Nature of the power of taxation.

(1) It’s inherent in sovereignty. – The power of taxation is inherent in sovereignty as an incident or attribute thereof, being essential to the existence of every government. It exists apart from constitutions and without being expressly conferred by the people. Hence, it can be exercised by the government even if the Constitution is entirely silent on the subject.

(a) Constitutional provisions relating to the power of taxation do not operate as grants of the power to the government. They merely constitute limitations upon a power which would otherwise be practically without limit.

(b) While the power to tax is not expressly provided for in our Constitution, its existence is recognized by the provisions relating taxation.

(2) It is legislative in character. – The power to tax is peculiarly and exclusively legislative and cannot be exercised by the executive or judicial branch of the government. Hence, only Congress, our national legislative body can impose taxes. The levy of a tax, however, may also be made by a local legislative body subject to such limitations as may be provided by law.

(3) It is subject to constitutional and inherent limitations. – The power of taxation is subject to certain limitations. Most of these limitations are specifically provided in the Constitution or implied therefrom, while the rest are inherent and they are those which spring from the nature of the taxing power itself although they may or may not be provided in the Constitution.

Individual equities or inequities, however, are not considered in the exercise of the power; and, therefore, the mere fact that the taxation is unjust or oppressive with respect to a particular taxpayer does not of itself render a tax law invalid, where no constitutional provision has been violated.

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Theory and basis of taxation

(1) The power of taxation proceeds upon the theory that the existence of government is a necessity; that it cannot continue without means to pay its expenses; and that for these means it has a right to compel all its citizens and property within its limits to contribute. As said in case:

“The power to tax is an attribute of sovereignty x x x emanating from necessity. It is a necessary burden to preserve the State’s sovereignty and a means to give the citizenry an army to resist an aggression, a navy to defend its shores from invasion, a corps of civil servants to serve, public improvements designed for the enjoyment of the citizenry and those which come within the States territory, and facilities and protection which a government is supposed to provide.”

(2) The basis of taxation is found in the reciprocal duties of protection and support between the state and its inhabitants. In return for his contribution, the tax payer receives the general advantages and protection which the government affords the taxpayer and his property. This is the so-called benefits-received principle. One is compensation or consideration for the other: protection for support and support for protection.

The foregoing statements, however, must be qualified.

(a) It does not mean that only those who are able to and do pay taxes can enjoy the privileges and protection given to a citizen by the government. Both are enjoyed as well as by those who do not, because they are not able to pay taxes. The reason is that protection in the enjoyment of his rights is a duty owed by the State to every citizen.

(b) From the contribution received, the government renders no special or commensurate benefit to any particular property or person. A tax is a “compulsory payment to the government in return for which the payer gets no definite, specific commodity or service.” (Caulery Public Finance and the General Welfare [1960].) It is not imposed on the basis of a special or peculiar benefit accruing to each citizen in proportion to the tax paid.

(c) The only benefit to which the taxpayer is entitled is that derived from his enjoyment of the privileges of living in an organized society established and safeguarded by the devotion of taxes to public purposes. The government promises nothing to the person taxed beyond that may be anticipated from an administration of the laws for the general good.

A person, therefore, cannot object to or resist the payment of taxes solely because no personal benefit to him can be pointed out as arising from the tax or he is benefited less than others who pay the same or smaller amount of tax. What matters in taxation is that the tax imposition is for a public purpose.


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Essential characteristics of tax

As indicated above, they are enumerated below.

(1) It is an enforced contribution. – A tax is not a voluntary payment or donation (84 C.J.S. 32.) and its imposition is in no way dependent upon the will or assent, open or implied, of the person taxed. (71 Am. Jur. 2d 344.) To be sure, taxation without representation, or without the consent in some form of those who are to be taxed, is contrary to the fundamental principles of good government. The principle of representation, however, applies only to political communities, as such, and not to individuals. It is satisfied by their adequate representation in the legislative body which votes the tax. (83 C.J.S. 48.)

(2) It is generally payable in money. – Unless qualified by law (e.g., backpay certificates under Sec. 2, R.A No. 304, as amended.), the term “taxes” or “tax” is usually understood to be a pecuniary burden – an exaction to be discharged alone in the form of money which must be in legal tender.

(3) It is proportionate in character. – A tax is laid by some rule of apportionment according which persons share the public burden. It is ordinarily based on ability to pay. Thus, in practice, some people pay very high taxes; others, very small amounts or none at all.

(4) It is levied on persons or property. – A tax may also be imposed on acts, transactions, rights or privileges. In each case, however, it is only a person who pays the tax. The property is resorted to for the purpose of ascertaining the amount of tax that must be paid and of enforcing payment in case default of the taxpayer. (84 C.J.S. 36.) But not all who pay a tax shoulder the burden of the tax.

(5) It is levied by the state which has jurisdiction over the person or property. – The object to be taxed must be subject to the jurisdiction of the taxing state. (infra.) This is necessary in order that the tax can be enforced. Although a state can tax all persons subject to its jurisdiction for all their property left by them within its jurisdiction to seize upon person or property for purposes of taxation.

(6) It is levied by the law-making body of the state. – The power to tax is a legislative power which under the Constitution only Congress can exercise through the enactment of tax statutes. Accordingly, the obligation of a tax is statutory liability.

(a) The power to tax is granted by the Constitution to local government subject to such guidelines and limitations as may be provided by law.

(b) During the period of martial law, (Sept. 21, 1972 to Jan. 17, 1981), the then incumbent President exercised the executive powers vested under the 1973 Constitution in the Prime Minister (who was the Chief Executive before its amendment in  1981) as well legislative powers through the issuance of “presidential decrees”.

(c) By virtue of Amendment No. 6 to the 1973 Constitution, the President was given concurrent legislative authority under certain conditions, which he exercised even after the lifting of martial law.

(d) Pending the ratification of a new Constitution and in the absence of a legislative body in the Provisional Government installed on February 25,1986, the President exercised legislative power through the issuance of executive orders under the convening of Congress on July 27, 1987.

(7) It is levied for public purpose or purposes. – Taxation involves, and a tax constitutes, s charge or burden imposed to government, the administration of the law, or the payment of public expenses. Revenues derived from taxes cannot be used for purely private purposes or for the exclusive benefit of private persons. (Gaston vs. Republic Planters Bank, 158 SCRA 626, Mar. 15 1988.) The “public purpose or purposes” of the imposition is implied in the levy of tax.

It is also an important characteristic of most taxes that they are commonly required to be paid at regular periods or intervals every year.

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Meaning of Taxes

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

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Purpose of Taxation

The primary purpose of taxation on the part of the government is to provide funds or property with which to promote the general welfare and protection of its citizens. In its broadest and most general sense, taxation includes every imposition of charge or burden by the sovereign power upon persons, property, or property rights for the use and support of the government and to enable it to discharge its appropriate functions.

Aside from raising revenues for governmental needs, taxation may also be exercised to attain non-revenue objectives.

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Meaning of Taxation

Taxation is the act of laying a tax, i.e.,the process or means by which the sovereign, through its law-making body, raises income to defray the necessary expenses of government. It is merely a way of apportioning the cost of government among those who in some measure are privileged to enjoin its benefits and, therefore, must bear its burdens.

As a power, taxation refers to the inherent power of the state to demand enforced contributions for public purpose or purposes.

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