1 The Victorian Prodigy’s Taxation Law Midterm Reviewer (General Principles and Income Taxation)- From Atty.
VJ Lim and Justice Dimaampao
I. GENERAL PRINCIPLES
Taxation- mode of raising revenue for public purpose
(LEPS: Levied by authority of the law, Enforced
contributions, which are Proportional in character,
and for the Support of the government)
What are Tax laws?
Any law that provides for the assessment and
collection of taxes for the support of the government
and other public purposes.
Tax laws are special laws. They prevail over the
general laws such as the Civil Code and/or Rules of
Court.
BASIS/THEORIES OF TAXATION:
(a) Lifeblood Doctrine: government can neither exist
nor endure without taxation
(b) Necessity Theory: a necessary burden to preserve
the State’s sovereignty and survival
(c) Benefits Received/Benefits Protection Theory: the
State has the power to demand and receive taxes on
the reciprocal duties of support and protection
DOCTRINE OF SYMBIOTIC RELATIONSHIP
Taxes are what is paid for “civilized society”. The
public is expected to share in the burden of the
running of the government while the latter provides
protection, peace and order, incentives and a
conducive business climate for the people.
LIABILITIES INVOVLVED
General Rule: Personal to the Taxpayer (Exception:
When there is a need to invoke the “Doctrine of
(Paul) Piercing the Corporate Veil”: when assets have
been fraudulently passed to stockholders in order to
avoid liabilities, the latter may be held liable).
Civil: for taxpayers
Criminal: arises when there is a failure to comply
with the civil liability to pay
As a general rule, the civil liability cannot be
compromised. There are only two exceptions. First,
when the assessment is considered to be of doubtful
validity, in which case, the commissioner can
compromise to not less than 40 percent of the basic
tax. And second, when the taxpayer is financially
incapable to pay the liability, in which case, it can be
compromised to not less than 10 percent of the basic
tax.
The civil liability may not be compromised when
there is (a) fraud or the (b) decision has already been
final.
The criminal liability cannot be compromised. The
same shall be endorsed to the DOJ. EXP: If the case
remains with the CIR and there is an absence of
fraud, a compromise penalty may be paid in lieu of
criminal l prosecution. The same shall also require
the consent of the fiscal and that the case has not yet
been filed in court.
NATURE
It is (a) INHERENT in sovereignty and (b)
LEGISLATIVE in character.
When does Taxation begin?
From the moment a State is born with the
concurrence of the four elements (People, Territory,
Sovereignty and government). It is an inherent power
and needs no constitutional conferment. (cf.
LIFEBLOOD DOCTRINE)
How are tax laws made?
The origination rule dictates that all appropriation,
tariff or revenue bill, shall originate from the House
of Representatives since the members thereof are
deemed to be more sensitive to the local needs of the
people. The Senate, may adopt, amend, revise,
modify and substitute the bill coming from the lower
house.
It is the BILL not the LAW which originates from the
lower house. The Senate may make extensive changes
to the bill by virtue its power of taxation.
It is a legislative act. Only the law-making body of the
Government can exercise the power of taxations as it
is inherent and written, except when the Constitution
provides otherwise. The president as supported by
the flexibility clause (adjust rates) in Art. 401 and 402
of the Tariff and Custom Code and the local
Sanggunian under the delegated authority of the Local
Government Code may exercise the power of
taxation.
A delegated power can no longer be delegated.
ASPECTS/PROCESSES/PHASES OF
TAXATION
(a)Levy/Imposition: refers to the enactment of tax
statutes
(SPAM: The scope of the legislative’s power to tax
includes: the Subjects of taxation, the Purpose
thereof, the Amount or rate to tax, and the the
Manner, means and agencies of collection).
RESIDUAL POWER OF TAXATION: The
legislative may tax anything outside the scope except
for those which restricted by (ICC): (a) inherent, (b)
constitutional, and (c) contractual limitations.
THE POWER TO TAX IS NOT THE POWER
TO DESTROY IN THE PHILIPPINES – it only
refers to the degree of vigor by which the power of
taxation may be exercised. Even as an implement of
police power, it may not be used to confiscate or
destroy.
(cf. Chief Justice John Marshall in McCulloch v.
Maryland)
What is the Doctrine of Judicial non-interference?
The Court cannot interfere in the exercise of the
Power of taxation. The Court cannot inquire into the
wisdom of the making of tax laws.
No Temporary Restraining Order against the
Congress exercising the power of Taxation.
No Injunction Rule to the (Bureau of Internal
Revenue) BIR enforcing tax collection.
2 The Victorian Prodigy’s Taxation Law Midterm Reviewer (General Principles and Income Taxation)- From Atty. VJ Lim and Justice Dimaampao
Exception: Only the CTA (Court of Tax Appeals)
may issue to restrain collection of taxes under its
appellate jurisdiction. CTA cannot issue injuction
under its original jurisdiction. NO APPEAL; NO
INJUCTION (CIR v JC Jusco) (life blood doctrine)
(b) Assessment and Collection: administrative in
character and may be delegated, provided that (a) the
tax law designates the agency and (b) the circulars and
regulations issued must be in compliance with
taxation law.
How are tax laws implemented?
Tax laws are implemented through the revenue
regulations. Revenue regulation is the implementing
guidelines of tax laws. It is the Government’s stand as
far as tax laws is concerned. It is an issuance signed by
the Secretary of Finance, upon recommendation of
the Commissioner of Internal Revenue and/or
Commissioner of Customs which prescribes or
defines rules and regulation for the effective
implementation of tax laws.
Who has the power to interpret Tax laws?
The Commission of Internal Revenue (CIR) has the
original and exclusive jurisdiction to interpret tax laws
subject to the review of Secretary of Finance.
Give at least four (4) distinctions of Revenue
regulations and BIR rulings.
1- Revenue regulations are issued by the Secretary of
Finance whereas BIR rulings are issued by the
Commissioner of Internal Revenue
2- Revenue regulations have force and effect of the
law whereas BIR rulings are merely advisory service
to the tax payer. It is not conclusive.
3- Revenue regulations need to be published; BIR
rulings need not to be published.
4- Revenue regulations are of general application;
BIR rulings are of specific or particular application.
5- Revenue regulations are formal pronouncements;
BIR rulings are administrative opinion on queries.
When does the Secretary of Finance review the
decision/recommendation of the Commissioners?
When the two (2) commissioners made the tax laws
in favor of the taxpayer.
Who reviews the decision of the Secretary of
Finance?
The Court of Tax Appeals (CTA).
What is the Role of the Courts as to the Power of
taxation?
1- Whether there is correct application of the tax
laws
2- Whether there is correct application of tax laws
according to the intention of the Congress. (correct
interpretation of the tax laws)
Such interpretations are not binding to the court but
at times interpretation of the CIR is given much
weight considering that the latter is more
knowledgeable and conversant thereto.
(c) Payment: An act of compliance by the taxpayer.
PURPOSES TAXATION
Primary: Raise revenue
Secondary: (REPI): Reduce social inequality,
Encourage local industry growth, Protect local
industries from unfair competition, and as Implement
of police power and even eminent domain.
EXTENT OF TAXATION
(CUPS): Comprehensive (covers persons, businesses,
activities, and professions, rights and privileges),
Unlimited, Plenary (complete), Supreme (as to the
subjects it may tax)
CANONS OF A SOUND TAXATION SYSTEM
(FAT): (a) Fiscal Adequacy- sufficient to meet needs;
(b) Administratively Feasibility- capable of
enforcement; and (c) Theoretical Justice- must take
into account the ability of the taxpayer to pay
A tax law that does not meet the requirement of being
theoretically just may be declared unconstitutional as
it contravenes the constitutional mandate that tax laws
must “uniform and equitable”.
DISTINCTION FROM OTHER INHERENT
POWERS AND IMPOSITIONS
Police Power (PABST): (a) Purpose:
Revenue/Regulation; (b) Amount of Exaction:
Unlimited/Limited to the cost of regulation, issuance
of license or surveillance; (c) Benefits: Both confer no
direct benefits; (d) Superiority of Contracts: Only
applies to taxation; and (e) Transfer of property rights:
Taxes become public funds while police power
merely restrains property rights.
Eminent Domain (CAP): (a)Compensation: No
compensation in taxation while eminent domain
requires just compensation; (b)Affected Persons:
Applies to all persons, property and excises that may
be subject thereof; (c) Purpose: Revenue/Public use
Special Assessment (PLEB): A special assessment is
an imposition levied to property that accrues some
special benefit from an improvement. It is assessed
using the mathematical computation of the tax liability
and the valuation of the property.
It (a) cannot be as a rule, be Personal liability of the
person assessed; (b) is only levied on Land; (c)
Exceptional as to time and locality; (d) based wholly
on Benefits.
License (PAP): (a) Purpose: Revenue/Regulation .
The imposition is a tax if its PRIMARY PURPOSE is
to raise revenue and regulation is merely incidental;
but if regulation is the PRIMARY PURPOSE, THE
FACT THAT INCIDENTAL REVENUE IS
OBTAINED DOES NOT MAKE THE
IMPOSITION A TAX; (b) Amount:
Unlimited/Limited to the cost of license or inspection
or surveillance; (c) Power: Taxation/Police Power
3 The Victorian Prodigy’s Taxation Law Midterm Reviewer (General Principles and Income Taxation)- From Atty. VJ Lim and Justice Dimaampao
License fees may be (a) useful (profession or
occupation) or( b) non-useful (clubs or gyms).
Toll: Taxation is a demand of sovereignty for the
purpose of raising revenue. A toll is a demand of
proprietorship for the cost and maintenance of the
property used.
May a toll fee be taxable?
Yes, because a toll fee is not a tax. The imposition of
VAT on toll fees does not constitute tax pyramiding,
which has “no basis in fact nor in law”.
Penalty: A tax is a civil liability. A person may only be
criminally liable when he fails in his civil obligation to
pay taxes. A penalty is a punishment imposed for
committing a crime.
Debt: A tax is not a debt as the same is not dependent
on the consent of the taxpayer. It also does not
involve an express or implied contract.
DOCTRINE OF LEGAL COMPENSATION
GR: Taxes are not subject to set-off. It does not allow
legal compensation as taxes are not Debts.(life blood
doctrine)
EXP: Legal compensation by operation of law, when
both claims of the local government and the taxpayer
are overdue and demandable and fully liquidated.
(Domingo v Garlitos: The petitioner has no clear right
to execute the judgment of taxes against the Estate of
the deceased Walter Price. Legal compensation by
operation of law takes place when both claims of the
local government and the taxpayer against each other
have already become due, demandable and fully
liquidated. In this case, the claim of the intestate for
the services rendered to the Government and the
claim for taxes by the government against the estate
have already become overdue and demandable is well
as fully liquidated).
In case of overpayment, the BIR has the obligation to
refund or set-off under the principle of solution
indebiti (CIR v Esso Standard Eastern Inc.)
Franchise: A franchise is a privilege unilaterally
granted by the government and may be revoked at
any time. It is not a contract and may not be protected
by the non-impairment clause.
LIMITATIONS:
(a) INHERENT (T-PINE):
Territoriality:
GR: Power of tax can only be practice within the
territorial jurisdiction of the taxing Power.
Object of taxation/ Scope of Taxation (B- TRIP ) 3
– Business
– Transaction
– Rights
– Interest
– Person
– Property
– Privileges
EXP: Exercise of a right. IE. Income tax (income tax
is not the tax on the income earner (personal right) or
the income earned (property right) but a tax on the
RIGHT to earn an income.
EXP to the EXP (O-DIED):
(a) Income from Overseas Filipino contractual
workers and seamen.
Others which are exempted under the doctrine of
territoriality (DIED)
– Donor’s tax
– Income tax
– Estate tax
– Documentary stamp tax (ROPI) transfer
of rights, obligations, property or interest.
The DST is paid for by maker, assignor, transferor or
issuer. If the liable party is exempt, then the recipient
shall pay for the same. If the insurance contract is
cancelled or does not materialize, the DST is
refunded (because it is premised upon the issuance of
the policy). It is imprescriptible.
RULES FOR SITUS:
POLL/CAPITATION/COMMUNITY TAXES:
Residence of the taxpayer, regardless of source of
income.
PROPERTY TAXES: Real property is taxed where
it is located.
The situs of personal property, following the principle
of mobilia sequuntur personam, was held to be where
the domicile of its owner was, regardless of where the
same was kept or actually located.
EXP (DE): (a) Definite location accompanied by
some degree of permanency (b) Express provision of
law (SPF): (a) Shares, or obligation bonds issued by
(a1) domestic corporation organized and constituted
in accordance with Philippine laws; (a2) by foreign
corporation where 85% of its business is located in the
Philippines (subject to estate and donor’s taxes); and
(a3) foreign corporations which have acquired
business situs, when such could have been used in
furtherance of its business; (b) Partnership business or
industry shares established in the Philippines; and (c)
Franchise exercised in the Philippines.
Thus, GR: Estate and donor’s taxes may be imposed;
EXP: when a foreign country grants exemptions or
does not impose taxes on intangible properties of
Filipinos.
EXCISE TAXES
Income Taxes
Place: NR Alien, Foreign Corporation,
Citizen (only within RP)
Nationality: R Citizen and D Corporation
(within and outside RP)
Residence: R Alien and R Foreign
Corporation (only within RP)
4 The Victorian Prodigy’s Taxation Law Midterm Reviewer (General Principles and Income Taxation)- From Atty. VJ Lim and Justice Dimaampao
ONLY R CITIZENS AND D CORPORATIONS
ARE TAXED OUTSIDE THE PHILIPPINES.
Donor’s Taxes
Place: NR Alien (based upon properties
situated in RP)
Nationality: R and NR Citizen (based upon
properties wherever are situated)
Residence: R Alien (based upon properties
wherever situated)
ONLY NR ALIENS ARE EXEMPT FROM
DONOR’S TAXES ON PROPERTIES OUTSIDE
THE PHILIPPINES.
Estate Taxes
Place: NR Alien (based upon properties
situated in RP)
Nationality: R and NR Citizen (based upon
properties wherever are situated)
Residence: R Alien (based upon properties
wherever situated)
ONLY NR ALIENS ARE EXEMPT FROM
ESTATE TAXES ON PROPERTIES OUTSIDE
THE PHILIPPINES.
VAT: If the transaction is perfected (made and
consummated) outside the Philippines, it is exempt.
Public Purpose: An elastic concept subject to
legislative prerogative.
International Comity: The bases for this are the
following: (a) the Incorporation Clause under the
Constitution and (b) the Principle of Sovereign
Equality Among States.
Non-Delegation of the Power to Tax: GR:
Legislative. EXP: (a) Delegated power of the
President to impose tariffs and customs; and (b)
Delegated power to local government units.
Constitutional provisions need an enabling law (ie.
TCC and LGC). If a tax is already in the NIRC, it
may not be imposed by the local government unit
(EXP: When federalism occurs).
Exemption of Government Instrumentalities and
Agencies: Basis: “Absurd situation” of “taking
money from one pocket and putting it in another”
(BAA of Laguna v. CTA). It should be noted
however, that THERE IS NOTHING THAT
PREVENTS GOVERNMENT FROM TAXING
ITSELF.
GR: If agency is performing governmental
exemptions, it is exempt; if it is performing
proprietary functions, it is not. EXP: Statutory
exemptees such as the GSIS, SSS, PHIC, and PCSO.
An instrumentality of the national government is
exempt from local taxes.
(b) CONSTITUTIONAL (DENT-UPO):
(b1) Due process: It contravenes the due process
clause if (VORCS) (a) it violates inherent limitations;
(b) it is for purposes Other than public purposes; (c) it
Retroactively imposes unjust and oppressive taxes; (d)
it amounts to Confiscation of property; and (e) the
Subject is outside the jurisdiction of the taxing
authority.
(b2) Equal protection(SAGA): (a) based on
Substantial distinctions; (b) Apply to both present and
future conditions; (c) Germane to the purposes of the
law; and (d) Apply equally to all members of the same
class.
(3) Non-impairment clause: A tax exemption that is
not in the nature of a contract (ie. a spontaneous
concession or franchise) is revocable and confers no
vested right.
(4) Traditional exemptees (C HORE): (a) Churches,
3
mosques, cemeteries, etc; (b) Charitable institutions;
(c)non-stock, non-profit Civic organizations; (d) non-
stock, non-profit Hospitals; (e) Orphanages; (f)
Religious orders; (g) non-stock, non-profit
Educational institutions.
Exempt from (a) Property taxes (local): (a1) must be
Owned, and (b) ADE: actually, directly, and
exclusively (not absolutely) used for its main
purposes.
(b) Income taxes (from main functions).
Article XIV (Section 4(3)): Non-stock, non profit
educational institution (Income tax, Custom Duties,
Property Tax)
Article VI (Section 28 (3): Religious, educational,
charitable (Property Tax)
Doctrine of incidental tax exemption: Income earned
from the main functions of traditional exemptees,
including activities which are reasonably incidental
and necessary for the achievement of its primary
objectives, are exempt.
Predominance test rule: Private schools and hospital
keep two books: (a ) those that refer to income from
tuition or hospital services, respectively, and (b) those
which refer to allied services.
If unrelated trade arising from such allied services
constitute more than fifty percent (50%) of their total
gross income, they shall be taxed at the corporate rate
of thirty percent (30%). Otherwise, they enjoy a
preferred rate of only ten percent (10%).
Tax amnesty vis-à-vis tax exemption: A tax amnesty is
a general pardon to all taxpayers granting immunity
from all civil and criminal liabilities arising from the
non-payment of taxes. A tax exemption is freedom
from a (civil) charge or burden of which others are
subjected.
An erring taxpayer may be (a) deficient and interest
accrues from demand or (b) delinquent and interest
accrues from due date.
Who may not partake of a tax amnesty (WIG-ACT)?
5 The Victorian Prodigy’s Taxation Law Midterm Reviewer (General Principles and Income Taxation)- From Atty. VJ Lim and Justice Dimaampao
(a) Withholding agents, (b) those under
Impeachment, (c) Government employees, (d) those
under AMLA investigation, (e) Criminal defendants,
and (f) those whose Tax cases have been already
decided.
(5) Uniformity requirement: ALL TAXABLE
ARTICLES OF THE SAME CLASS SHALL BE
TAXED AT THE SAME RATE.
Equality refers to the equal and impartial application
of the burden to all persons and property subject to
taxation. Uniformity requires that all taxable property
alike are subjected to the same tax.
(6) Progressive system: As the tax base increases, so
does the tax rate.
Are regressive taxes prohibited?
No, all the Constitution requires is that Congress
“evolve a progressive system of taxation”. This means
that direct taxes are preferred and indirect taxes
should be minimized.
(7Others: non-imprisonment for non-payment of poll-
tax, origination rule (ibid), presidential veto,
presidential power to fix tariff rates, freedom of the
press, freedom of religion, , no public money shall be
sued for a sect, priest, etc., delegation to local
governments, money collected for a special purpose
shall be allocated for a special fund, and exclusive
appellate jurisdiction of the Supreme Court to
determine the legality of taxes, imports, assessments,
fees and penalties.
(c) CONTRACTUAL
KINDS OF TAXES:
DIRECT AND INDIRECT: A direct tax is a tax for
which a taxpayer is directly liable on the transaction or
business it engages in. An indirect tax is primarily for
by persons who in turn, can shift the burden to
someone else.
SPECIFIC AND AD VALOREM: A specific tax is
based on a physical unit of measurement such as
weight or volume while an ad valorem tax is based on
a specified value of the goods such as its selling price.
GENERAL AND SPECIAL: A general tax is solely
imposed for the purpose of raising revenue while a
special tax is used to achieve a particular legitimate
objective of government (ie. OPSF).
NATIONAL AND LOCAL: A national tax is
imposed by the national government while a local tax
is levied by the local government.
PERSONAL AND PROPERTY: Personal taxes are
imposed on individuals within a specified territory
regardless of their citizenship, property or occupation.
Property taxes refer to those imposed on real or
personal property, in proportion to their value.
DOUBLE TAXATION:
NO SPECIFIC PROHIBITION; WHAT IS THE
BASIS? Uniformity and equitable requirement
(prohibition against excessive taxes) and the Equal
Protection Clause.
DIRECT (SKA-JP ) : Occurs when the same (a)
2 )
Subject matter or property is imposed with a tax of
the (b) same Kind or character, by the (c) same taxing
Authority or State or government, within the (d)
Jurisdiction or taxing district, during the (e) same
taxing Period, and for the (f) same Purpose.
IE. Local business tax based on gross revenue.
INDIRECT DOUBLE TAXATION IS
PERMITTED. IE. Different taxing authorities.
DOMESTIC AND INTERNATIONAL: Domestic
double taxation arises when taxes are imposed within
the same state by the local or national government.
International double taxation occurs when
comparable taxes in two or more states are imposed
on the same taxpayer in respect of the same subject
matter and for identical periods.
How do tax treaties eliminate double taxation?
A tax treaty resorts to (a) the exemption method or
the exemption of income or capital taxed at the
source or situs in the state of residence or (b) the
credit method or the crediting of the tax paid at the
state of source against the tax levied in the state of
residence. The former focuses on the income or
capital itself while the latter focuses on the tax.
TAX EVASION AND AVOIDANCE: Tax evasion
refers to fraud through the use of tenses or forbidden
devises to lessen or defeat taxes. It connotes the
integration of three factors, namely (ACE): (a) an
Accompanying state of mind which is evil, in bad
faith, willful or deliberate; (b) a Course of action or
failure of action which is unlawful; and (c) for the End
to be achieved- the payment of less than what is due
or the non-payment of what is due.
Tax evasion is not a continuing offense.
Tax avoidance refers to legal means to reduce taxes.
It is a tax saving device sanctioned by law.
Doctrine of Imprescriptibility. Taxes are not
imprescriptible unless the law itself provides. Basis:
Lifeblood doctrine.
RULES ON IMPRESCRIPTIBILITY
NIRC: Statute of limitations for assessment is three
(3) years from last day prescribed by law or actual
filing. If no return or the return is false or fraudulent,
the period is ten (10) years from discovery.
Any internal revenue tax assessed within the period of
limitation may be collected by distraint or levy or a
court proceeding within five (5) years from
assessment.
6 The Victorian Prodigy’s Taxation Law Midterm Reviewer (General Principles and Income Taxation)- From Atty. VJ Lim and Justice Dimaampao
TCC: Does not express any general statute of
limitations. It provides however that an entry or
passage “free of duty or settlement of duties” will after
the expiration of three (3) years, in the absence of
fraud or protest or compliance audit, be final and
conclusive, unless the liquidation of the import entry
was merely tentative.
LGC: Local taxes, fees or charges shall be assessed
within five (5) years from the date they became due.
In the event of fraud or intent to evade, the same shall
be assessed within ten (10) years from discovery of
such fraud or intent to evade.
Doctrine of non-claim (laches/estoppel) does not
apply.
Doctrine of Estoppel– In the performance of its
governmental functions, the State cannot be estopped
by the neglect, errors or mistakes of its agents or
officers. The government is not bound to the mistake
of its employees, in so far as taxation is concerned.
(this doctrine works against the taxpayer)
PROSPECTIVITY OF TAX LAWS
GR: Tax laws are civil in nature and are therefore
prospective, pursuant to the Civil Code.
EXP:
REVENUE REGULATIONS: (a) There is no injury
nor prejudice to the taxpayer. EXP to the EXP
(BOM): (a) Bad faith on the part of the taxpayer;
(b)the taxpayer Omits or does not submit facts or
documents; and (c) Misstates documents, material
facts and statements.
TAX LAWS (ELI ): (a) when Expressly provided
2
for; (b) provided for by Legislative intent; (c) Implied
from the language of the law; and (d) it involves
Income taxation.
CONSTRUCTION OF TAX LAWS AND
EXEMPTIONS:
GR: Tax laws are strictly construed against the
government and liberally in favor of the taxpayer.
Basis: Burdens are not to be imposed or presumed to
be imposed beyond what statutes expressly declare.
Tax exemptions are strictly construed against the
taxpayer.
Basis: Lifeblood doctrine.
When are tax exemptions liberally construed
(EXCEPTION- CGRIT)? (a) Calamity victims, (b)
GOCC’s , (c) Retirees, (d) Involve special
circumstances ie.disability, and (e) Traditional
exemptees.
What is a Tax Payer’s suit?
A class suit brought by any tax payer (Natural or
Juridical, Citizen or foreigner) questioning the illegal
expenditure of public funds or expenditures without
appropriation by the Government or any of its tax
officials.
As long as taxes are involved, people have a right to
question contracts entered into by the government. A
taxpayer need not to be a party to a contract to
challenge its validity so as long as money for public
funds is illegally dispersed. (Jumamil v Café). It must
be shown that (WID): (a) there is a Wastage of public
funds through the enforcement of an invalid or
unconstitutional law; or (b) there is an Illegal
disbursement of public funds or (c) there is a
Deflection of public money for an improper purpose.
GR : Taxes should be spent for the general public.
EXP: Public funds can be used benefiting a group of
private individuals provided that:
1. It enhances the social justice of the government.
(paramount public interest)
2. It has far reaching implication to the future.
3. It is of transcendental importance.