Seminars Schedules

Taxation power through other inherent powers

Monday, 1 August 2011, 11:20 | Category : National Taxes
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The main purpose of the power of taxation is to raise revenue. In some instances however, taxation is used as a medium of the exercise of other powers – the eminent domain and the police power. Power of eminent domain is that inherent power of the state to take private properties to be used for public purpose from reluctant owners upon payment of just compensation. The essence of this power is for the effective implementation of the government of its projects and programs. As an example, without this power, government would be futile in solving transportation traffic problems because private owners would tend to refuse parting their properties for road widening especially when they would expect better economic use of their properties. On the other hand, police power comprises of those which the government could implement for the promotion of general welfare – public morals, safety, health, and welfare.

Typical examples are as follows:
a. Importations are imposed import duties to protect local industry so prices would tend to be higher and so the rest would be discouraged to buy. This is police power because the purpose is general welfare but the medium of exercise is taxation.
b. Senior citizens discount as an allowable deduction is taking property for use that is an exercise of eminent domain, the purpose is welfare of senior citizens that is police power, but the medium is taxation.

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