Responsabilidad Social Corporativa

L.1. TARIFF

Taxes Tariff

All embracing term to include various kinds

of enforced

contributions upon persons for the attainment of public purposes Generally, no limit on

the amount collected as long as it is not cost of construction or maintenance of the public improvement private individuals or entities.

A toll is a sum of money for the use of something, generally applied to the consideration which is paid for the use of a road, bridge or the like, of a public nature. (1 Cooley 77.)

The view has been expressed, however, that the taking of tolls is only another method of taxing the public for the cost of the construction and repair of the improvement for the use of which the toll is charged. (71 Am. Jur.

2d 351.)

L.3. LICENSE FEE

Taxes License and

Regulatory Fee

Exacted primarily to regulate certain not necessarily make the act or business

License is in the nature of a special privilege, of a permission or authority to do what is within its terms. It makes lawful an act which would otherwise be unlawful. A license granted by the State is always revocable. (Gonzalo Sy Trading vs. Central Bank of the Phil., 70 SCRA 570 [1976])

29 Importance of the distinctions

(1) It is necessary to determine whether a particular imposition is a tax or a license fee because some limitations apply only to one and not to the other, and for the reason that exemption from taxes may not include exemption from license fee.

(2) The power to regulate as an exercise of police power does not include the power to impose fees for revenue purposes. The amount of tax bears no relation at all to the probable cost of regulating the activity, occupation, or property being taxed. (see Progressive Development Corp. vs. Quezon City, 172 SCRA 629 [1989])

(3) An exaction, however, may be considered both a tax and a license fee. This is true in the case of car registration fees which may be regarded as taxes even as they also serve as an instrument of regulation. If the purpose is primarily revenue, or if revenue, is, at least, one of the real and substantial purposes, then the exaction is properly called a tax. (Phil. Airlines, Inc. vs. Edu, 164 SCRA 320 [1988])

(4) But a tax may have only a regulatory purpose. The general rule, however, is that the imposition is a tax if its primary purpose is to generate revenue, and regulation is merely incidental; but if regulation is the primary purpose, the fact that incidentally revenue is also obtained does not make the imposition a tax. (see Progressive Development Corp. vs. Quezon City)

Progressive Development Corp v. QC (1989): To be considered a license fee (PRIMARY PURPOSE TEST):

(1) imposition must relate to an occupation or activity that so engages the public interest in health, morals, safety and development as to require regulation for the protection and promotion of such public interest;

(2) imposition must bear a reasonable relation to the probable expenses of regulation,

taking into account not only the costs of direct regulation but also its incidental consequences as well.

Note: Taxes may also be imposed for regulatory purposes. It is called regulatory tax.

Fees may be properly regarded as taxes even though they also served as an instrument of regulation. If the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then the exaction is properly called a tax.[PAL v. Edu (1988)] L.4. SPECIAL ASSESSMENT

Taxes Special Assessment Levied not only on

land.

Levied only on land.

Imposed regardless

of public

improvements

Imposed because of an increase in value of land benefited by public improvement.

Contribution of a taxpayer for the support of the government.

Contribution of a person for the construction of a public improvement It has general

application both as to time and place.

Exceptional both as to time and locality.

A special assessment is not a personal liability of the person assessed, i.e., his liability is limited only to the land involved. It is based wholly on benefits (not necessity).

A charge imposed only on property owners benefited is a special assessment rather than a tax notwithstanding that the statute calls it a tax. The rule is that an exemption from taxation does not include exemption from special assessment. But the power to tax carries with it the power to levy a special assessment.

30 Note: The term "special levy" is the name used in the present Local Government Code (RA. No.

7160). A province, city, or municipality, or the National Government, may impose a special levy on lands especially benefited by public works or improvements financed by it (see Sec.

240, RA 7160). Art. 1279, Civil Code) A person cannot be

imprisoned for non-payment of debt (except when it arises from a crime), periods provided for in the NIRC.

Governed by the ordinary periods of prescription.

Does not draw interest except only when delinquent

Designed to regulate conduct

May be imposed only by the government

May be imposed by the government or private individuals or entities Art. 1279, Civil Code)

M. KINDS OF TAXES

(1) Personal, Poll or Capitation Tax – tax of a fixed amount imposed on persons residing within a specified territory, whether citizens or not, without regard to their property or the occupation or business in which they may be engaged (e.g. community (formerly residence) tax). Taxes of a specified amount imposed upon each person performing a certain act or engaging in a certain business or profession are not, however, poll taxes.

(71 Am.Jur.2d 357).

(2) Property Tax – tax imposed on property, real or personal, in proportion to its value or in accordance with some other reasonable method of apportionment (e.g., real estate tax). The obligation to pay the tax is absolute and unavoidable and is not based upon the voluntary action of the person assessed.

(3) Privilege/Excise Tax – any tax which does not fall within the classification of a poll tax or a property tax. Thus, it is said that an excise tax is a charge imposed upon the

31 performance of an act, the enjoyment of a privilege, or the engaging in an occupation, profession, or business. The obligation to pay the tax is based on the voluntary action of the person taxed in performing the act or engaging in the activity which is subject to the excise. The term “excise tax” is synonymous with “privilege tax” and the two are often used interchangeably (e.g., income tax, value added tax, estate tax, donor’s tax).

M.2. AS TO BURDEN OR INCIDENCE (1) Direct Taxes – taxes which are demanded

from persons who also shoulder them; taxes for which the taxpayer is directly or primarily liable, or which he cannot shift to another (eg. Income tax, estate tax, donor’s tax, community tax)

(2) Indirect Taxes – taxes which are demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another, falling finally upon the ultimate purchaser or consumer; taxes levied upon transactions or activities before the articles subject matter thereof, reach the consumers who ultimately pay for them not as taxes but as part of the purchase price. Thus, the person who absorbs or bears the burden of the tax is other than the one on whom it is imposed and required by law to pay the tax. Practically all business taxes are indirect (e.g., VAT, percentage tax;

excise taxes on specified goods; customs duties).

M.3. AS TO TAX RATES

(1) Specific Tax – a tax of a fixed amount imposed by the head or number or by some other standard of weight or measurement. It requires no assessment (valuation) other than the listing or classification of the objects to be taxed (e.g., taxes on distilled spirits, wines, and fermented liquors; cigars and cigarettes)

(2) Ad Valorem Tax – a tax of a fixed proportion of the value of the property with respect to which the tax is assessed. It requires the intervention of assessors or appraisers to estimate the value of such property before the amount due from each taxpayer can be determined. The phrase “ad valorem” means literally, “according to value.” (e.g.

real estate tax, excise tax on automobiles, non-essential goods such as jewelry and perfumes, customs duties (except on cinematographic films)).

(3) Mixed

AS TO PURPOSES

(1) General or Fiscal Tax –levied for the general or ordinary purposes of the Government, i.e., to raise revenue for governmental needs (e.g. income tax, value added tax, and almost all taxes).

(2) Special/Regulatory/ Sumptuary Tax –levied for special purposes i.e., to achieve some social or economic ends irrespective of whether revenue is actually raised or not (e.g. protective tariffs or customs duties on imported goods to enable similar products manufactured locally to compete with such imports in the domestic market).

Tariff duties intended mainly as a source of revenue are relatively low so as not to discourage imports.

M.4. AS TO SCOPE (OR AUTHORITY IMPOSING THE TAX)

(1) National – taxes imposed by the national government (e.g. national internal revenue taxes, customs duties, and national taxes imposed by laws).

(2) Municipal or Local – taxes imposed by local governments (e.g. business taxes that may be imposed under the Local Government Code; professional tax).

32 M.5. AS TO GRADUATION

(1) Proportionate – The rate of tax is based on a fixed percentage of the amount of the property, receipts or other basis to be taxed.

Example: real estate tax, value added tax, and other percentage taxes.

(2) Progressive – The rate of tax increases as the tax base or bracket increases.

Example: income tax, estate tax, donor’s tax.

(3) Digressive – A fixed rate is imposed on a certain amount and diminishes gradually on sums below it. The tax rate in this case is arbitrary because the increase in tax rate is not proportionate to the increase of tax base.

(4) Regressive – The rate of tax decreases as the tax base or bracket increases. There is no regressive tax in the Philippines.

Regressive/Progressive system of taxation A regressive tax must not be confused with the regressive system of taxation.

In a society where the majority of the people have low incomes, regressive taxation system exists when there are more indirect taxes imposed than direct taxes. Since the low-income sector of the population as a whole buys more consumption goods on which the indirect taxes are collected, the burden of indirect taxes rests more on them than on the more affluent groups. There should be no objection if indirect taxes are raised on luxury items consumed mainly by the higher income groups and reduced on basic commodities consumed by the lower income segments of society.

Studies reveal that the progressive elements of the income and other direct taxes have not sufficiently offset the regressive effects of the indirect taxes as a whole.

A progressive tax is, therefore, also different from a progressive system of taxation.

II. National Internal

Revenue Code of 1997 as