Characteristics of estate tax

Estate taxes are an excise tax. They are ad valorem. They are also direct, national, general and progressive.

[1] PROGRESSIVE. Estate tax is progressive because the rate increases as the tax base increases.

[2] GENERAL. Estate tax is a general tax measure because the purpose is to raise revenue for the government to be used for general purposes.

[3] NATIONAL. Estate tax is not local; it is national. It is imposed by the National Government and collected by the Bureau of Internal Revenue (BIR). Local government units (LGU) cannot impose this tax anymore because of the principle of preemption under the Local Government Code (Sec. 133)

[4] EXCISE. Estate tax is an excise not, not a tax on property. It is imposed upon the privilege of transferring property or the shifting of economic benefits and enjoyment of the same from the decedent to his heirs. This is a privilege because such transmission and acquisition from the dead to the living is a fiction of law.

[5] AD VALOREM. Estate is based on the fair market value at the time of death. However, the appraised value of real property as of the time of death shall either be the fair market value [a] as determined by the Commissioner (zonal value) or [b] as scheduled or fixed by the Provincial and City Assessors, whichever is higher.

[6] DIRECT. Estate tax is the amount to be paid by the person liable to pay. The obligation to pay this tax cannot be shifted.

It is important to note that, in case the executor or administrator fails to pay the estate tax, the heirs are subsidiarily liable to the extent of the shares received by them in proportion to the whole. In such a case, there is no shifting of the obligation or burden to pay the tax because there originally exists a joint liability between the hirs and the executor or administrator. The heirs' liability arises only upon failure of the executor or administrator to pay the estate tax.

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