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TAXATION: III. CLASSIFICATION OF TAXES - Coggle Diagram
TAXATION:
III. CLASSIFICATION OF TAXES
AS TO SUBJECT MATTER
CAPITATION or POLL TAXES
CAPITATION/POLL = FIXED,
WITHIN SPECIFIC TERRITORY
REGARDLESS OF PROPERTY
A fixed amount
upon all the persons OR
upon all the persons
of a certain class,
resident within a specific territory
without regard to their property or occupations in which they may be engaged.
[71 AmJur 2d 357] Example: Community tax (Cedula)
EXAMPLE
COMMUNITY TAX
PROPERTY TAXES
PROPERTY TAX =
ASSESSED ON ALL PROPERTY
Assessed on all property or on all property
of a certain class
located within a certain territory
on a specified date in proportion to its value, or in accordance with some other reasonable method of apportionment,
the obligation to pay which is absolute and unavoidable and
is not based upon any voluntary action of the person assessed.
[71 AmJur 2d 358]
EXAMPLE
REAL ESTATE TAX
EXCISE OR LICENSE TAXES
EXCISE OR LICENSE TAXES = PRIVILEGE TAX
BASICALLY, ANYTHING THAT IS
NEITHER CAPITATION NOR PROPERTY TAX
Any tax which does not fall within the classification of a poll tax or a property tax, and which embraces every form of burden not laid directly upon persons or property.
It is a charge imposed upon the performance of an act, the enjoyment of a privilege, or the engaging in an occupation.
It is synonymous with a “privilege tax.” [71 AmJur 2d 361]
EXAMPLE
VAT, income tax
NB: Not limited to the Excise tax in our NIRC
AS TO INCIDENCE OR BURDEN
A. DIRECT TAXES
DIRECT = DEMANDED FROM SAME PERSON WHO SHOULDERS THEM
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
EXAMPLE
INCOME TAXES
B. INDIRECT TAXES
INDIRECT = DEMANDED FROM ONE PERSON, SHOULDERED BY ANOTHER
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 pays 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
Practically all business taxes are indirect.
EXAMPLE
VAT
Percentage Tax
TAX EXEMPTION
NAPOCOR enjoyed a general tax exemption from all taxes, direct or indirect.
In 1976 this exemption was stated in general terms.
The question brought before the Court was whether NAPOCOR continued to enjoy tax exemption from indirect taxes.
The Court ruled in the negative, holding that a review of the chronology of issuances reveal that it has always been the intention to exempt NAPOCOR from the payment of both direct and indirect taxes.
[Maceda v. Macaraig]
AS TO DETERMINATION OF AMOUNT
EXCISE TAX APPLIES TO GOODS MANUFACTURED
Excise taxes apply to goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition and to things imported.
(SECTION 129., NIRC Goods Subject to Excise Taxes)
EXCISE TAX IS IMPOSED ATOP OF VAT
The excise tax imposed herein shall be in addition to the value-added tax imposed under Title IV.
AD VALOREM TAX:
BASED ON SELLING PRICE OR OTHER SPECIFIED VALUE OF THE GOOD
and an excise tax herein imposed and based on selling price or other specified value of the good shall be referred to as 'ad valorem tax.'
AD VALOREM REQUIRES VALUATION
Literally “according to the value.”
It is a tax of a fixed proportion of the value of the property with respect to which the tax is assessed, and requires the intervention of assessors or appraisers to estimate the value of such property before the amount due from each taxpayer can be determined.
EXAMPLE
Real Estate Taxes
SPECIFIC TAX:
BASED ON WEIGHT, VOLUME, OR ANY PHYSICAL MEASUREMENT
"For purposes of this Title, excise taxes herein imposed and based on weight or volume capacity or any other physical unit of measurement shall be referred to as 'specific tax'
REQUIRES NO ASSESSMENT/VALUATION OTHER THAN LISTING/CLASSIFICATION OF OBJECTS TAXED
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.
EXAMPLE
Taxes on distilled spirits, wines, and fermented liquors
AS TO PURPOSE
a. GENERAL OR FISCAL
GENERAL BENEFIT:
NO SPECIAL (SPECIFIC) BENEFIT
The government renders no return of special benefit to any property, but only secures to the citizen the general benefit which results from protection to his person and property and the promotion of various schemes which have for their object, the welfare of all.
[71 AmJur 2d 356]
EXAMPLE:
INCOME TAX, VAT
b. SPECIAL, REGULATORY, SUMPTUARY
SPECIAL PURPOSE
Levied for a special purpose to achieve some social or economic objective
EXAMPLE:
PROTECTIVE TARIFFS
CUSTOM'S DUTIES
But if tariffs are protective, doesn't that mean it is under the exercise of Police Power?
AS TO SCOPE
a. NATIONAL
NATIONAL: IMPOSED BY
NATIONAL GOVERNMENT
Taxes imposed by the National Government
EXAMPLES:
National internal revenue taxes
Customs duties
b. LOCAL
LOCAL: IMPOSED BY
MUNICIPAL CORPORATIONS or LOCAL GOVERNMENTS
Imposed by municipal corporations or local governments.
EXAMPLES:
Real estate taxes
Business taxes
AS TO GRADUATION OR RATE
a. PROGRESSIVE
TAX BASE/BRACKET^ = TAX RATE^
The rate of tax increases as the tax base or bracket increases
b. REGRESSIVE
TAX BASE v = TAX RATE v
The rate of tax decreases as the tax base increases
IF THERE ARE MORE INDIRECT TAXES IN THE SYSTEM, SUCH SYSTEM HAVE ALSO BEEN CALLED REGRESSIVE
(Note: a system where there are more indirect taxes than direct has also been called regressive)
c. MIXED or DEGRESSIVE
d. PROPORTIONATE
BASED ON FIXED PERCENTAGE
Based on a fixed percentage of the amount of the property receipts or other basis to be taxed