Inherent limitations on Power of Taxation:
A. Non Delegation of the power to Tax – the power to tax is purely legislative and it cannot be delegated by the legislature to the executive or judicial department of the government. Separation of the three branches of government.
B. Exemption from taxation of government entities. Government agencies performing essential government functions are exempt from tax unless expressly taxed while those performing proprietary functions are subject to tax unless expressly exempted. Government cannot tax itself.
C. Public Purpose – purpose affecting the inhabitants of the state as a community and not merely as individuals. Financing educational activities, promotion of science, maintenance of roads and bridges, aid for victims of calamities, etc. etc.
D. Territorial Jurisdiction – the tax laws of the state are enforceable only within it’s territorial limits. Tax laws do not operate beyond the country’s territorial limits.
E. International comity – the property of a foreign State or government may not be taxed by another. Courteous and friendly agreement and interaction between nations.