TAXATION 1 Lecture Notes 2016-2017 Page 1 of 10 GENERAL PRINCIPLES OF TAXATION 1. INHERENT POWERS OF THE STATE Definition Taxation - is the power by which the sovereign raises revenue to defray the necessary expenses of the government. Additional Notes : The theory behind the exercise of the power to tax emanates from necessity . The government cannot and must be estopped particularly in matters involving taxes. Collection of taxes should be made in accordance with law as any arbitrariness will negate the very reason of government which is to promote the common good. Eminent Domain- affects only property RIGHTS. It may be exercised by some private entities. The property forcibly taken under this power, upon payment of just compensation, is needed for conversion to public use or purpose. Police Power- is the power of promoting the public welfare by restraining and regulating the use of both liberty and property of all the people. Distinctions TAXATION EMINENT DOMAIN POLICE POWER 1. As to who exercises the Power Government only or its political subdivision Government or its political subdivision or public service company or utilities Sample . Telephone companies (PANTELCO), water district and electric companies (AKELCO) Government only or its political subdivision 2. As to scope All persons, properties and rights Only a particular property owner All persons, properties and rights 3. As to purpose To raise revenue to support the government For public use To promote general welfare 4. As to Effect Becomes public fund Transfer of right to property There is restraint on use of property 5. As to amount of Imposition No limit (that is why taxation is plenary provided that it should not be confiscatory) No amount impose, only the payment of market values Amount is limited to cover cost of license and expenses of police surveillance and regulation 6. As to benefits received Indirect benefit Just compensation is given to the owner of the expropriated property Indirect benefit 7. As to relation to the constitution Inferior to non- impairment clause Inferior to non- impairment clause Superior to non- impairment clause Note: As to amount of imposition, taxation is unlimited. The legislature has the inherent power to select the subject of taxation and to grant exemptions. They have the right to determine the amount or rate to tax, in any amount it sees fit. Not only is the power to tax unlimited in its reach as to subjects but in its very nature, it acknowledges no limits and may be carried even to the extent of exhaustion and
TAXATION 1 Lecture Notes 2016-2017 Page 2 of 10 destruction, thus becoming in its exercise the power to destroy. But the power to destroy should be use validly as an implement of the police power in discouraging and prohibiting or certain things or enterprises inimical to the public welfare. The power to destroy must be exercised fairly, equally and uniformly, lest the tax collector kill the hen that lays the golden eggs.
- Fall '15