Legalese 2009 (Week 45)


exemption from taxation – the grant of immunity to particular persons from a tax which persons generally within the state or taxing district are obliged to pay (see Fundamentals of Taxation, p. 71-72 [2009])


No law granting any tax exemption shall be passed without the concurrence of a majority of all members of the Congress. (Constitution, Art. VI, Sec. 28[4])


The power of the legislature to exempt from taxation is not unlimited.  Aside from  limitations provided in the Constitution, there must underlie its exercise some principle of public policy that can support a presumption that the public interest will be served by the exemption allowed.  The grant of an exemption from taxation rests upon the theory that such exemption will benefit the body of the people, and not upon any idea of lessening the burden of the individual owners of property.  (see Fundamentals of Taxation, p. 72-73 [2009]).


Congress enacted a law that granted a 6-year income tax holiday to persons engaged in preferred areas of investments.  Is public interest served by the exemption granted?