A tax that governments impose on financial income generated by all entities within their jurisdiction. By law, businesses and individuals must file an income tax return every year to determine whether they owe any taxes or are eligible for a tax refund. Income tax is a key source of funds that the government uses to fund its activities and serve the public.

The first income tax imposed in America was during the War of 1812. Its original purpose was to fund the repayment of a $100 million debt that was incurred through war-related expenses. After the war, the tax was repealed, but income tax became permanent during the early 20th century.

History of taxation in the Philippines is not that old. Self assessment system for individuals and corporations was introduced as early as 1934 when the first Philippine Tax Code was enacted by the parliament. This code was immediately applied to income tax, corporation income tax, and inheritance tax. Later on the area of application was expanded and other national internal revenue taxes were encompassed.

The pre-colonial society, being communitarian, did not have taxes. 5.  Tribute Encomienda System Bandala Polo Y Servicio (Forced Labor)

Manila-Acapulco Galleon TradeDuring the Spanish Period, new income generating means were introduced by the government such as the :

6.  It brought silver from Nueva Castilla and silk from China by way of Manila. It was the main source of income for the colony during its early years. Manila-Acapulco Galleon Trade

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

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

9.  Part of this tribute goes to the encomendero and the rest to the Church and government. 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. It is a land management system similar to the feudal system in Europe.Encomienda System

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

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

11. Did you know?That in the 19th century, the “cedula”served as an identification card thathad to be carried at all times. Aperson who could not present his orher cedula to a guardia civil couldthen be detained for being“indocumentado”.Andres Bonifacio and other Katipunerostore their cedulas in August 1896, signalingthe start of the Philippine Revolution.

12. The Development of the Community Tax 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.

13. A sample cedula in the 1920s. 14. What is a “cedula”? 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 drivers license and a passport.

15. Why is “cedula” important?A person is required to present a cedula whenhe or she acknowledges a document before anotary public; takes an oath of office uponelection or appointment to a governmentposition; receives a license, certificate orpermit from a public authority; pays a tax orfee; receives money from a public fund;transacts official business; or receives salaryfrom a person or corporation.

16. A sample cedula in the 2000s. 17. 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