Taxation is basically the system where

governments collect money from individuals LIST OF TAXES CHARGED

and businesses to fund public services. Taxes
can come in many forms, like income tax (on 1. Income Taxes
what you earn), sales tax (on what you buy), Individual Income Tax - for employees, self-
and property tax (on what you own). employed, and professionals.
Corporate Income Tax- for businesses and
Principles of Taxation corporations.
Minimum Corporate Income Tax (MCIT) (for
Ability to Pay Principle – Taxes should be low-income corporations.
based on a person's capacity to pay. Those Withholding Tax -prepaid tax deducted from
who earn more should contribute more. salaries and payments.

Benefit Principle – People should pay taxes 2. Consumption Taxes

in proportion to the benefits they receive from Value-Added Tax (VAT) – 12%
government services (e.g., fuel tax for road Percentage Tax – 3% (for businesses not
maintenance). subject to VAT)

Equality (Equity) and Fairness – Taxes 3. Property-Related Taxes

should be applied fairly, without discrimination. Capital Gains Tax – 6% (on sale of real
property)
Certainty and Transparency – The amount, Capital Gains Tax – 15% (on sale of shares of
time, and manner of tax payment should be stock not traded in the stock exchange)
clear to taxpayers. Estate Tax – 6% (on inherited property)
Donor’s Tax – 6% (on donations exceeding
Convenience of Payment – Tax collection ₱250,000 annually)
should be easy and convenient for taxpayers.
4. Excise Taxes (Sin and Luxury Taxes)
Efficiency – The cost of collecting taxes should Tobacco Tax (on cigarettes and vapes)
not exceed the revenue generated. Alcohol Tax (on beer, wine, and spirits)
Fuel Tax (on petroleum products)
Non-revenue Purpose – Taxes can also be Sweetened Beverage Tax (on sugary drinks)
used to regulate certain behaviors (e.g., sin Luxury Goods Tax (on expensive items like
taxes on alcohol and tobacco). jewelry, yachts, etc.)

Purposes of Taxation 5. Transaction-Based Taxes

Documentary Stamp Tax (DST) -on legal
Revenue Generation – The primary purpose documents, contracts, loan agreements, etc.
of taxation is to fund government programs, Stock Transaction Tax – 0.6% (on sale of
infrastructure, public services, and salaries of shares in the stock exchange)
government employees.
6. Import and Export Duties (Collected by
Regulation and Control – Taxes can be used Bureau of Customs)
to control activities, like imposing higher taxes Customs Duties (on imported goods)
on cigarettes and liquor to discourage Import VAT (applied to goods entering the
consumption. country)

Economic Stability – The government adjusts 7. Other National Taxes and Fees
taxes to control inflation, encourage Franchise Tax (on businesses operating
investments, or stabilize the economy. under a franchise agreement)
Amusement Tax (on casinos, nightclubs,
Wealth Redistribution – Progressive taxation concerts, etc.)
(higher taxes for the rich) helps reduce income Motor Vehicle User’s Charge (MVUC) (for
inequality by funding social services for the vehicle registration)
poor. Travel Tax (for Filipinos traveling abroad)
Gaming and Casino Tax (for PAGCOR and
Encouragement of Local Industries – Tax POGO operators)
incentives can support businesses and attract
investments, helping economic growth.
Bureau of Internal Revenue (BIR) under
the National Internal Revenue Code (NIRC)
of 1997 (Republic Act No. 8424).
GOVERNMENT OFFICES CHARGED WITH Main role: Collect local taxes and fees for
REVENUE GENERATION, MANAGEMENT, municipalities, cities, and provinces.
AND TAXATION Legal basis: Local Government Code of 1991
(Republic Act No. 7160).
1. Bureau of Internal Revenue (BIR) Key functions:
Main role: Collects national internal revenue Collects real property tax, business tax,
taxes (income tax, VAT, excise tax, etc.). community tax, and other local fees.
Legal basis: National Internal Revenue Code Manages funds for local infrastructure and
(NIRC) of 1997 (Republic Act No. 8424). services.
Key functions:
Administers and enforces tax laws. Other Key Agencies Involved in Revenue
Collects income tax, VAT, excise tax, donor’s and Taxation
tax, estate tax, and other national taxes. Bangko Sentral ng Pilipinas (BSP) –
Conducts tax audits and investigations. Regulates money supply and financial stability.
Philippine Amusement and Gaming
2. Bureau of Customs (BOC) Corporation (PAGCOR) – Collects taxes from
Main role: Collects customs duties, import casinos and gaming businesses.
taxes, and tariffs on goods entering the Philippine Charity Sweepstakes Office
country. (PCSO) – Manages revenues from lottery and
Legal basis: Tariff and Customs Code of the sweepstakes for public welfare programs.
Philippines.
Key functions: Summary
Monitors and regulates imports and exports. BIR – Collects national internal taxes.
Prevents smuggling and illegal trade. BOC – Collects customs duties and import
Collects import duties and taxes. taxes.
DOF – Oversees financial policies and tax
3. Department of Finance (DOF) collection agencies.
Main role: Oversees the country’s financial COA – Audits and ensures proper use of tax
policies, revenue collection, and fiscal revenues.
management. BTr – Manages government funds and
Key functions: borrowing.
Formulates tax policies and financial LGUs – Collect local taxes and fees.
strategies.
Supervises the BIR, BOC, and other revenue FUNDING GOVERNMENT EXPENDITURE
agencies.
Manages government debt and borrowing. 1. Sources of Government Funds
A. Tax Revenues (Largest Source)
4. Commission on Audit (COA) B. Non-Tax Revenues
Main role: Ensures proper use of government Collected by government agencies and
funds and revenues. state-owned enterprises.
Legal basis: 1987 Philippine Constitution Fees and Charges – Payments for
(Article IX-D). government services (e.g., passports,
Key functions: permits, licenses).
Audits government agencies, including tax Dividends from Government-Owned
collection offices. Corporations
Ensures transparency and accountability in Profits from companies like PAGCOR, PCSO,
government spending. and MWSS.
Investigates fraud or misuse of public funds. Interest Income – Earnings from government
investments.
5. Bureau of the Treasury (BTr) C. Borrowing and Loans (Debt Financing)
Main role: Manages government funds, Managed by the Bureau of the Treasury (BTr).
national debt, and borrowing. Domestic Borrowing – Government issues
Legal basis: Presidential Decree No. 1177 treasury bills and bonds to borrow from local
(Budget Reform Act). banks and investors.
Key functions: Foreign Borrowing – Loans from
Handles the national budget and cash flow. international institutions like the World Bank,
Issues government bonds and treasury bills. Asian Development Bank (ADB), and
Manages government bank accounts. International Monetary Fund (IMF).

6. Local Government Units (LGUs) and How the Government Spends Its Funds
Local Treasury Offices
Government funds are allocated based on the
General Appropriations Act (GAA), which is the
annual national budget approved by Congress.
Major spending categories include:

Education (Largest Budget Allocation)

Funds the Department of Education (DepEd),
State Universities and Colleges (SUCs), and
Commission on Higher Education (CHED).
Includes free tuition programs and school
infrastructure.

Public Infrastructure
Funded through the "Build, Build, Build" and
"Build Better More" programs. Covers roads,
bridges, airports, and railways.

Healthcare and Social Services

Funding for PhilHealth, hospitals, and health
centers.
Social welfare programs like 4Ps (Pantawid
Pamilyang Pilipino Program).

Debt Servicing (Loan Repayments)

A significant portion of the budget goes to
paying interest and principal on national debt.

Defense and Security

Supports AFP (Armed Forces of the
Philippines), PNP (Philippine National Police),
and national security programs.

Local Government Funding

LGUs receive a share of national taxes through
the National Tax Allotment (NTA, formerly IRA).

Summary: How the Government Funds

Expenditures
Tax Revenues – Income tax, VAT, excise tax,
and customs duties (largest source).
Non-Tax Revenues – Fees, government-
owned corporations, and investment earnings.
Borrowing – Loans from local and foreign
sources.
Budget Allocation – Funds are distributed
through the General Appropriations Act (GAA).
Deficit Management – If spending exceeds
revenue, the government borrows money.