Philippine Taxation System

Topics: Tax, Taxation, Public finance Pages: 22 (3836 words) Published: October 15, 2014
I. Introduction
On hearing the word tax, what usually springs to mind are images of infrastructures, businesses and projects beneficial to the general welfare of the people, or more negatively, the idea of corruption and dirty tricks especially nowadays when numerous issues are colouring the taxation system of the country. With these, today, its importance seems to be overlooked and is viewed more negatively as a burden to the people. Currently, the individual income tax rate in the Philippines stands at 32 percent, which is third highest in the entire Association of South East Asian Nation (ASEAN) region, next to Thailand and Vietnam. A number of the country’s lawmakers already have their hands on this matter and encourages the government to take actions in lowering it down. This matter has become especially important now that the Asean integration free-for-all market in 2015 is nearing. It is important to understand taxation and to determine how well it fits the economy of a country for it is a key factor on its growth. The taxation system has been a hot economic issue and has been causing rage and fury among the people. Clearly, it is a national issue that needs immediate attention and action as it affects the whole of the nation. It will be an agonizing thought if what is known to be the “lifeblood of the government” will be the very one thing that sucks “life” out of its people. What’s supposed to be used to finance the basic services such as education and health care as well as infrastructure--which are all vital to the economy’s growth and the improvement of the lives of the people-- could be the very same thing that seem to limit the capability of the people to improve their own lives and unforgivingly take away the food in the Filipinos tables. Or is it not? Objectives of the Study

The study is aimed to determine the following:
1. The fiscal adequacy
2. Administrative feasibility
3. Equity
4. And the consistency and compatibility of the Philippine taxation system with the Nation’s Economic Direction.

Significance of the Study
The study is intended to increase the awareness of the readers on the Philippine taxation system. It is specifically addressed to: taxpayers, students and educators.

Scope and Limitation of the study
The study involves 7 participants who pay taxes for at least 3 years. The participants are selected to represent different social and industry classes.

II. Review of Related Literature

Nature and Purpose of Taxation

Taxation may be defined as the inherent right of the state to levy and collect a portion of each individual and entity’s income from productive endeavors within the states’ political boundaries.

Since taxation is inherent right of the state, meaning, absolute right, taxation laws were enacted to limit this right. That is the reason why taxation is graduated, and in most countries, it is progressive. Graduated, meaning, that taxes to be paid are divided into several brackets of income; and progressive, meaning, that the higher the income, the higher will be the tax rate to be paid, and vice-versa.

Taxation is very important for the government to exist. Without it, no government can ever exist, as taxes are the lifeblood of the government.

Citizens pay taxes in the expectation that the government will protect them with the necessary environment to enable them to live in safety and perform them with the necessary environment to enable them to live in safety and perform their productive activities without fear or hesitation.

The Bureau of Internal Revenue is the tax-collecting arm of the government for individual and corporate income taxes. The Bureau of Customs is the government-collecting arm for import taxation. (Cuevas et al., 2012)

Procedure of Taxation

Taxation is legislative in character. As such, all tax measures emanate from the Congress. The House of Representatives enact taxation bills. Then it goes to the Senate. Then to...
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