It is the power by which the State exacts enforced proportional contribution from the people, property and exercise of a right within its territory to raise revenue for the purpose of defraying the necessary expenses of the government. The main theory supporting the exercise of the power is the so-called "lifeblood theory". The theory states that taxes are the lifeblood of the nation. Without the revenue raised from taxation, the government will not survive resulting to the detriment of the society. Without taxes, the government would be paralyzed for lack of motive power to activate and operate it. Another theory is the benefits-received theory which states that tax are imposed because of the reciprocal duties of protection and support between the State and the taxpayer. The taxpayer is liable to pay tax because of the protection it receives from the State.
Inherent Powers of the Government Power of Eminent Domain – Eminent domain is the right or power of a sovereign state to appropriate private property to particular uses to promote public welfare. It is an indispensable attribute of sovereignty; a power grounded in the primary duty of government to serve the common need and advance the general welfare. Police Power – is the power of the government to regulate behaviors and enforce order within its territory, often framed in terms of public welfare, security, health, and safety. The exercise of police power can be in the form of making laws, compelling obedience to those laws through physical means with the aim of removing liberty, legal sanctions, or other forms of coercion and inducements. Power of Taxation – the power to impose and collect taxes and charges on individuals, goods, services, and other to support the operation of the government.
Funds provided by taxation have been used by states and their functional equivalents throughout history to carry out many functions. Some of these include expenditures on war, the enforcement of law and public order, protection of property, economic infrastructure (roads, legal tender, enforcement of contracts, etc.), public works, social engineering, and the operation of government itself. Governments also use taxes to fund welfare and public services. These services can include education systems, health care systems, pensions for the elderly, unemployment benefits, and public transportation. Energy, water and waste management systems are also common public utilities.