Understanding the Tax Laws

In exploring the basics of taxation, we have been told that tax laws are "construed liberally in favor of the taxpayer" and tax exemptions are "construed in strictissimi juris against the taxpayer." Let's take each statement up and see what they say when reconciled to each other.

1.) Liberal Construction in Favor of the Taxpayer

Taxes are a necessary evil. Government cannot function without them. But the power to determine the amounts, subjects, etc. of taxation falls under the province of Congress. This means the congressmen and senators are free to decide what taxes the government should collect. Liberal construction favoring the taxpayer is a rule employed to ensure that the taxing power cannot be abused by the politicians. Liberal construction favoring the taxpayer means whatever the tax law does not touch cannot be taxed by the government and that government cannot collect more than what the law allows.

2.) Tax Exemptions Construed In Strictissimi Juris against the Taxpayer

The government permits tax exemptions only if they are beneficial to the public. To qualify for an exemption, a taxpayer must possess all the necessary requirements before exemption can be availed of. If the taxpayer lacks just one requirement, he cannot qualify.

Now with these two rules established, let's consider the facts: local government units from the provinces down to the barangays can create their own taxes; the besides income tax and VAT the government imposes tariffs on imports as well as exports (why do you think that is so?;) local government units collect real estate taxes; when a person dies, his estate is taxed; the Bureau of Internal Revenue requires its agents to reach regular collection quotas instead of determining the correct amounts to be collected (which results in intimidation and harassment of taxpayers;) there are separate taxes on beverages, fuel, vehicles and stock dividends; the rice, sugar, and coconut industries are taxed in addition to the already existing taxes that people in those industries pay (like income tax, real estate and VAT;) minimum wage earners are income tax-exempt and get taxed if their incomes increase above minimum wage (fostering a slave mentality;) BMBEs can only claim exemption if granted a BIR-approved certificate; the sale of a house is tax-exempt only if the seller buys a more expensive house and consequently gets deeper into debt; and on and on.

The implication is this: the taxpayer has little freedom at all, and the government is truly absolute in its power to tax us all.