ILOCOS SUR POLYTECHNIC STATE COLLEGE

Tagudin Campus

MODULE 1

THE MODULE

TITLE: FUNDAMENTAL PRINCIPLES OF TAXATION

WHAT IS THE MODULE ALL ABOUT?

Module 1 focuses on the purposes and principles of taxation. It will discuss

the inherent power of the governemnt , the scope of taxation and the principle of
sound tax system . It will present also the different forms from the escapr of taxation

LIST OF TOPICS TO BE STUDIED IN THE MODULE

A. Introduction
B. Definition of Taxation
C. The life Blood Doctrine
D. Scope of the Power of Taxation
E. Principle of Sound Tax System
F. The inherent power of Satte
G. Limitation of the Power of Taxation
g.1 Inherent limitations
g.2 Constitutional limitations
H. Escape from Taxation

INTENDED LEARNING OUTCOMES (ILO)

At the end of this module, the students would be able to:

1) Explain the purposes and principles of taxation
2) Explain the scope of taxation
3) Discuss the different principle of sound tax system.
4) Differentiate the inherent limitation over the constitutional limitations of the
power of taxation.
5) Distinguish what is acceptable and illegal escape of taxation

LEARNING CONTENT

FUNDAMENTAL PRINCIPLES OF TAXATION

A. Introduction

The family aims to make life easier not only for itself , but for the community
as well. It is headed and governed by its leader- usually the father – clothed
with the desire and energy to work towards this end. In this respect , the state

Course Code: Tax 101

Descriptive Title: Taxation( Income Taxation)
Instructor: Felix M. Del Rosario, CPA
ILOCOS SUR POLYTECHNIC STATE COLLEGE

Tagudin Campus

MODULE 1

is not too different from the family- both envision and strive for a life of order,
peace and progress for their members. In the family, the children are
responsible for carrying and materializing the vision, as do citizens in a state .
But because of the principle of democarcy , apllicable to the state as it is to
the family , children and citizens may choose not to fulfill this duty and instead
concentrate on other endeavors . if children enjoy a certain degree of freedom
from their family , so do citizens from their government and fellowmen.
The family recognizes the uniqueness of each child and this same attitude is
shown by the state to its citizens. Such recognition is the basis of granting the
individual citizen the liberty to pursue his/her abilities and interests, especially
if these help to shape , direct and strengthen the state’s well being .
Enterprising citizens in democratic countries such as the Philippines , for
example , choose to engage in business , an occupation particularly
encouraged by the free enterprise system. Such a system , however , is still
subject to the powers of the state and its implementing , executing , and
regulating arms.
The government , which is responsible for increasing the prosperity of a
nation , has for one of its powers that of taxation. Such power enables the
government to manage the finances of the nation. A weak and confusing
taxation system begets perplexing economic trends , while a strong one spells
a well-directed economy that can stand among global competition.

B. Taxation
1. As a Power- refers to the inherent power of the state to demand enforced
contribution for public purpose to support the government.
2. As a Process- the lesgislative act of laying a tax to raise income for the
government to defray in necessary expenses.

Purpose of Taxation
1.Primary- to raise revenue
2.Secondary
a.Regulatory
- To regulate the conduct of businesses or professions
- To achieve economic and social stability
- To protect local industries
b.Compensatory
- Key instrument of social control - Check inflations
- Reduces inequities in wealth distributions - Tools on international bargains
- Strengthens anemic enterprises - Promotes science and inventions

Course Code: Tax 101

Descriptive Title: Taxation( Income Taxation)
Instructor: Felix M. Del Rosario, CPA
ILOCOS SUR POLYTECHNIC STATE COLLEGE

Tagudin Campus

MODULE 1

- Provides incentives
- Uses as implement in exercise of police power to promote general welfare.
C. The Life Bloode Doctrine
Taxes are indispensabe to the existence of the state.Without taxation the state
cannot raise revenue to support is operations.
Nature or Characteristics of the Power of Taxation
1. for public purpose 5. exaction payable in money
2. inherently legislative in nature 6. territorial
3. subject to internatioal comity or treaty
4. not absulote being subject to constitutioal and inherent limitations.

How exercised:
- Legislation of loaws by Congress and tax ordinances by the Local
Sangguanian
- Tax collection by the administrative branch of the government

D. Scope of the Power Taxation

Taxation is supreme,comprehensive,unlimited and plenary,It includes the power to
destroy. The power of taxation is very wide of its scope, from all the object of
taxation, the place, property and the profession, anything that will earned an income
will be taxable. The tax payer will be impose a tax on its income, from business and
its property. The taxation of the Philippines are almost complete and enforceable and
only the congress could make an amendment. But becaause of the supreme scope
of the power of taxation, the congress find its way not to abuse the power of taxation
through limitation by the nature itself known as inherent limitation and the limitation
stated in the constitution known as the constitutional limitations.
Discretion of the Taxing Power- this extends to:
1. amount or rate of the tax 5. Situs of taxation
2. kinds of tax to be collected 6. Method of collection
3. apportionment of the tax 7. Purposes for its levy,provided for public purpose
4. the persone,property and excises to be taxed,provided within it jurisdiction.
Underling principles behind the power of taxation

Course Code: Tax 101

Descriptive Title: Taxation( Income Taxation)
Instructor: Felix M. Del Rosario, CPA
ILOCOS SUR POLYTECHNIC STATE COLLEGE

Tagudin Campus

MODULE 1

1. Principles of Necessity – the existence of the government is a necessity

and and it cannot continue without means to support itseft – this is the Theory
of Taxation.
2. Benefit Recieved Theory - the government and the people have the
reciprocal and manual duties pf support and protection – this is the Basis of
Taxation.

Legal Basis of the Power of Taxation

1. Benefit received theory
2. The sovereign power of the state over is people and property
3. The presumption of receipts or enjoyment of benefits and protection by the
people
4. To protect new conditions by imposing special duties
5. To uplift social conditions by imposing regulatory taxes or licences.

Objects of Taxation
1. Businesses 5. acts
2. Interests 6. person
3.Transactions 7. properties
4. Rights 8. Privileges
Phases of Stage of Taxation
a. Levy or Imposition Impact of taxation Aspect of
b. Assessment of tax
Taxation
c. Payment of the tax Incidence of Taxation
- these all comprise the taxation system

Element of the tax system

a.Tax structure b.Tax administration c.Public Tax consciousness
F. Principles of a sound tax system
Fiscal Adequacy – sources of revenue should be sufficient to meet the demand for
public expenditure
e.g. The Philippine is zero rating in this criteria because we all know that our
government resorted to borrowings from the WB/IMF just to implement its propose
annual budget for the year.
Adminitrative Feasibility – tax laws must be capable of convenient,just and
effective administration
e.g. The tax payer now a days have a lot of options of tax payment, It could be
through bank, bayad center and through agents. The BIR find ways that each

Course Code: Tax 101

Descriptive Title: Taxation( Income Taxation)
Instructor: Felix M. Del Rosario, CPA
ILOCOS SUR POLYTECHNIC STATE COLLEGE

Tagudin Campus

MODULE 1

municipality has a tax agent to cater the needs of the taxpayer. Installment mode of
payment of tax is also implemented for a taxpayer who had a big amount to be paid .
Theoretical Justice - tax must be imposes with equity and certainty and must
consider the taxpayers ability to pay and benefits received.

Our country is using the schedular rate to narrow the gap of the rich and the poor.
The ability to pay of the taxpayer is the consideration. The higher the income, the
higher the tax rate .
- Non-observance of the principles does not necessarily render a tax levy
unconstitutional.
Principal Approaches in the distribution of tax burden
a.Benefit Approach- tax payment should be based on benefits received
b.Substitution Effect- tax payments should be base relative to the ability of
taxpayers to pay
Taxation and Economic Efficiency
1.Income Effect - makes people economically efficient(ex:transformation)
2.Subtituton Effect- makes people economically inefficient(ex: inderect taxes)

F.The Inherent Power of the Government

1.Power of Taxation – the power to take property for the support of the government
and for public purpose. The power of the State to enforce proportional contribution
from its subjects to sustain itself. It also known as the strongest among the three
inherent power of taxation because the two inherent power of state will not be
implemented without the power of Taxation.
2.Police Power – the power to enacts laws to promote the general welfare of the
people . It is wider in application because it is the generalpower to make laws.This is
the reason why regulatory body are existing. The reason why we need to take
licensure examination before practicing our profession such as the doctor, lawyer,
accountant, teachers and others. The reason why the driver need to seek a driver
license before it was allowed to make driving in public places. Because without the
police power, there will be chaos in our society. Imagine a society that anycone
could perform an operation that only professional doctor is authorized, a society that
everyone could drive a vehicle without restriction, with that example of scenario, the
health and life of the citizens are at stake.
3.Power of Eminent Domain- the power to take private property for public use upon
payment of just compensation. No individual may say no to a government if such
property will be for the benefit of the majority of the constituents. For example, the
construction of the amburayan bridge affected some of the houses of the resients of
bio, but the construction of amburan bridge is for the betterment of the opeartion and

Course Code: Tax 101

Descriptive Title: Taxation( Income Taxation)
Instructor: Felix M. Del Rosario, CPA
ILOCOS SUR POLYTECHNIC STATE COLLEGE

Tagudin Campus

MODULE 1

for the safety of the heavy travellers , that’s the reason why, the people affected of
the construction of the said bridge will not file a protest as long, teh government paid
a just compensation or the said house and lot that has been destroyed in the
process of the construction of the bridge.

Point of Diffences of the Inherent Power of the States

Point of Taxation Police Power Eminent Domain
Difference
Exercising Authority Government Government Government or
private entities
Necessity of Delagation is not There must be There must be due
Delegation Necessary since it delegation before delegation before
is local governments local government or
inherent could excercised it private party may
exercise it.
Purpose Revenue and Property is taken for Property is taken for
support of the public purpose public use
government
Persons affected Community or class Community or class Operates on the
of individuals of individuals owner of the
property
Effect of transfer of Money paid as There is bo transfer There is transfer of
property rights taxes becomes part of title,at most there right to property
of the public fund is restraint on the whether it be of
injurious use of ownership or lesser
property right
Amount of Unlimited Sufficient to cover No imposition,the
Impositon the cost of owner is paid the
regulation fair market value of
property
Importance Most important of Most superior
the three
Relationship with Inferior to the ‘Non- Superior to the Superior and may
the Constitution Impairment ‘Non- override the ‘Non-
Clause’of Impairment Clause’ Impairment Clause’
The Constitution of Because the welfare
The Constitution of the state is
superior to private
contracts
Limitation Constitutionally and Public interest and Public purpose and
inherently restricted the just
Requirment of due compensation
process

Course Code: Tax 101

Descriptive Title: Taxation( Income Taxation)
Instructor: Felix M. Del Rosario, CPA
ILOCOS SUR POLYTECHNIC STATE COLLEGE

Tagudin Campus

MODULE 1

Similarities of the Three Powers

1. All three power are necessary attributes of sovereignty,resting upon
necessity
2. All are inherent powers of the State
3. All are legislative in nature
4. They are ways in which the State interferes with private rights and property
5. They exist independently with the Constitution although the condition for their
exercise may be prescribe or limited by the Constitution.
6. They all presuppose an equivalent compensation received by the persons
affected by the exercises of the power,whether directly,indirect or remote.
7. The exercises of these power by the local government units may be limited by
national legislature
*Police power can be used to raise revenue for the government(ex: license
fee)
G. LIMITATIONS OF POWER OF TAXATION
G.1 Constitutional Limitation
1. Observance of due process of law- No one should be deprived of his
life , liberty or property without due process of law . Tax laws should
neither be harsh nor oppressive. Tax must be imposed only for public
purpose, collected only under authority of a valid law and by the taxing
power having juridiction. The government shall observe the taxpayer’s
right to notice and hearing.
2. Equal protection of the law- No person shall be denied the equal
protection of law . Taxpayers should be treated equally both in terms of
rights conferred and obligations imposed. This rule applies where
taxpayers are under the same circumstances and conditions. For
example, the rate of income tax imposed to the daughter of the
commissioner earning 45,000 monthly is the tax rate to be imposed to an
ordinary instructor who also receiving 45,000 monthly.
3. Uniformity in taxation- The rule of taxation shall be uniform and
equitable. Taxpayers under dissimilar circumstances shall not be taxed the
same . Taxpayers should be classified according to commonality in
attributes and the tax classification to be adopted should be based on
substantial distinction. Each class is taxed differently but taxpayers falling
under the same class are taxed the same. Hence, uniformity is realtive
equality.
4. Progressive scheme of taxation- Congress shall evolve a progressive
system of taxation. Under the progressive system, tax rate increase as the
tax base increase. The constitution favors progressive tax as it is
consistent with the taxpayer’s ability to pay .Moreover, the progressive
system aids in an equitable distribution of wealth to the society by taxing
the rich more than the poor.
5. Non-imprisonment for non- payment of debt or poll tax- As a policy ,
no one shall be imprisoned by virtue of his poverty and no one shall be

Course Code: Tax 101

Descriptive Title: Taxation( Income Taxation)
Instructor: Felix M. Del Rosario, CPA
ILOCOS SUR POLYTECHNIC STATE COLLEGE

Tagudin Campus

MODULE 1

imprisoned for mere inability to pay debt. However , this constitutional

guarantee applies only when the debt is acquired by the debtor in good
faith . Debt acquired in bad faith constitutes estafa , a criminal offense
punishable by imprisonment. This policy applies only to poll tax( CTC or
cedula ) and not the other tax payment
6. Non-impairment of obligation and contract- The State should set an
example of good faith among its constituents . It should not set aside its
obligations from contracts by the exercise of its taxation power.Tax
exemptions granted under contract should be honored and should not be
cancelled by a unilateral government action.
7. Free worship rule- The Philippine government adopts free exercise of
religion and do not subject its exercise to taxation. Consequently, the
properties and revenues of religious institutions such as tithes or offerings
are not subject to tax. This exemption, however, does not extend to
income from properties or activities of religious institutions that are
commercial in nature.
8. Non-approoriation of public or property for the benefit of any
church,sect or system of religion- This constitutional limitation is
intended to highlight the separation of religion and the state. To support
freedom of religion, the government should not favor any particular syatem
of religion by appropriating public funds in support thereof.
9. Exemption of religious,charitable oreducational entities, non-profit
cementeries, churches and mosque frome property taxes- The
constitutional exemption from property tax applies for properties actually
directly and exclusively used for charitable, religious and educational
purpose. In onserving this constitutional limitation , The Philippine follows
the doctrine of use whrein only properties actually devoted for religious,
charitable or educational activities are exempt from real property tax.
10. Exemption from taxes of the revenues and assets of non-profits,non-
stock educational institutions including
grants,endownment,donations or contribution for educational
purposes- The constitution recognizes the necessity of education in state
building by granting exemption revenues and assets of non profit
educational institutions. This exemption, however, applies only on
revenues and assets that are actually, directly and exclusively devoted for
educational purposes.
11. Concurrece of a majority of all members of Congress for the
passage of a law granting tax exemption- Tax exemption law counters
against the lifeblood doctrine as it deprives the government of revenues.
Hence the grant of tax exemption must proceed only upon a valid basis.
As a safety net, The Constitution requires teh vote of majority of all
members of Congress in the grant of Tax Exemption.
12. Non-diversification of tax collections- Tax collections should be used
only for public purpose . It should never be diversified or used for private
purpose.
13. Non-delegation of the power of taxation
Exemption:

Course Code: Tax 101

Descriptive Title: Taxation( Income Taxation)
Instructor: Felix M. Del Rosario, CPA
ILOCOS SUR POLYTECHNIC STATE COLLEGE

Tagudin Campus

MODULE 1

a. power to tax was delegated to the President under the Flexibility

Clause of the Tariff and Customs Code
b. power to tax was delegated to the local government units under the
Local Government Code.
c. Matters involving the the expedient and effective administration and
implementations of assessment and collection of taxes or certain
aspects of taxing process that are not legeslative character.

14. Non-impairment of the jurisdiction of Supreme Court to review tax

cases- Notwithstanding the existence of teh Court of Tax Appeals, which
is special court, all cases involving taxes can be raised to and be finally
decided by the Supreme Court of the Philippines.

G. 2 Inherent Limitation
1. Territoriality of taxation- Public services are normally provided within the
boundaries of teh state. Thus, tax can be imposed only within the territories of
the State . This is the reason why that every time Manny Pacquiao will have a
boxing bout outside the countries, all amount of his earnings are all taxable in
the Philippine government because Manny Pacquiao is a filipino citizen , and
a Filipino citizen are taxable inside and outside the country and any payment
made by Pacquiao in the said country are considered foreign tax credit to be
deductible in the computation of the income tax of Manny Pacquiao.
2. Subject to international comity or treaty- It pertains to mutual courtesy or
reciprocity between States. It is a basic principle of international law that all
states are equally sovereign . Example of international comity is the
agreement between Australian government and Philippine government on
property tax that states that “ All property of Australian citizen in the
Philippines are not taxable in teh Philippines at the same time, any property of
Filipino Citizen in the Australi is not also taxable in Australia”. Other example
is that , the agreement of Canadian government to our country , that Doctors,
accountants, lawyers of the country will allow to practice their profession in
Canada subject to the rules of the governing society of the certain
professional organization and the other way around that Professionals of
Canadian government are allowed also to practice their profession to our
country.
3. Tax exemption of the government – The taxation power is broad. The
government can exercise the power upon anything including itself. However ,
the government normally does not tax itself as this will not raise additional
funds but will only impute additional costs . Exemption of government
instrumentalities will be subject with the approval of the majority in the
congress( 2/3) . Under our law, government properties and income from
essential public functions are not subject to taxation ( PNP, DPWH, DOH,

Course Code: Tax 101

Descriptive Title: Taxation( Income Taxation)
Instructor: Felix M. Del Rosario, CPA
ILOCOS SUR POLYTECHNIC STATE COLLEGE

Tagudin Campus

MODULE 1

BFP, AFP, BJMP). However, income of the government from its properties
and activities conducted for profit including GOCC’s are subject to tax
( GSIS,SSS).
4. Tax is for public purpose- Tax is intended for the common good. Taxation
must be exercised absolutely for public purpose . It cannot be exercised to
further any private interest.
5. Non delegation of the power of taxation- The legislative taxing power is
vested exclusively in Congress and is non- delegable in pursuant to the
doctrine of separation of the branches of the government to ensure a system
of checks and balances .
The power of lawmaking, including of taxation , is delegated by the people to
the legislature . Soa s not to spoil the purpose of delegation, it is held that
what has been delegated cannot be further delegated.
Exceptions to the rule of non- delegation
1.Under the constitution, LGU are allowed to exercise the power to tax to enable
them to exercise their fiscal autonomy( The LGU could create ordinances as other
sources of their income ).
2. Under the Tariff and Customs Code, The President is empowered to fix the
amount of tariffs to be flexible to trade conditions. ( It will help the local industry to
compete with the imported goods, It is also one way of helping the Filipino traders to
keep them existing in the market).

SITUS OF TAXATION
The place of taxation
Factors that determine the situs of taxation
1.Nature,kind or classification of the tax 5. Sources of income
2.Subject matter of the tax 6. Place of exercise,business or
occupation 3.Citizenship of taxpayer
being taxed
4.Residence of the taxpayer 7. place where income-producing activity was
. held or done
Applications
1. Persons-residence of the taxpayer
2. Community development tax-residence or domicile of the taxpayer
3. Business taxes-where the bussiness was conductted ir place where the
transaction took place
4. Privilege or occupation tax-where the previlege is exercises
5. Real property tax-where the property is located
6. Personal property taxes
a. tangible- where they are physically located
b. intangible- domicile of the owner unless the property has acquired a situs
else where

Course Code: Tax 101

Descriptive Title: Taxation( Income Taxation)
Instructor: Felix M. Del Rosario, CPA
ILOCOS SUR POLYTECHNIC STATE COLLEGE

Tagudin Campus

MODULE 1

7. Income- place where the income is earned or residence or citizenship of tax

payer
8. Transfer Taxes- residence or citizenship of taxpayer or location of the
property
9. Franchise Taxes- state that grants the franchise
10. Corporate Taxes- depend on the law of incorporation
H. DOUBLE TAXATION
Taxing the object or subject within the territorial jurisdiction twice,for the same
period,involving the same kind od tax by the same taxing authority.

Kinds:
1. Direct Double Taxation - this objectionable and prohibited because it
violates the constitutional provision on uniformity and equality
2. Indirect Double Txation – no constitutional violation.Ex: taxing the same
property by two different taxing authority.
Remedies to Double Taxation
1. Provision for tax exemption
2. Allowance for tax credit
3. Allowance for principle of reciprocity
4. Enter into treaties with and agreement with foreign government
I. Form of Escape of from Taxation
A. Those that will not result in loss of revenue to the government
1. Shifting – the process of transferring the tax burden from the statutory
taxpayer to another without violating the law.
2. Capitalization – the seller is willing to lower the price of the commodity
provided the taxes will be shouldered by the buyers.
3. Transformation – the manufacturer absorbs the additional taxes imposed
by the government without passing it to the buyers for fear of lost of his
market.Instead,it increases quantity of production,there by turning their
units to production at a lower cost resulting to the transformation of the tax
into again throuth the medium of production.

B. Those that will result to loss of revenue to the government

1. Tax Evasion –( tax dodging) – resorting to acts and devices that illegally
reduces or totally escape the payment of taxes that are due to the
taxpayer.They are prohibited and are therefore are not subject to
penalties.

Course Code: Tax 101

Descriptive Title: Taxation( Income Taxation)
Instructor: Felix M. Del Rosario, CPA
ILOCOS SUR POLYTECHNIC STATE COLLEGE

Tagudin Campus

MODULE 1

2. Tax Avoidance – tax minimization scheme – the reduction or totally

escaping payment of taxes through legally permissible means, that are not
probihited and therefore are not subject to penalties.
3. Tax Exemptions – an immunity,privilege or freedom from payment of a
charge or burden to which others are obliged to pay.
Kind of Exemptions
1. Express – granted by the constitution,statute,treaties,ordinance,contracts or
franchise
a. Constitutional
b. Statutory
c. Contractual
2. Implied – exempted by accidental or international omission
3. Total – exemption for all taxes (OFWs.)
4. Partial – exemption from certain taxes, partially or totally

Grounds for Exemption

1. It may based on a contract
2. It may be based on grounds of public policy – ex: granting of exemptions to
rural baks and sweepstakes or lotto winnings
3. It may be based on some grounds to foster charitable and other benevolent
institutional
4. It may be created to lessen the rigors of international double or multiple
taxation
5. It may be created to lessen the rigors of international double or multiple
taxation
Diatinction between tax evasion and tax avoidance
Tax Evasion Tax Avoidance
It is a scheme used outside of those It is a tax saving device within the
lawful means and when availed of, it means sanctioned by law
usually subjects the taxpayer to
penalties
It is accomplished by breaking the law Accomplished by legal procedures and
do not violate the law
It cannot fraud,deceit and malice No fraud is invilved

Tax Exemption
 Is not automatic
 Is not non-transferable
 Is revocable by the government(excep whene granted under a valid contract
or by the Constitution)
 Rule shall be uniform
 Does not contravente the LifeBlood Doctrine

Course Code: Tax 101

Descriptive Title: Taxation( Income Taxation)
Instructor: Felix M. Del Rosario, CPA
ILOCOS SUR POLYTECHNIC STATE COLLEGE

Tagudin Campus

MODULE 1

 Is always disfavored
 Is allowed only only under a clear and unequivocal provision of the law
 On real property tax will be based on the Doctrine of Usage and not Doctrine
pf Ownership, except for real properties owned by the government which is
absolutely exempy form taxation
 On real property tax cannot be granted by local governments but can condone
existing liabilities in special cases
 On local taxes can be granted by local government but they cannot condone
existing liabilities on local taxes
Fundamental Doctrine in Taxation
1. No court may enjoin the collection of taxes
2. Claim for exemptions shall be interpreted strictly against the taxpayer
3. A law that permit deduction from the tax base is strictly construed againts the
tax payer
4. Tax assesment are presumed to be correct and done in good faith
5. Tax law are generally prospective in application
6. Tax are not subject to compensation or set off
7. Refun of taxes do not earn interest because interest do not run against the
government
Distinction between Tax Amnesty and Tax Condonation
Tax Amnesty – a general pardon or intentional overlooling by the same state of its
authority to impose penalties on persons otherwise guilty of tax evasion or violation
of tax laws. The purpose is to give the erring taxpayer a chance to reform and
become part of the society with ah clean slate.
Tax Condonation – means to remit or to refrain from exacting or imposing a tax. It
cannot extend refund of taxes already paid when obtaining condonation.

Tax Exemption Tax Amnesty

There is no tax liability at all Cannotes condonation from payment of
existing tax liability
The grantee need mot pay anything The grantee pays a portion
Can be availed of by any qualified Not always available
taxpayer

Summary of the Module :

Module 1 discussed the Importance of taxation in the government, as a source of the
fund of the government in funding its operation. It presents also the three inherent
power of state; the power of taxation, the eminent domain and police power and it
was noted that the power of taxation is the strongest among the three, It presents
also the scope of Taxation known as CUPS- comprehensive, unlimited , plenary and
supreme. Coming from its scope of Supreme, two limitations were arises , one
coming from itself known as the inherent limitations ( TIPED); territoriality,

Course Code: Tax 101

Descriptive Title: Taxation( Income Taxation)
Instructor: Felix M. Del Rosario, CPA
ILOCOS SUR POLYTECHNIC STATE COLLEGE

Tagudin Campus

MODULE 1

International Comity, Public Purpose, exemption of government agency and

delegation of taxing authority and the limitations presented in the Philippine
Constitutions known as constitutional limitations. It presents also the principle of
sound tax system known as FEA, ( Fiscal Adequacy, Theoritical Justice or Equality
and Administrative Feasibility). It discuss also the place of taxation such citizenship
of the taxpayer, residence of taxpayer , sources of income as factors to be
considered in determining the situs of taxation and lastly, It discusses the forms of
escape of taxation, the one that is acceptable by the BIR- the tax minimization or tax
avoidance and the one illegally reduces or totally escape of payment known as tax
dodging or tax evasion.

References:
 Bangawan, Rex B. (2018). Income Taxation (Laws, Principles and
Applications ) Real Excellence Publishing, Baguio City
 Urbano, Bartolome R, (2015). Income Taxation Made Available, C & E
Publishing , Inc. Manila

INTENDED LEARNING ACTIVITY

ACTIVITY 1

Name: _____________________ Class Schedule: ________________

Course/Year/Section: ____________ Date: _________________________

I. MODIFIED TRUE OR FALSE. Write TRUE if the statement is correct and FALSE if
the statement is incorrect. If the statement is incorrect, identify the incorrect word or
statement and write the correct word or statement. (2 points each)

1.2/3 of all members of Congress is required to pass a tax exemption law.

2. No one shal be imprisoned for non-payment of tax
3. Taxpayers under the same circumstance should be taxed differently
4. The government should tax itself
5. International Comity connotes courtesy between nations.
6. Taxation is subject to inherent and constitutional limitations
7. Police power is the most superior power of government
8. Eminent Domain involves confiscation of prohibited commodities to protect
the well being of the people
9. Fiscal adequacy, administrative feasibilty and unequality are the principle of
sound taxation.

Course Code: Tax 101

Descriptive Title: Taxation( Income Taxation)
Instructor: Felix M. Del Rosario, CPA
ILOCOS SUR POLYTECHNIC STATE COLLEGE

Tagudin Campus

MODULE 1

10. Taxes are the lifeblood of the government.

ACTIVITY 2

Answer the assessment made by your instructor by clicking the link given to
you testmoz.com/8125730 Passcode: trishamae

You may now proceed to the next module of this course. I hope you have
learned some information if not a lot in the
lessons discussed earlier.

Course Code: Tax 101

Descriptive Title: Taxation( Income Taxation)
Instructor: Felix M. Del Rosario, CPA