Tax: A Definition

Taxation is the state's inherent power to raise revenues to defray the government's necessary expenses by imposing financial burdens on persons and property. It doesn't need a constitutional provision.

Taxation is based on 2 principles: Necessity and reciprocity. The government can't exist or function without the necessary funding (necessity principle.) The government also has the duty to protect its citizens; the citizens, in turn, have to duty to support the government that protects them (Benefits-received/Reciprocity Principle.) Taxation also has 2 aspects: levy, which is the making of a law or ordinance creating a tax; and collection, which is the actual collecting of the tax itself. Collection is an administrative act, while levy is legislative. Collection is done by the following:

1.) BIR -for national taxes

2.) Bureau of Customs -customs duties

3.) Local Government Units -local and real property taxes

A sound tax system will have the following principles:

1.) Fiscal Adequacy

Sources of revenue must be sufficient to cover the government's expanding (or contracting) expenditures.

2.) Theoretical Justice

The tax burden should be proportional to the taxpayer's ability to pay (rarely the case; too many regressive taxes.)

3.) Administrative Feasibility

The tax must be clearly understood by the taxpayer and capable of efficient collection by government agents (my tax review teacher says many government agents don't know how to collect properly.)