8 essential characteristics of tax


A tax (from the Latin taxo) is a compulsory financial charge or some other type of levy imposed upon a taxpayer (an individual or legal entity) by a governmental organization in order to fund various public expenditures. A failure to pay, along with evasion of or resistance to taxation, is punishable by law. en.wikipedia.org/wiki/Tax. The following are the essential characteristics of tax.

[1] It is an enforced contribution for its imposition is in no way dependent upon the will or assent of the person taxed. Consent is not an element. This is why some hold the extreme view that taxation is robbery or theft because it is taking of property without or against the will of the owner.

[2] It is generally payable in the form of money, although the law may provide payment in kind. For example, backpay certificates are an acceptable form of payment under Sec. 2, R.A. No. 304, as amended. The reason why tax should generally be paid in money is liquidity. The Government needs cash for its operation (to pay employees, etc.). Another reason is valuation. Money has a value certain on its face; whereas, real or personal property still needs appraisal and its market value may fluctuate.

[3] It is proportionate in character or is laid by some rule of apportionment which is usually based on ability to pay. Payment of taxes must be based on the “ability-to-pay” principle; thus, the higher the income of the taxpayer, the bigger the amount of the tax paid. www.slideshare.net/lanceabalos/taxation-lectures1.

[4] It is levied on persons, property, rights, acts, privileges, or transactions. Congress, through its plenary legislative power, can choose with almost unlimited discretion the subjects and objects of taxation. In fact, courts cannot inquire into such discretion unless there is a violation of the inherent and constitutional limitations of taxation.

[5] It is levied by the State which has jurisdiction or control over the subject to be taxed.[6] It is levied by the law-making body of the State. The power to tax is a legislative power. However, it is also granted to local governments, subject to such guidelines and limitations as law may provided. (Section 5 of Article X of the Constitution) In other words, although taxation is an inherent power of the State, it is exercised through law. Therefore, constitutional tax provisions are not a grant but a limitation on this power. On the other hand, local government units have no inherent power to tax but they have the constitutional tax power granted and protected by the 1987 Constitution.

[7] It is levied for public purpose. Revenues derived from taxes cannot be used for purely private purposes or for the exclusive benefit of private persons. (G.R. No. 77194) The "public purpose or purposes" of the imposition are implied in the levy of tax. (94 Phil. 1047) A tax levied for a private purpose constitutes a taking of property without due process of law. Therefore, the courts have the power to look into whether the tax has a public or private purpose. If the purpose is public, the courts can look into the wisdom of the legislature no further.

[8] It is also an important characteristic of most taxes that they are commonly required to be paid at regular periods or intervals. (see 1 Cooley 64)

Tax is an enforced fee that is charged on individuals and organizations by government or its agency on a product, income, or service. Despite many people complaining of making tax contributions to government, these contributions are very important for the economy of a country. This is because these financial contributions are used by government for the implementation of various socio-economic development projects such as the construction of roads and bridges, schools, health facilities and provision of social services like national security, provision of salaries for civil servants including the police, the army, judges, doctors, nurses and teachers. However, to clearly understand the rationale behind government charging of taxes terms such as taxation, equity in relation to taxation, direct and indirect tax and sources of income, need to be clearly understood. www.ukessays.com/essays/economics/explaining-the-primary-purpose-of-taxation-economics-essay.php.

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