Who should decide the public purpose of taxes?


It is Congress, through its plenary legislative power, that decides and determines what the public purpose of taxation should be. However, as to the question of whether the purpose is indeed public, it is the Judiciary that has the final say.

In the final analysis, therefore, the decision on the question of whether the tax purpose is public is not a legislative but a judicial function. However, once it is settled that the purpose is public, the courts can make no other inquiry into the objective of the legislature in imposing a tax (110 Phil. 331), or the wisdom, advisability, or expediency of the tax.

As the power of taxation is legislative and not judicial, the determination of what are public purposes for which taxes may be levied is primarily a matter of determination by the legislature. But this legislative determination is not conclusive and is subject to judicial review. The Supreme Court of the United States declared, in Loan Association v. Topeka, that while it was not easy to decide what was a public purpose, and that the court was justified in interposing only when the case was clear, affirmed in most positive terms this inherent and essential limitation of the taxing power. This case involved the validity of a tax levied for the payment of bonds in aid of manufacturers located in a Kansas town, and the court declared that this was not a lawful public purpose. The difficulty of laying down a general rule as to what is a public purpose was recognized by the court. www.digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=1939&context=ylj.

"It is a general rule that the legislature is without power to appropriate public revenue for anything but a public purpose. It is the essential character of the direct object of the expenditure which must determine its validity as justifying a tax, and not the magnitude of the interests to be affected nor the degree to which the general advantage of the community, and thus the public welfare, may be ultimately benefited by their promotion. Incidental advantage to the public or to the state, which results from the promotion of private interests and the prosperity of private enterprises or business, does not justify their aid by the use of public money." (25 R.L.C. pp. 398-400)

"The test of the constitutionality of a statute requiring the use of public funds is whether the statute is designed to promote the public interests, as opposed to the furtherance of the advantage of individuals, although each advantage to individuals might incidentally serve the public." (81 C.J.S. p. 1147)

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