Constitutional Limitations of Taxation

1. Observance of due process of law and equal protection of the laws. (sec, 1, Art.
3) Any deprivation of life , liberty or property is with due process if it is done
under the authority of a valid law and after compliance with fair and reasonable
methods or procedure prescribed. The power to tax, can be exercised only for a
constitutionally valid public purpose and the subject of taxation must be within the
taxing jurisdiction of the state. The government may not utilize any form of
assessment or review which is arbitrary, unjust and which denies the taxpayer a
fair opportunity to assert his rights before a competent tribunal. All persons
subject to legislation shall be treated alike under like circumstances and
conditions, both in the privileges conferred in liabilities imposed. Persons and
properties to be taxed shall be group, and all the same class shall be subject to
the same rate and the tax shall be administered impartially upon them.

2. Rule of uniformity and equity in taxation (sec 28(1)Art VI) All taxable articles or
properties of the same class shall be taxed at the same rate. Uniformity implies
equality in burden not in amount. Equity requires that the apportionment of the
tax burden be more or less just in the light of the taxpayers ability to bear the tax
burden.

3. No imprisonment for non-payment of poll tax (sec. 20, Art III) A person cannot be
imprisoned for non-payment of community tax, but may be imprisoned for other
violations of the community tax law, such as falsification of the community tax
certificate, or for failure to pay other taxes.

4. Non-impairment of obligations and contracts, sec 10, Art III . the obligation of a
contract is impaired when its terms and conditions are changed by law or by a
party without the consent of the other, thereby weakening the position or the
rights of the latter. IF a tax exemption granted by law and of the nature of a
contract between the taxpayer and the government is revoked by a later taxing
law, the said law shall not be valid, because it will impair the obligation of
contract.

5. Prohibition against infringement of religious freedom Sec 5, Art III, it has been
said that the constitutional guarantee of the free exercise and enjoyment of
religious profession and worship, which carries the right to disseminate religious
belief and information, is violated by the imposition of a license fee on the
distribution and sale of bibles and other religious literatures not for profit by a
non-stock, non-profit religious corporation.

6. Prohibition against appropriations for religious purposes, sec 29, (2) Art. VI,
Congress cannot appropriate funds for a private purpose, or for the benefit of any
 priest, preacher or minister or for the support of any sect, church except when
such priest, preacher, is assigned to the armed forces or to any penal institutions,
orphanage or leprosarium.

7. exemption of all revenues and assets of non-stock, non-profit educational

institutions used actually, directly, and exclusively for educational purposes from
income, property and donor’s taxes and custom duties (sec. 4 (3 and 4) art. XIV.

8. Concurrence by a majority of all members of Congress in the passage of a law

granting tax exemptions. Sec. 28 (4) Art. VI.

9. Congress may not deprive the Supreme Court of its jurisdiction to review, revise,
reverse, modify or affirm on appeal or certiorari, final judgments and orders of
lower courts in all cases involving the legality of any tax, impost, assessment or
any penalty imposed in the relation thereto.

Definition of Tax
~ a compulsory contribution to state revenue, levied by the government on workers'
income and business profits or added to the cost of some goods, services, and
transactions.
~ is an amount of money that you have to pay to the government so that it can pay for
public services.
~ Taxes are involuntary fees levied on individuals or corporations and enforced by a
government entity - whether local, regional or national - in order to finance government
activities.

~ an enforced proportional contribution levied by the law making body of the state to
raise revenue to support the indispensable and all the necessary expenses of the
government.

Tax vs Taxation
~ Tax has a limited meaning. It is the amount of tax levied/collected etc. by the
Government. Taxation is the process of tax collection. It covers all of the following:
passing of the law by the parliament, making of rules by the Government, entire set of
people appointed as tax commissioners, assessment; the appellate authorities and so
on.

ESSENTIAL ELEMENTS OF A TAX

 
1. It is an enforced contribution.
 
2. It is generally payable in money.
 
3. It is proportionate in character.
 
4. It is levied on persons, property, or the exercise of a right or privilege (Excise tax).
 
5. It is levied by the State which has jurisdiction over the subject or object of taxation.
 
6. It is levied by the law-making body of the State.
 
7. It is levied for public purpose or purposes.