What are Taxes & Taxation: A Guide to Understanding Taxes with Your Tax Tita

Let’s Talk About Taxes and Taxation

Hey, there!

First off, a big virtual hug to everyone navigating the labyrinth of Philippine taxation.

Trust me, adulting is hard, and understanding taxes? Even harder.

But as your Tax Tita, I’m here to sprinkle some clarity amidst the cloud of confusion.

 Let’s deep-dive, shall we?

Definition of Taxation (because, let’s get our terms straight!):

“Taxation is the act of levying a tax. It is the process or means by which the sovereign, through its law-making body, raises revenue to defray the necessary expenses of the government.”

Unpacking The Jargon: Taxation 101

1. “The act of levying a tax”:

This is basically the government saying, “Hey, we need some funds, so we’re setting this particular tax.” Think of it like being charged an extra fee for a VIP concert ticket. It’s the cost of enjoying the show!

Imagine going shopping in one of our countless malls, and you see that adorable top or those killer heels with an added amount on the price tag. That’s kind of like how our government “adds” or sets a specific tax amount on certain goods or our incomes.

For the Titas in Training: It’s like that extra 20% you pay on top of your spa day. Only, this 20% goes to the government.

Another Example: Our beloved Philippines might decide that for us to have cleaner streets, there’s a need for a tiny environmental tax on certain products. So, next time you see a slightly higher price tag on a plastic bottle, remember: it’s for Mother Earth!

2. “The process or means”:

Okay, so now that the tax is set, how do we get it from your wallets to the government’s coffers? This is the method or way they do it.

It’s not just slapping on an extra amount. There’s a whole system behind it! This talks about how the government collects this amount.

Life Analogy: Think of it as your BFF borrowing money. She doesn’t just take it; there’s a promise (or a Pinky Swear ) to return it, maybe through monthly brunch treats!

Example: Remember that time you got your first salary and wondered why a chunk was missing? Yep, that’s our friend, the withholding tax. Straight from your paycheck to the government!

3. “By which the sovereign, through its law-making body”:

When we say “sovereign”, picture the Philippines as a person. She’s the boss, the queen, the main character. And her trusty sidekicks? The lawmakers in our Congress and Senate. They decide the tax rules.

Example: It’s like our very own Philippine version of a K-drama where Congress and The Senate writes the script, and we, the citizens, act it out. Cue dramatic music.

4. “Raises revenue”:

Raises Revenue is a fancy word for collecting money. This is basically our government’s version of a paycheck. In simple terms? It’s all about collecting that money. And trust me, in a country of islands as beautiful as ours, there are a lot of expenses to cover.

Chika Time: It’s like pooling funds for that epic barkada beach trip—only this is for roads, schools, and hospitals.

Example: Ever been to Luneta Park and marveled at its beauty? The maintenance, the events, the lovely lights during holidays—all funded by our tax pesos.

5. “To defray the necessary expenses of the government”:

All this collected money? It’s not for a wild party.

It’s for the essential stuff—hospitals, roads, schools, and all the things that make our Philippines run smoothly.

Imagine having a huge group potluck. Everyone chips in, brings a dish (or cash for the lazy ones like me ), and at the end of the day, we all get to enjoy a grand feast.

Example: From the school in your barangay, the public hospital in your city, to the bridge being constructed nearby—all these are our tax pesos at work!

Nature and Scope of the Power of Taxation

We chatted about what taxation is above.

Now,  let’s dive into its nature and scope.

Sounds fancy, right? But just like that 10-step skincare routine we all tried last summer (guilty ), each element has its role.

Let’s decode!

Nature and Scope of the Power of Taxation:

“The power of taxation is comprehensive, plenary, unlimited, and supreme. It is essentially legislative in character and is inherent in the state.”

1.”Comprehensive”:

This basically means our government’s taxing power covers a LOT. From that cute pair of shoes you bought online to the income of big tech companies, they can potentially tax it all.

Example: Remember the time you decided to start a small online business during the lockdown and realized you had to register it? Yep, the government’s reach is pretty much everywhere.

2.”Plenary”:

This is just a fancy term meaning ‘full and complete’. When it comes to deciding what, how, and when to tax, the Philippines is pretty much its own boss.

Example: If the government suddenly wanted to impose a tax on specifically our favorite milk tea (oh, the horror! ) for health reasons, it has the full power to do so.

3. “Unlimited and supreme”:

These two words emphasize just how dominant the power of taxation is. There’s no putting a leash on it! It’s like how your favorite teleserye lead has ultimate sway in the plotline.

Example: The government can decide to adjust tax rates or introduce new ones based on what it deems necessary. Remember the TRAIN law? That’s the government flexing its unlimited power.

4.”Essentially legislative in character”:

This means the big decisions regarding taxes are made by our lawmakers. Yep, those guys and gals in fancy suits we voted into office!(I just sincerely hope they understand what the lifeblood doctrine is!)

Example: Before any tax reform becomes law, it has to pass through both houses of Congress and the Senate and get the president’s approval. So, it’s a whole team effort!

5.”Inherent in the state”:

This simply means that the power to tax is a natural part of being a government. Like how posting OOTDs is inherent to being a fashion blogger, taxation is innate to governance.

Example: Just as rice is a staple in every Pinoy meal, taxation is an essential part of how every country operates.

Definition of Taxes :

“Enforced proportional contributions levied by the state’s law-making body by virtue of its sovereignty upon the persons or properties within its jurisdiction for the support of the government and all its public needs.”

Demystifying Taxes: Let’s Dive Deeper!

1.”Enforced proportional contributions”:

At its core, taxes aren’t voluntary donations. They’re mandated, but they’re based on a certain proportion or scale. It’s like when our barkada decides on a fixed contribution for a beach trip. The more luxury you want, the more you contribute.

Example: If Juan earns more than Pedro, Juan will pay a higher amount of income tax, because it’s proportional to his earnings.

2.”Levied by the state’s law-making body”:

This emphasizes that our taxes are set by official bodies – think Congress or the Senate. It’s not just any Juan (pun intended) deciding the amounts!

Example: When the TRAIN law was passed, it was our elected officials in the Congress and Senate who discussed, debated, and decided its provisions.

3.”By virtue of its sovereignty”:

This means that because our Philippines is an independent and sovereign state, it has the full right to set and collect taxes.

Example: It’s like when you’re the queen bee of your squad. You decide the theme for your birthday bash because, well, it’s your party!

4.”Upon the persons or properties within its jurisdiction”:

Basically, if you’re living, working, or owning property here, expect the taxman’s knock. Our islands, our rules!

Example: If you bought a condo unit in Makati or opened a sari-sari store in Cebu, you’re within the Philippine jurisdiction and will need to abide by our tax regulations.

5.”For the support of the government and all its public needs”:

This is the WHY. We pay taxes so that our government can run smoothly and provide us with public services.

Example: Every time you drive on NLEX or see a public school being built, know that our tax pesos are hard at work!

To Wrap Up Taxes and Taxation Jargon:

Are Taxes and Taxation Complicated?

Taxes might sound complicated, like trying to understand the ending of a Filipino telenovela, but it’s all about the communal spirit.

We contribute a bit, and in return, we get roads to drive on, schools to learn in, and hospitals for when we eat one too many chicharons.

Think of taxes like the membership fee to the exclusive club that is the Philippines.

We all chip in, and in return, we get to enjoy the amenities, services, and beauty of our home country. And while we might grumble about those deductions now and then, just remember: Every peso has the potential to make our nation even more fabulous.

Got thoughts or just want to share your latest “I survived tax season” selfie? Hit me up below! Remember, the best way to navigate adulting is to do it together, one tax query at a time.

And as Your Tax Tita always says:

“In the world of taxes, just like in love, every contribution matters – small or big, it’s all about giving your share to build something beautiful together. #TaxHugotWithYourTaxTita

Your Tax tita