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  • A. The Power of Taxation Is An Essential and Inherent Attribute of Sovereignty, Belonging As A

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    Jim M. Magadan
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    The power to tax is an inherent power of the State that exists apart from constitutions. It is a legislative power that allows governments to impose taxes even without express constitutional authority in order to fund operations and provide services to citizens. The necessity theory holds that governments have the right to tax citizens and property to generate the means necessary for their continued existence. While tax credits directly reduce tax liability, tax deductions reduce the income subject to taxation.

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    The power to tax is an inherent power of the State that exists apart from constitutions. It is a legislative power that allows governments to impose taxes even without express constitutional authority in order to fund operations and provide services to citizens. The necessity theory holds that governments have the right to tax citizens and property to generate the means necessary for their continued existence. While tax credits directly reduce tax liability, tax deductions reduce the income subject to taxation.

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    46 views2 pages

    A. The Power of Taxation Is An Essential and Inherent Attribute of Sovereignty, Belonging As A

    Uploaded by

    Jim M. Magadan
    The power to tax is an inherent power of the State that exists apart from constitutions. It is a legislative power that allows governments to impose taxes even without express constitutional authority in order to fund operations and provide services to citizens. The necessity theory holds that governments have the right to tax citizens and property to generate the means necessary for their continued existence. While tax credits directly reduce tax liability, tax deductions reduce the income subject to taxation.

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    © All Rights Reserved
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    of 2

    1.

    2.

    3. The power to tax is inherent power of the State. What does it connote/imply when it is an
    inherent power?

    a. The power of taxation is an essential and inherent attribute of sovereignty, belonging as a


    matter of right to every independent 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.

    4. What do you mean by the power to tax is legislative in character?

    a. 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. However, the levy of a tax may also be made by a
    local legislative body, subject to such limitations as may be provided by law.

    5.

    6.

    7. Discuss the case of Paseo Realty and Development Corp. vs. CA.

    a. Taxation is a destructive power which interferes with the personal and property rights of
    the people and takes from them a portion of their property for the support of the
    government. And since taxes are what we pay for civilized society, or are the lifeblood of
    the nation, the law frowns against exemptions from taxation and statutes granting tax
    exemptions are thus construed strictissimi juris against the taxpayer and liberally in
    favor of the taxing authority.
    A claim of refund or exemption from tax payments must be clearly shown and
    be based on language in the law too plain to be mistaken. Elsewise stated, taxation is
    the rule, exemption therefrom is the exception.

    8. What are the manifestations of the inherent power to tax?

    a. Taxes can be imposed even in the absence of a constitutional provision.


    b. The state can select the object and subject matter of taxation. Thus, unlimited.
    c. No injunction in the collection of taxes.
    i. Xpn: There is a pending case filed in the CTA to enjoin the collection of tax.
    d. Taxation is not subject to set-off.

    i. Xpn: When both debts are due and demandable and has been fully liquidated.

    9. what is the “Necessity Theory”?

    a. The power to tax proceeds upon the theory that the existence of a government is a
    necessity. No sovereign State can continue to exist without the means to pay its
    expenses, and for those means, it has the right to compel all citizens and property
    within its limit to contribute.
    10. What inherent power of the state was exercised in the grant of 20% discount on purchases of
    medicines made by senior citizens and PWDs? Is such discount deductible as tax credit or as tax
    deduction? Will the concept of just compensation apply in giving out these discounts?

    11. Compare and contrast tax credit from tax deductions.

    a. A tax credit differs from a tax deduction. On the one hand, a tax credit reduces the tax
    due, including -- whenever applicable -- the income tax that is determined after applying
    the corresponding tax rates to taxable income. A tax deduction, on the other, reduces
    the income that is subject to tax in order to arrive at taxable income. To think of the
    former as the latter is to avoid, if not entirely confuse, the issue. A tax credit is used only
    after the tax has been computed; a tax deduction, before.

    12. Is lifeblood doctrine similar with the Necessity Theory? Discuss.

    13. Discuss the scope of the legislative power to tax.

    14. Distinguish a tariff bill from a revenue bill.

    15. Discuss how revenue and tariff bills are approved and turned into law.

    16. Define and distinguish these 3 concept: “uniformity in taxation”, “equality in taxation”, “tax
    must be equitable”, “taxation must be progressive”.

    17. Compare Holmes dictum (McCulloch v. Maryland, 4 Wheat, 3164L ed. 579, 607) vis-à-vis
    Marshall Dictum (Panhaldle Oil C. v. Mississippi, 277 US 218). How can you reconcile both
    doctrines?

    18. Cite and discuss a case wherein taxation was used as an implement of police power to promote
    general welfare.

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