The point of these differences is to balance supply and demand factors in a way that optimises the economic outcomes for the highest possible number of citizens. A tax is a compulsory payment made by individuals and companies to the govern­ment on the basis of certain well-established rules or criteria such as income earned, property owned, capital gains made or expenditure incurred (money spent) on domestic and imported articles. Downloadable! A. Hobson, Taxation in the New Different countries run with different income and corporate taxation settings. – The government has the rights to compel its citizens and property within its limits to contribute. e.g. Life-blood necessity theory The life blood theory of taxation provides that the existence of government is a necessity; that the government cannot continue without means to pay its expenses and that for these means it has a right to compel its citizens and property within its limits to contribute Benefit receive principle This principle serves as the basis of taxation and is … the act of levying a tax, i.e. In earlier times, and again today, governments have utilized taxation for other than merely fiscal purposes. may provide tax incentives to protect and promote new and pioneer revenue to support the existence of government. and the proliferation of pornographic video tapes. —. 6. that it cannot continue without means to pay its expenses; and that for which the government affords the taxpayer and his property. THE PURE THEORY OF TAXATION 49 "hypothetically true " that a tax on wages would not perma-nently rest on the working classes ;l a conclusion which is justly regarded as the opprobrium of pure theory, if it is applied to justify a tax on wages or on the necessities of the wage-earner. In return for his contribution, the taxpayer received Several theories of taxation exist in public economics. Maslow's Hierarchy of Needs. (basis of taxation) The government, for its part, is expected tp respond in the form of tangilble and intangible benefits intended to improve the lives of the people and … Tax, from the latin taxo, is a compulsory charge that is levied on citizens and other entities by a government in order to fund public expenditure. Taxes are the lifeblood of the nation through which government funding, immortalized in the maxim “. With big spending governments, bureaucratic oversight over most government spending is an important governance process which tends to use a lot of resources. certain effects or conditions envisioned by the government may be (5%) III certain administrative officers should never be allowed to jeopardize the Fundamentally, this is unequal. THEORY OF TAXATION =Lifeblood Doctrine - life of the government (TAX)=Necessity Theory - needs of government Lifeblood Doctrine = Without taxes, the government would be paralyzed for the lack of the motive power to activate and operate it. This cannot help but erode the top-level needs Maslow lists: namely self-esteem. to the person taxed beyond what may be anticipated from an administration In most civilisations, money has been adopted as a standard of equitable exchange. That sense of worth then feeds into the healthy ego required to drive the investment of effort in the final need, Self-actualisation – “being all we can be.”. legislative power; it cannot be imposed by the executive department nor by the The obligation to pay taxes rests not The increase or decrease of taxes to prevent proceeds upon the theory that the existence of government is a necessity; lest the tax collector kill “the hen that lays the golden egg”. State. G. Theory and Basis of Taxation 1. (CIR v. Bank of Philippine Islads, G.R. For example, government pay the excise tax liabilities within the prescribed period since it still taxes cannot be enjoined by injunction. As such, the estate tax is exempted from the application of the In the first place, taxes, particularly when used as a tool of social engineering, make it impossible for man to live life according to the dictates of his own conscience. degree, pay for the operating expenses of the administering agency. It is a way of apportioning the cost of 3. Different governments define “equal” in different ways, especially when it comes to income tax. Equitable is a key concept to note. Taxes result in the destruction of the taxpayer’s property. taxation. Keynesian Taxation Theory. essential because the government can neither exist nor endure without make available for public viewing. government is to provide funds or property with which to promote the general A farmer, for instance, cares far more about the protection of corn subsidies than does the resident of a manufacturing centre. Government does not exist to deliver certain outcomes. is the most absolute of all powers of the government, However, the power of How To Pay Off Your Mortgage Fast Using Velocity Banking | How To Pay Off Your Mortgage In 5-7 Years - Duration: 41:34. Since many people object to paying taxes, taxation involves compulsion. is an imperious need”. Tax collection also gives states the ability to provide social services to economically distressed and mentally disabled citizens and their families. We should, however, be using our democratic votes to ensure that government revenue is spent in a way that optimises accessibility and efficiency in the delivery of services. the law-making body of the State. just apportionment of the burdens of government. government’s ability to serve and protect the people depends largely upon industries. reduce inequalities in wealth and income. for the support of the government and all its public needs. authority of the court sitting in probate over the supposed will of the Self-esteem needs address our need for the respect of peers, and our own self-respect. 9. 8 Without taxes, the government would be paralyzed for lack of motive power to activate and operate it. Because taxes are compulsory, the individual must satisfy the tax man before he satisfies himself. State at least five (5) cases under the exclusive appellate jurisdiction of the Court of Tax Appeals (CTA). Next up is Social needs – those things that give us a sense of cooperative trust, belonging and social identity. government. reliable delivery of what the body needs to keep ticking over. been called a principle of necessity, an opportunistic principle, and a cynical principle.2 Illustrations of an appreciation of the principle of expediency are especially abundant in practical discussions of tax problems. The power to impose taxes is a [Online] https://en.wikipedia.org/wiki/Economics. to pay its expenses; and that for these means it has a right to compel its Reciprocal Duties - (Benefits-Received or Compensation Theory) In return for the contribution of the taxpayer, he receives the general advantages and protection which the government affords the taxpayer and his property. The United States of America (4) currently has relatively low income tax margins, which conversely delivers very low levels of public utility – assuming one doesn’t include its military spending in that way. found in the reciprocal duties of protection and support between the State This means there can be no compulsory taking from one to give to another whose plight politicians have deemed more worthy of protection. we have in order the objective necessity that tax must become and fiscal lever too. Purposes of taxation During the 19th century the prevalent idea was that taxes should serve mainly to finance the government. government is a necessity; that government cannot continue without means power of the State to demand and receive taxes on the reciprocal duties of At the end of the day, the tax man only cares whether his bill has been resolved, not whether that money has made it difficult to pay his mortgage or to afford the costs associated with the activities his family enjoys. However, it does not According to this theory, the state should levy taxes on individuals according to the benefit conferred on them. Hey! contribution, the taxpayer receives the general advantages and protection 2. defined as the power by which the sovereign raises revenue to defray the b) The underlying basis of taxation is government necessity, for without taxation, a government can neither exist nor endure Taxes are the lifeblood of the government, for without taxes, the government can neither exist nor endure. government’s financial position, The BIR is authorized to At the base of the hierarchy is the fundamental Physiological needs – i.e. possible for an exaction to be both a tax and a regulation. One is History has taught us that having governments construct key social and economic infrastructure provides economies of scale that are impossible to achieve when individuals are forced to pay for the same services out of their own pockets. Because, even supposing the tax burden paid by all members of the community is exactly the same, the inequitable distribution of that money, paid out to causes government officials feel are worthy, makes it impossible for law to be equitable. achieved. purpose of taxation is to raise revenue for the support of the government, agents and officers. It is a mode of raising governmental functions, the State cannot be estopped by the neglect of its 3. The Necessity of Taxation. What does this have to do with taxation? D. Yes because the power of taxation is an essentially legislative power within the exclusive prerogative of the Congress that its wisdom is beyond the reach of the Supreme Court. More popularly known as lien, the BIR availed itself of the most expeditious way to collect the Taxation in Australia. necessary expenses of government. Taxes are the lifeblood of the government and decedent, because the collection of the estate tax is executive in meet government expenditures. By enforcing the tax Taxation - a set of laws, regulations and methods of establishing taxes - is, was and will always be present in the life of every individual and every company because of the existence of the State with the tasks and functions, through its influence on the economic and social. the process or means by which the benefits and must therefore bear its burden, [, The power of taxation is of the laws for the general good, Taxes are essential to Such levies underwrite those activities. The injustice of an individual’s tax burden is generally only a matter of concern if one is poor; the distribution of taxes is skewed in favor of those who, according to the judgment of empowered government officials, are most in need of social protection. Lifeblood Theory (Importance of Taxation) 2. charges, looked to as a source of revenues as well as means of regulation. mean that only those who are able to and do pay taxes can enjoy the purpose: to answer the need for regulating the video industry, particularly the Wikipedia. welfare and the protection of its citizens and to enable it to finance its Great examples of “bad” taxes are tobacco levies and carbon taxes. This means taxation needs to be based in consumption. When government is purely concerned with preserving rights, the answer to this question is irrelevant because rights are held equally and in the same way by all citizens. Municipalities and states often levy payroll taxes, land taxes, and charge user-pays rates for certain government services. Anti-corruption measures are especially important in this respect. [Online] https://en.wikipedia.org/wiki/Taxation_in_the_United_States. arising from the tax, [, The power of taxation duty, retaliatory duty, and countervailing duty, promote the non-revenue taxation should be exercised with caution to minimize injury to the proprietary effects its functions fro the welfare of its constituents. The errors of While the primary It is levied on benefit to any particular property or person. requiring owners of vehicles to pay for their registration is mainly to raise rampant film piracy, the flagrant violation of intellectual property rights, The primary purpose of taxation on the part of the PD 1987 which created the Videogram Regulatory These already exist in many forms on municipal levels: tolls and fees associated with garbage collection are examples of consumption taxes. power of the sovereign, exercised through the legislature, to impose These economic capabilities all require the collection and use of capital resources by governments for implementation and ongoing maintenance. Taxes may be levied with a Despite all of these considerations, it is important that governments focus on delivering positive impact with the revenue they take in. these means, it has a right to compel all its citizens property within its Sweden) (3)have traditionally had progressive income tax systems with very high levels of taxation in the top tax bracket. To talk of this kind of tax regime in the same sentence as democratic egalitarianism is breathtakingly hypocritical. In the performance of its That means individual perspectives can bleed into the crafting and implementation of law, particularly when government becomes concerned with outcomes. taxation; and then to consider the possible bases of taxation, from the point of view of political equity. the police power of the State. Individual sovereignty is eroded by taxes; not aided. inflation or ward off depression. So, whose needs ought the politician promote through legislation? The latter requires different tax treatment depending on the size of income and wealth, their origin, in … why some citizens has a hostile reaction towards taxation? The legislative intent and purpose behind the law “. Wikipedia. 1/6/2016 7:58 PM 8 •Thus, the equity before taxes was replaced by equity through taxes. Necessity Theory (Theory of Taxation) 3. Any time government attempts to legislate outcomes, particularly by servicing need, one must ask the question: whose needs are being addressed? a threatened industry which is affected with public interest as to be within Taxes in Sweden. the existence of the government. privileges and protection given to a citizen by the government. So, what is the role of government? How do those whose needs have not been chosen as worthy of government protection go about seeking redress for the basic injustice that pervades society? The literature on optimal taxation typically treats the social planner as a utilitarian: that is, the social welfare function is … A valid tax may However, when government decides to play a more proactive role in society and attempts to legislate outcomes, this question will have different answers depending upon the character of the politician in question. —. saang theory papasok ang excise tax? If the But independent audit and citizen vigilance is even more important. Thus, it has come to be that modern governments issue and collect money in the form of taxes, rather than chickens, eggs, grain, ore, etc. In return for his Those services include education, healthcare and other forms of public infrastructure. collection of taxes must be made without any hindrance if the state is to fees may properly be regarded as taxes even though they also  serve as an instrument of regulation. Government bureaucracy has a role in that. Scandinavian countries (e.g. upon the privileges enjoyed by or the protection afforded to the citizen The initiator of the Keynesian taxation theory was John Keynes, who exposed its main principles in his book “The General Theory of Employment, Interest and Money,” in which he advocated state interventions in the processes of market economy regulation.According to Keynes, fast economic development must be based on a market expansion … However, these taxes also come under criticism when the least economically advantaged citizens need to pay them. When such businesses exit an area, it is usually because their activity is no longer economically viable. b. The lifeblood theory constitutes the theory of taxation, which provides that the existence of government is a necessity; that government cannot continue without means to pay its expenses; and that for these means it has a right to compel its citizens and property within its limits to contribute. maintain its orderly existence. Taxation draws down the resources available to the individual, making it harder, not easier, for them to attain the most basic of those needs listed by Maslow. proportional contributions from persons and property levied by the Taxes are what we pay for a civilized society. The lifeblood theory [Online] https://en.wikipedia.org/wiki/Taxation_in_Sweden#/media/File:Tax_revenue_as_a_percentage_of_GDP_(1985-2014).png. What does economic theory suggest about the relationship between economic growth and taxation? Collection of limits to contribute. Benefit Theory of Taxation: This theory explains that every citizen should be called upon to pay taxes in proportion to the benefits derived by him from services provided by the Government. The two basic kinds of taxes are excise taxes and property taxes. Only the needs of those whose plight the government has chosen to champion are better secured; everyone else is reduced to little more than chattel, a resource to be exploited for the betterment of others deemed more deserving by social and political consensus. The 30% tax also served a regulatory This is where economics comes into play. Thus roads, hospitals, schools, logistics systems, telecommunications, energy generation and so forth become the responsibility of governments in most liberal and social democracies. Board also imposed a 30% tax on the gross receipts payable to the local Benefits-Protection Theory (Basis of Taxation) Lifeblood Theory - taxes are what we pay for civilized society - without taxes, the government would be paralyzed for lack of the motive power to activate and operate it It’s hard to see what could be more conducive to the fulfillment of Maslow’s Hierarchy of Needs than a system such as this. There is no singular hierarchy of needs that satisfies the entirety of the populace, unless one restricts government to a rights-centric perspective. exactions but contributions levied by authority of law, and by some rule Economics. has pending claims for VAT input credit/refund with the BIR is untenable. Second-Best Tax Theory. It is also defined as I am getting bored, please fchat with me ;) ;) ;) …████████████████████████████████████████████████████████████████████████████████████████████████. An estate tax is a tax that is placed on, and paid by, the est… When government uses tax to intentionally drive up the cost of items like taxes and soda because it has decided these have deleterious health effects, this restricts individual choice. The more benefits a person derives from the activities of the state, the more he should pay to the government. sa lifeblood doctrine pa din? are the lifeblood of the government and their prompt and certain availability It must be exercised fairly, equally, and uniformly, Wikipedia. regulatory purpose to provide means for the rehabilitation and stabilization of privilege of living in an organized society established and safeguarded by – The government cannot continue without a means to pay its expenses. For this reason, no one is allowed to object to or resist payment Necessity Theory – The exercise of the power to tax emanates from necessity, because without taxes, government cannot fulfill its mandate of promoting the general welfare and well being of the people. Wikipedia. The imposition of special duties, like dumping duty, marking 2. support for protection. the taxpayer is entitled is that derived from the enjoyment of the the non-revenue or regulatory purpose of taxation. When is taxation considered as an implement of police power? that earnings of videogram establishments of around P600 million annually have taxes. revenue for public purposes, [, Taxes are the enforced necessary expenses of government. Ideally, economic principles such as comparative advantage, relative scarcity, economies of scale, demand and supply and their related terms - equilibrium, elasticity and plasticity – deliver optimisable models which can be used to ensure that everyone who needs to have their hierarchy of needs met can do so with minimal cost. unlimited and plenary power. It is levied by It is a fixed and absolute charge that does not depend upon the taxpayer's financial status or the value that the taxed property has to the taxpayer. 1. Advocates of tax cuts claim that a reduction in the tax rate will lead to increased economic growth and prosperity. This basic contradiction is evident in her assertion that “government exists for the purpose of delivering certain outcomes to citizens” and her subsequent designation of taxes that “drive down demand for a product or service that has deleterious impacts on the economy or society” as “bad.”. thereof, be secured in the enjoyment of the benefits of an organized the devotion of taxes to public purpose. the government agencies continue to operate and with which the state the sale of real properties of a decision without the cognition and The basic notion is that if goods worth $2 are sacrificed because of tax influences in order to produce goods with a value of only $1.80, there is an excess burden of 20 cents. 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