable year of the taxpayers

1.Taxpayer under the calendar year must file their annual income tax return for the current
period not later than April 15 of the following year
2. A corporate taxpayer with fiscal year ending June 30, 2014 must be file its annual income
tax return not later than October 15 2014

2. Short accounting period- less than 12 months

a. Newly commenced business – start of the business until designated year-end of the
business
b. Dissolution of business – start of the current year to the date of dissolution of the
business
c. Change of accounting period by corporate taxpayer – start of the previous
accounting period up to the designated year-end of the new accounting period
d. Death of the taxpayer – start until the death of taxpayer
e. Termination of the accounting period of the taxpayer by the Commissioner on
Internal Revenue – start until the date of termination

ACCOUNTING METHODS

Accounting techniques used to measure income

1. The general methods

a. Accrual basis

-Income is recognized when earned. Expense is recognized when incurred

-right to receive is established or when an enforceable right to secure payment is

created against the counterparty

b. Cash basis
-Income is recognized when received and expense is recognized when paid

*They both similar to their tax counterparts, except:

1. Advanced income is taxable upon receipt

2. Prepaid expenses is non-deductible

3. Special tax accounting requirement must be followed

 Hybrid basis – combination od accrual basis, cash bass and other methods of accounting

Initial payment – total payment by the buyer, in cash or property. Broader than down payment

Selling price- entire amount for which the buyer is obligated to the seller

Contract price – amount receivable in cash or other property from the buyer

2. Installment and deferred payment method. Is a variant of the accrual basis and is used in
reporting income when a non-interest bearing note us received as consideration in a sale
3. Percentage of completion method. Estimated gross income from construction is reported based
on the percentage of completion of the construction project
4. Outright and spread-out method
Leasehold Improvement – tangible improvements made by the lessee to the
property of the lessor
Outright method – lessor report income the fair market value of such buildings
subject to the lease at the same time
Spread-out method – lessor spread over the life of the lease the estimated
depreciated value of such buildings at the termination of the lease and report as income
each year
*The treatment specified by the outright method is perceived as unjust and abusive and is an
improper introduction of legislation
Farming Income – recognized using the cash basis or accrual basis

5. Crop year basis. Farming income is recognized as the difference between the proceeds of
harvest and expenses of the particular corp harvested

INCOME TAX REPORTING

Self assessment method taxpayers declare their income and expenses and personally determine the
tax due thereon

Types of income tax-related returns filed to the government

1. Income tax returns

2. Withholding tax returns
3. Information returns

Types of income tax return

1. Capital gains tax return

2. Regular income tax return

WITHHOLDING SYSTEM

a. Final withholding tax

b. Creditable withholding tax

INFORMATION RETURNS
Certain taxpayers are also required to file information returns to the government

MODE OF FILING INCOME RETURNS

1. Manual filing system

2. E-BIR Forms
3. Electronics filing and Payment System(eFPS)

Exercise Drills

(C) Constitutional limitation

(I) Inherent limitation

(N) Not a limitation

1. Non-assignment of Taxes
2. Territoriality of Taxation
3. Taxes must be for public use
4 Exemption of the property of religious institutions from income tax
5. Exemption of the revenues and assets of non-profit, non-stock educational
institutions
6. Non-delegations of the taxing power
7. Non-appropriation for religious purpose
8. The requirement of absolute majority in the passage of a tax exemption law
9. Non-imprisonment for non-payment of tax or debt
10. Taxpayers under the same circumstance should be treated equal both in terms of
privileges ad obligations
11. Exemption from property taxes of religious, educational and charitable entities
12. Government income and properties are not objects of taxation
13. Each local government shall have the power to create its own sources of revenue
14. Imprescriptibility in taxation
15. Non-impairment of obligation and contracts
16. Guarantee of proportional system taxation
17. International courtesy
18. Non-impairment of the jurisdiction of the supreme court to review tax cases
19. The government is not subject to estoppel
20. Imprisonment for non-payment of poll tax

True or False 1
1. Eminent domain involves confiscation of prohibited commodities to protect the well-being of
the people.
2. Horizontal equity requires consideration of the circumstances of the taxpayer.
3. Taxes are the lifeblood of the government.
4.