TAXATION

Name: PAHUGOT, SHENA NORREN Section: BSIT-3D
Date: APRIL 24, 2024
1. Define the power of taxation and elucidate its significance in the context
of governance and fiscal policy. Provide examples to support your
explanation.
 The power of taxation in the context of government: is the authority of

a sovereign state to collect money or property from individuals or businesses
within its borders, following fair rules of distribution. Taxes are crucial for
building the Philippines. They act as the backbone of the government's
finances, funding its operations and expenses. Governments use the money
collected from citizens to pay for welfare programs, the military, roads and
bridges, government employees, science programs, public schools, and the
many other services a government is responsible for.
 The power of taxation in the context of fiscal policy: Taxes are not only
a source of state finance used for public investment, but the tax function can
also be used to control state policy which is more commonly known as the
budgeter function and the regular function. Taxation is considered as a tool
of fiscal policy. For instance, taxes fund public services like schools and
hospitals, ensuring everyone have access to essential resources.
2. Enumerate and explain the primary purposes of taxation.
Taxation has three main purposes:
 To manage resources efficiently: taxation serves the purpose of resource

allocation by ensuring that resources are allocated efficiently within the
economy.
 To reduce income inequality: taxation is utilized for income redistribution,
aiming to reduce inequalities in the distribution of income and wealth.
 To stabilize the economy: taxation contributes to economic stability by
playing a role in macroeconomic management.

a. How do these purposes align with the objectives of government and

societal needs? Provide real-world instances to illustrate your points.
 These goals align with what governments and societies need by

ensuring fair distribution of wealth, promoting economic growth, and
maintaining stability. For example, taxes can discourage harmful activities
like pollution, help redistribute wealth from the rich to the poor, and
stimulate spending during economic downturns. However, sometimes these
goals can conflict. For instance, policies that redistribute income may affect
resource allocation. Therefore, governments must balance these objectives
carefully to create effective tax policies that benefit everyone.
3. What is the definition of a tax according to economic and legal

perspectives?
 Economic: Taxes are mandatory contributions levied on individuals or

corporations by a government entity—whether local, regional, or national.
 Legal Perspectives: Taxation is a term for when a taxing authority, usually
a government, levies or imposes a financial obligation on its citizens or
residents.
a. Discuss the key elements that constitute a tax and differentiate it from
other forms of revenue generation for the government.
 Taxes are money collected by the government from people and

businesses, and they're mandatory — you have to pay them. Unlike other
ways the government makes money, like fees for services or selling stuff,
taxes aren't tied to anything specific you get in return. When you pay taxes,
you don't get a direct benefit for the exact amount you paid. However, there
are some exceptions. For example, payroll taxes taken from your paycheck
might go toward things like retirement or medical benefits. And taxes on
things like gasoline might help pay for roads. But in general, taxes are
compulsory payments that don't come with a guaranteed return.
4. Outline the different classifications of taxes based on various criteria

such as nature, scope, and impact.
Direct Taxes:
 Nature: Levied directly on individuals or organizations.

 Scope: Wide-ranging, covering various sources of income, assets, and
profits.
 Impact: Directly felt by taxpayers, influencing their income, savings, and
investment decisions.
Indirect Taxes:
 Nature: Imposed on goods and services, collected by intermediaries from

consumers.
 Scope: Limited, primarily applied to specific goods and services.
 Impact: Indirectly felt by consumers, affecting consumption patterns and
market dynamics.
a. Provide examples for each classification and discuss their implications

on individuals, businesses, and the economy at large.
 Direct taxes, such as income tax and corporate tax, are paid by
individuals and businesses directly to the government. For individuals, these
taxes mean less money to spend and save, while businesses have fewer
profits for growth.
 Indirect taxes, like sales tax and value-added tax (VAT), are added
to the prices of goods and services, making things more expensive for
consumers and more complex for businesses. Both types of taxes are vital
for government income and economic stability, affecting how people spend,
how businesses grow, and how the economy performs overall.
5. Critically analyze the role of taxation in addressing income inequality

and promoting social welfare.
 Taxation helps make things fairer by making sure everyone contributes

according to their means. When higher earners pay more taxes, it helps
spread wealth around. Also, giving tax breaks to people with lower incomes
helps them manage their money better. Taxes on big inheritances stop rich
families from getting richer and ensure everyone gets a fair shot. But some
people try to avoid paying taxes, which isn't fair.
 Overall, taxes pay for important things like healthcare and education,
which help everyone live better lives. They also help fix big problems like
poverty and inequality by giving everyone a fair chance. But we need to
make sure tax rules are fair and followed properly to make the system work
for everyone.
a. How do progressive, regressive, and proportional tax systems contribute

to or mitigate socioeconomic disparities?
 Progressive taxes make wealthier individuals contribute a larger portion of

their income, which helps fund programs supporting those with fewer
resources. They are like a balancing act, ensuring that those who can afford
it most contribute more to society.
 On the other hand, regressive taxes take a bigger slice from the incomes of
lower earners, widening the wealth gap. This can create more financial strain
for those who are already struggling.
 Proportional taxes treat everyone equally, but they don't necessarily
change the gap between rich and poor. While they might seem fair, they may
not provide enough support to those who need it most. In essence, the type
of tax system in place can either help narrow or widen the gap between the
wealthy and the less fortunate, impacting socioeconomic disparities in
society.

TAXATION

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Name: PAHUGOT, SHENA NORREN Section: BSIT-3D

Date: APRIL 24, 2024

 The power of taxation in the context of government: is the authority of

2. Enumerate and explain the primary purposes of taxation.

Taxation has three main purposes:

 To manage resources efficiently: taxation serves the purpose of resource

a. How do these purposes align with the objectives of government and

 These goals align with what governments and societies need by

3. What is the definition of a tax according to economic and legal

 Economic: Taxes are mandatory contributions levied on individuals or

 Taxes are money collected by the government from people and

4. Outline the different classifications of taxes based on various criteria

 Nature: Levied directly on individuals or organizations.

 Nature: Imposed on goods and services, collected by intermediaries from

a. Provide examples for each classification and discuss their implications

5. Critically analyze the role of taxation in addressing income inequality

 Taxation helps make things fairer by making sure everyone contributes

a. How do progressive, regressive, and proportional tax systems contribute

 Progressive taxes make wealthier individuals contribute a larger portion of

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