Principle of Double Taxation

MEANING 

Double taxation means taxing the same property twice when it should be taxed only once; that is, "taxing the same person twice by the same jurisdiction for the same thing." It is obnoxious when the taxpayer is taxed twice, when it should be but once. Otherwise described as "direct duplicate taxation," the two taxes must be imposed on the same subject matter, for the same purpose, by the same taxing authority, within the same jurisdiction, during the same taxing period; and the taxes must be of the same kind or character. (Nursery Care Corp. v. Acevedo, GR No. 180651)

TYPES OF DOUBLE TAXATION

1.   In its strict sense (referred to as direct duplicate taxation or direct double taxation) double taxation means:

a.    Taxing twice

b.   By the same taxing authority

c.    Within the same jurisdiction or taxing district or locality

d.   For the same purpose

e.    In the same year (or taxing period)

f.     Some of the property in the territory

Both taxes must be imposed on the same property or subject matter. It is considered obnoxious when the same taxpayer is taxed twice by the same jurisdiction when it should be but once (DE LEON 2016, Villanueva vs. City of Iloilo, 26 SCRA 578; Comm vs. Bank of Commerce, 459 SCRA 638; Formedish Maych Phils, Inc. vs. Treasurer by the City of Manila, 700 SCRA 428)

2.   In its broad sense (referred to as indirect duplicate taxation or indirect double taxation) double taxation is taxation other than direct duplicate. (Cooley 475). It extends to all cases in which there is a burder of two or more pecuniary impositions (DE LEON, 2016)

CONSTITUTIONALITY 

GR: Our Constitution does not prohibit double taxation, in the broad sense (see San Miguel Brewery, Inc. vs City of Cebu); Hence, it may not be invoked as a defense against the validity of a tax law 

XCP: Double Taxation in the strict sense (DE LEON, 2016)

         Double Taxation, while not forbidden, is something not favored. Such taxation, it has been held should, whenever possible, be avoided and prevented. (See De Villata vs Stanley, 32 Phil. 541)

a.    Doubts as to whether double taxation has been imposed should be resolved in favor of the taxpayer (84 C.J.S. 138). The reason obviously is to avoid injustice or unfairness.

b.   Where double taxation (in its narrow sense) occurs, the taxpayer may seek relief under the uniformity rule or the equal protection guarantee (DE LEON, 2016)

RESIDUAL TAXING POWER DEFINED

LGUs may exercise the power to levy taxes, fees or charges on any base or subject not otherwise specifically enumerated herein or taxed under the: 

a.    Local Government Code; 


b.   National Internal Revenue Code; or 


c.    Other applicable laws (Sec. 186, LGC). 


CONDITIONS IN THE EXERCISE OF THE RESIDUAL POWER OF TAXATION 

a.    The tax base or subject is not taxed under the National Internal Revenue Code or other applicable laws; 


b.   The taxes, fees, or charges are not unjust, excessive, confiscatory, oppressive, or contrary to the declare national economic policy of the government; 


c.    A public hearing has been conducted prior to the enactment of the ordinance levying taxes, fees, or charges; and 


d.   The procedures for the approval, effectivity, and publication of tax ordinance have been complied with. 


e.    The residual power is subject to the constitutional limitations on the taxing power and the common limitations on the taxing power of LGUs as prescribed in Section 133 of LGC. 


f.     Principle of Pre-emption or Exclusionary Rule (Ingles, 2018)