History of Taxation

Prepared by: BSBA – Financial Management II

History of Taxation

The first known system of taxation was in Ancient Egypt around 3000 BC - 2800

BC in the first dynasty of the Old Kingdom.

In Biblical times, tax is already prevalent. According to Genesis 47:24:

"But when the crop comes in, give a fifth of it to Pharaoh. The other four-fifths you

may keep as seed for the fields and as food for yourselves and your households and

your children".

History of Taxation

Earliest taxes in Rome are called as portoria were customs duties on imports and exports.

Augustus Caesar introduced the inheritance tax to provide retirement funds for the military. The tax was five percent on all inheritances except gifts to children and spouses .

History of Taxation

In England, taxes were first used as emergency measures.

The pre-colonial society, being communitarian, did not have taxes.

History of Taxation in the Philippines

During the Spanish Period, new income generating means were introduced by the government such as the :

Manila-Acapulco Galleon Trade Polo Y Servicio (Forced Labor) Bandala Encomienda System Tribute

History of Taxation in the Philippines

Manila-Acapulco Galleon Trade

History of Taxation in the Philippines

It was the main source of income for the colony during its early years.

It brought silver from Nueva Castilla and silk from China by way of Manila.

History of Taxation in the Philippines

Polo Y Servicio It was the forced labor for 40

days, of men ranging from 16 to 60 years of age who were obligated to give personal services to community projects.

One could be exempted from the polo by paying a fee called falla (which was worth one and a half real).

History of Taxation in the Philippines

Bandala SystemIt is a form of direct taxes that the Spaniards

implemented in which the natives were coerced to sell their products to the government at very low prices.

It comes from the Tagalog word mandala, which is a round stock of rice stalks to be threshed.

History of Taxation in the Philippines

Encomienda SystemIt is a land management

system similar to the feudal system in Europe.

Here, a meritorious Spaniard (called an encomendero) is given full authority to manage the encomienda by collecting tribute from the inhabitants and govern people living on it.

Part of this tribute goes to the encomendero and the rest to the Church and government.

Tribute

History of Taxation in the Philippines

It was the residence tax during the Spanish times. It may be paid in cash or kind, partly, or wholly.

But in 1884, the tribute was replaced by the cedula personal or personal identity paper, equivalent to the present community tax certificate.

That in the 19th century, the “cedula” served as an identification card that had to be carried at all times. A person who could not present his or her cedula to a guardia civil could then be detained for being “indocumentado”.

Did you know?

Andres Bonifacio and other Katipuneros tore their cedulas in August 1896, signaling the start of the Philippine Revolution.

The cédula was imposed by the Americans on January 1, 1940, when Commonwealth Act No. 465 went into effect, mandating the imposition of a base residence tax of fifty centavos and an additional tax of one peso based on factors such as income and real estate holdings.

The payment of this tax would merit the issue of a residence certificate. Corporations were also subject to the residence tax.

The Development of the Community Tax

A sample cedula in the 1920s.

Also known as a “residence certificate”, is a legal identity document in the Philippines.

Issued by cities and municipalities to all persons that have reached the age of majority and upon payment of a community tax, it is considered as a primary form of identification in the Philippines and is one of the closest single documents the Philippines has to a national system of identification, akin to a driver's license and a passport.

What is a “cedula”?

A person is required to present a cedula when he or she acknowledges a document before a notary public; takes an oath of office upon election or appointment to a government position; receives a license, certificate or permit from a public authority; pays a tax or fee; receives money from a public fund; transacts official business; or receives salary from a person or corporation.

Why is “cedula” important?

A sample cedula in the 2000s.

History of Taxation

In Modern Industrial Nations

• The government designates a tax base (such as income, property holdings, or a given commodity)

• A Tax Law is a body of rules passed by the legislature by which the government acquires a claim on taxpayers to convey, transfer and pay to the public authority