The constitutional and
legal basis of public finance
in the Philippines
The Philippine Fiscal Framework
It is embodied
Constitution and the Laws
The legislative branch or the Congress
Which is composed of
The senate and the house of the representatives.
Major Components of Philippine Public Finance:
➢ Considered one of the three fundamental powers of the State ➢ The most important revenue generating measure of the government ➢ It is inherent in every State, it need not be expressly conferred by the Constitution
Purpose of taxation
✓ To sustain its existence, to operate the government.
A. Source of Taxation
The State power to tax, being essentially legislative, is expressed in the form of statutes. The tax system also includes the Constitution, administrative rules and regulations implementing the tax laws, administrative decisions interpreting tax laws and judicial decisions.
1. The Constitution is the fundamental law of the land to which all laws must conform. “It is the written instrument by which the fundamental powers of government are established among the several departments for their safe and useful exercise and for the benefit of the body politic.
The Constitution is also viewed as a covenant where the people surrender the exercise of some of their sovereign powers to the government. The Constitution limits and limits and restricts the exercise of taxation by Congress.
2. Laws or statutes are congressional enactments, called Republic Acts (RA). These include Presidential Decrees (PD) promulgated by former President Ferdinand Marcos in the exercise of his lawmaking powers under the 1973 Constitution; the Batas Pambansa (BP) enacted by the defunct Batasan; and the Executive Orders issued by President Aquino pursuant to the Freedom Constitution.
The primary tax laws of the Philippines consist of the National Internal Revenue Code or NIRC (P.D. 1158, as amended); Tariff and Customs Code of TCC (P.D 1464, as amended); Local Government Code of 1991, Creating the Court of Tax Appeals (R.A. 1125).
3. Administrative rules and regulations are those promulgated by or under the authority of the Secretary of Finance. These are intended to clarify or explain the law and carry into effect its general provisions by providing the details of administration and procedures. These are valid only as long as they do not contradict the law and contravene the Constitution. 4. Administrative rulings and opinions on tax laws are interpretations which are issued by implementing agencies involved like the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC). Rulings on tax questions in the form of "Opinions" are also rendered by the Secretary of Justice who is the chief legal officer of the government. It is an accepted principle that the interpretation placed upon a statute by the executive officer whose duty is to enforce it is entitled to great respect by the courts. Nevertheless, such an interpretation is not conclusive and will be ignored if judicially found erroneous.
5. Judicial decisions are promulgated by the Supreme Court and the Court of Tax Appeals (CTA) in interpreting tax laws. These form part of the legal system of the Philippines. The decisions of the CTA are appealable to the Supreme Court pursuant to Article Vlll, Section 5 (2) (b) of the Constitution. This provision empowers the Supreme Court to review, revise, reverse, modify or affirm on appeal or certiorari final judgment of lower courts, the CTA included, in all cases involving the legality of any tax, impost or assessment.
B. Limitations on Power of Taxation
The legislature’s exercise of the power to tax is not absolute. Certain limitations are set up to prevent abuse or misuse of the tax power. These restrictions are classified into inherent and constitutional limitations.
1. Inherent Limitations...
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