GENERAL PRINCIPLES

Question 1

The process or means by which the sovereign, through its law-making body, raises income to defray the expenses of the government
a. Toll c. Taxation
b. License fee d. Assessment

Question 2

The proportional contribution by persons and property levied by the law-making body of the State by virtue of its sovereignty for the support of the government and all public needs is referred to as
a. Taxes c. License fees
b. Toll d. Assessmen

Question 3

The primary purpose of taxation is
a. To encourage the growth of some industries through the proper use of incentives
b. To implement the police power of the State
c. To reduce excessive inequalities of wealth
d. To raise revenue for governmental needs

Question 4

Which of the following is not a secondary purpose of taxation?
a. To serve as key instrument of social control
b. To effect a more equitable distribution of wealth among people
c. To achieve social and economic stability
d. To raise revenue to defray the necessary expenses of the government

Question 5

Which theory in taxation states that without taxes, a government would be paralyzed for lack of power to activate and operate it, resulting in its destruction?
a. Power to destroy theory c. Sumptuary theory
b. Lifeblood theory d. Symbiotic doctrine

Question 6

Which among the following concepts of taxation is the basis for the situs of income taxation?
a. Lifeblood doctrine of taxation c. Compensatory purpose of taxation
b. Symbiotic relation in taxation d. Sumptuary purpose of taxation

Question 7

Treating persons who are similarly situated in the same manner
a. Uniformity of taxation c. Due process of law
b. Equality of taxation d. Non-delegation of legislative power

Question 8

One of the characteristics of a tax is
a. A tax is a pecuniary burden and the law may not allow payment in kind
b. It is dependent upon the will or contractual assent, express or implied, of the person taxed
c. It is levied by the state by virtue of its sovereignty
d. It is collected for public and private purposes

Question 9

One of the characteristics of internal revenue tax is that they are
a. Criminal in nature c. Political in nature
b. Penal in nature d. Civil in nature

Question 10

Which of the following is a nature of taxation?
a. The power is granted by legislative action c. It is generally payable in money
b. It is essentially an administrative function d. Without it the state can continue to exist

Question 11

Being legislative in nature, the power to tax may not be delegated, except
a. To local governments or political subdivisions
b. When allowed by the Constitution
c. When delegation relates merely to administrative implementation that may call for some degree of discretionary powers under a set of sufficient standards expressed by law or implied from the policy and purpose of the Act
d. All of the choices

Question 12

Although the power of taxation is basically legislative in character, it is not the function of Congress to
a. Fix with certainty the amount of taxes c. Identify who should collect the tax
b. Collect the tax levied under the law d. Determine who should be subject to the tax

Question 13

The levying and imposition of tax and the collection of tax are processes which constitute the taxation system
a. Basis of taxation c. Nature of taxation
b. Aspects of taxation d. Theory of taxation

Question 14

The official action of an officer authorized by law in ascertaining the amount of tax due under the law from a taxpayer is
a. Assessment c. Deficiency
b. Delinquency d. Distraint

Question 15

The actual effort exerted by the government to effect the exaction of what is due from the taxpayer is known as
a. Assessment c. Payment
b. Levy d. Collection

Question 16

Deals with the provisions of the law which determines the person or property to be taxed, the sums to be raised, the rate thereof, and the time and manner of levying, receiving and collecting taxes
a. Collection c. Enforced contribution
b. Payment d. Levy

Question 17

When the power to tax is delegated to the local government
a. Only the local executive can exercise the power
b. Only the legislative branch of the local government can exercise the power
c. The local executive and the legislative branch of the government can exercise the power
d. Neither the local executive nor the legislative branch of the local government can exercise the power

Question 18

Levying of local government taxes may be exercised by
a. The local executive only
b. The legislative branch of the local government only
c. The local executive and the legislative branch of the local government unit
d. Neither the local executive nor the legislative branch of the local government can exercise the power

Question 19

Where does taxing power of the provinces, municipalities and cities precede from?
a. Constitutional grant c. Presidential decree or Executive act
b. Legislative enactment d. Local legislation

Question 20

All of the following, except one, are basic principles of the sound tax system
a. Fiscal adequacy c. Administrative feasibility
b. Theoretical justice d. Inherent in sovereignty

Question 21

Under this basic principle of sound tax system, the government should not incur a deficit
a. Theoretical justice c. Fiscal adequacy
b. Administrative feasibility d. None of the above

Question 22

The tax imposed should be proportionate to the taxpayer’s ability to pay
a. Fiscal adequacy c. Administrative feasibility
b. Equality or theoretical justice d. Intellectual sensitivity

Question 23

The tax laws must be capable of convenient, just and effective administration
a. Fiscal adequacy c. Administrative feasibility
b. Equality or theoretical justice d. Intellectual sensitivity

Question 24

The following, except one, are basic principles of a sound tax system
a. It should be capable of being effectively enforced
b. It must be progressive
c. Sources of revenue must be sufficient to meet government expenditures and other public needs
d. It should be exercised to promote public welfare

Question 25

The power to demand proportionate contributions from persons and property to defray the expenses of the government
a. Power of taxation c. Power of eminent domain
b. Police power d. Power of recall

Question 26

The power of the state or those to whom the power has been delegated to take private property for public use upon paying to the owner a just compensation
a. Power of eminent domain c. Power of taxation
b. Police power d. People power

Question 27

The power of the state to enact such laws in relation to persons and property as may promote public health, public morals, public safety and the general welfare of the people
a. Power of eminent domain c. Power of taxation
b. Police power d. People power

Question 28

The following are similarities of the inherent power of taxation, eminent domain and police power, except one
a. Are necessary attributes of sovereignty c. Affect all persons or the public
b. Interfere with private rights and property d. Are legislative in implementation

Question 29

Which statement refers to police power as distinguished from taxation?
a. It can only be imposed on specific property or properties
b. The amount imposed depends on whether the activity is useful or not
c. It involves the taking of property by the government
d. The amount imposed has no limits

Question 30

Which of the following may not raise money for the government
a. Power of taxation c. Power of eminent domain
b. Police power d. Privatization of government’s capital assets

Question 31

In this power of the State, the person who is parting with his money or property is presumed to receive a benefit
a. Taxation c. Eminent domain
b. Police power d. Forfeiture power

Question 32

Which of the following statements is correct?
a. Non-payment of tax and debt is a ground for imprisonment
b. The power to tax may include the power to destroy
c. Provisions in the Philippine Constitution on taxation are grants of power
d. Lands and buildings being used actually, directly and exclusively for religious and charitable purposes by churches and charitable institutions are exempt from income and property taxes

Question 33

They restrict the exercise of the power of taxation although they are not embodied in the Constitution
a. Theoretical justice c. Inherent limitations
b. Legislative in character d. Constitutional limitations

Question 34

Those restrictions on the exercise of the power of taxation that are found in the Constitution or implied from its provisions
a. Theoretical justice c. Inherent limitations
b. Legislative in character d. Constitutional limitations

Question 35

Which of the following statements is not correct?
a. Taxes may be imposed to raise revenues or to provide disincentives to certain activities within the state
b. The state can have the power of taxation even if the Constitution does not expressly give it the power to tax
c. For the exercise of the power of taxation, the state can tax anything at any time
d. The provisions of taxation in the Philippine Constitution are grants of power and not limitations on taxing powers

Question 36

This is an inherent limitation on the power of taxation
a. Rule on uniformity and equity in taxation
b. Due process of law and equal protection of the laws
c. Non-impairment of the jurisdiction of the Supreme Court in tax cases
d. Tax must be for the public purpose

Question 37

This is a constitutional limitation on the power of taxation
a. Tax laws must be applied within the territorial jurisdiction of the state
b. Exemption of government agencies and instrumentalities from taxation
c. No appropriation of public money for religious purposes
d. Power to tax cannot be delegated to private persons or entities

Question 38

A tax must be imposed for public purpose. Which of the following is not a public purpose?
a. National defense
b. Public education
c. Improvement of the sugar and coconut industries
d. Improvement of a subdivision road

Question 39

Which of the following statements is incorrect?
a. No person shall be imprisoned for non-payment of debt or non-payment of taxes
b. The passage of laws granting tax exemptions requires the concurrence by majorit of all the members of Congress
c. The Supreme Court’s jurisdiction over tax cases cannot be impaired
d. The revenues and assets of non-stock, non-profit educational institutions and donations for educational purposes are exempted from taxes and duties

Question 40

Toll as distinguished from tax
a. Demand of sovereignty
b. Imposed by government only
c. Amount is based on the cost of construction of public improvement used
d. Paid for the support of the government

Question 41

All of the following, except one, are characteristics of a toll
a. Demand of proprietorship
b. Compensation for the use of another’s property
c. Maybe imposed by private individuals
d. Levied for the support of the government

Question 42

One of the following is not a characteristic of a special assessment
a. It has special application only to a particular time and place
b. It is levied only on land
c. May be levied on business
d. Based wholly on benefits

Question 43

Tax imposed by the national government and as effective within the entire jurisdiction thereof
a. National tax c. Proportional tax
b. Local tax d. General tax

Question 44

Taxes imposed by a political subdivision of the state and is effective only within the territorial boundaries thereof
a. National tax c. Progressive tax
b. Local tax d. Regressive tax

Question 45

A tax that is imposed upon a person who is directly bound to pay it
a. Direct tax c. Excise tax
b. Indirect tax d. Poll tax

Question 46

Forms part of the purchase price of the commodity or service and passed on to customers
a. Direct tax c. Excise tax
b. Indirect tax d. Poll tax

Question 47

Schedular system of income taxation means
a. All types of income are added together to arrive at gross income
b. Separate graduated rates are imposed on different types of income
c. Capital gains are excluded in determining gross income
d. Compensation income and business/professional income are added together in arriving at gross income

Question 48

In case of conflict between tax laws and generally accepted accounting principles (GAAP)
a. Both tax laws and GAAP shall be enforced c. Tax laws shall prevail over GAAP
b. GAAP shall prevail over tax laws d. The issue shall be resolved by the courts

Question 49

Tax as distinguished from license fee
a. Non-payment does not necessarily render the business illegal
b. A regulatory measure
c. Imposed in the exercise of police power
d. Limited to cover cost of regulation

Question 50

Tax imposed upon performance of an act, the enjoyment of privilege or the engaging in an occupation
a. Personal, poll or capitation c. Excise
b. Property d. Regressive

Question 51

Which of the following is not an example of excise tax?
a. Transfer tax c. Real property tax
b. Sales tax d. Income tax

Question 52

An example of a property tax is
a. Additional community tax on income of real properties
b. Real estate tax on real properties
c. Estate tax on inherited personal as well as real properties
d. Donor’s tax on donation of property

Question 53

Tax which imposes a specific sum by the head or number or by some standards of weight or measurement and which requires no assessment other than a listing or classification of the objects to be taxed
a. Ad Valorem c. Excise
b. Specific d. Revenue

Question 54

Tax of a fixed proportion of the value of the property with respect to which the tax is assessed and requires the intervention of assessors or appraisers to estimate the value of such property before the amount due from each taxpayer can be determined is known as
a. Specific c. Special or regulatory
b. Ad Valorem d. Answer not given

Question 55

The following are kinds of taxes as to graduation. Which one is not?
a. Digressive c. Regressive
b. Uniform d. Progressive

Question 56

Tax based on a fix percentage of the amount of property, income or other basis to be taxed
a. Progressive c. Regressive
b. Proportional d. Indirect

Question 57

Tax where the rate decreases as the tax base increases
a. Progressive c. Regressive
b. Proportional d. Indirect

Question 58

Tax where the rate increases as the tax base increases
a. Progressive c. Regressive
b. Proportional d. Indirect

Question 59

Value-added tax is an example of
a. Graduated tax c. Regressive tax
b. Progressive tax d. Proportional tax

Question 60

Tax of a fix amount imposed among all persons residing within a specified territory without regard to their property or occupation they may be engage
a. Personal, poll or capitation tax c. Excise tax
b. Property d. Regressive

Question 61

Tax imposed on personal or real property in proportion to its value or some other reasonable method of apportionment
a. Personal, poll or capitation tax c. Excise tax
b. Property d. Regressive

Question 62

One of the following is not an inherent limitation on the exercise of the power of taxation
a. International comity
b. Double taxation
c. Non-delegation of the legislative power to tax
d. Territoriality

Question 63

The following constitute double taxation except one
a. Both taxes are imposed in the same amount
b. Both taxes are levied for the same purpose
c. Both taxes are imposed by the same taxing authority
d. Both taxes are imposed upon the same person

Question 64

Which of the following constitutes objectionable double taxation?
a. A license fee and a tax imposed on the same business or occupation for selling the same articles
b. A 20% final withholding tax on interest income on bank deposits and a 5% gross receipts tax on banks is a direct duplicate taxation
c. Persons engaged in leasing or selling real property are subject to real estate dealers tax and their sales are also subject to 12% VAT
d. A tax of 1% is imposed for bank reserve deficiency while a penalty of 1/10 of 1% is also imposed as a consequence of such reserve deficiency

Question 65

Which of the following statements is correct?
a. Indirect double taxation violates the Constitutional provision of uniformity and equal protection
b. There is direct double taxation in taxing the income of the corporation and again subject the portion of that income declared as dividend to final tax
c. Indirect double taxation is legal as long as there is no violation of equal protection and uniformity clauses of the Constitution
d. All of the above

Question 66

The usual mode(s) of avoiding occurrence of double taxation is/are
a. Reciprocal exemption, either by law or treaty
b. Tax credit of foreign taxes paid
c. Deduction for foreign taxes paid
d. All of the above

Question 67

Which is not a direct double taxation?
a. A lessor of property pays a real estate tax and income tax on the same property
b. Imposition of tax on the finished products and the raw materials used in the production of the said finished products
c. Imposition of tax on corporate income and shareholder’s dividends from the same corporation
d. All of the above

Question 68

Transfer of the tax burden by one on whom the tax is assessed to another
a. Shifting c. Transformation
b. Capitalization d. Tax exemption

Question 69

The reduction in the selling price of income-producing property by an amount equal to the capitalized value of future taxes that may be paid by the purchaser
a. Shifting c. Transformation
b. Capitalization d. Tax exemption

Question 70

The method by which the manufacturer or producer upon whom the tax is imposed pays the tax and strives to recover such expense through lower production cost without sacrificing the quality of his product
a. Shifting c. Transformation
b. Capitalization d. Tax exemption

Question 71

The grant of immunity to particular persons or corporation or to persons or corporations of a particular class from a tax which persons and corporations generally within the same taxing district are obliged to pay
a. Tax exemption c. Tax avoidance
b. Tax evasion d. Tax amnesty

Question 72

In every case of doubt, tax statutes are construed
a. Strictly against the government and the taxpayer
b. Liberally in favor of the government and the taxpayer
c. Strictly against the government and liberally in favor of the taxpayer
d. Liberally in favor of the government and strictly against the taxpayer

Question 73

In every case of doubt, tax exemptions are construed
a. Strictly against the government and the taxpayer
b. Liberally in favor of the government and the taxpayer
c. Strictly against the government and liberally in favor of the taxpayer
d. Liberally in favor of the government and strictly against the taxpayer

Question 74

The exploitation by the taxpayer of legally permissible alternative tax rates or methods of assessing taxable property or income, in order to reduce tax liability. It is also known as tax minimization
a. Tax exemption c. Tax avoidance
b. Tax evasion d. Transformation

Question 75

The use of illegal or fraudulent means to avoid or defeat the payment of tax. It is also known as tax dodging
a. Exemption c. Avoidance
b. Shifting d. Evasion

Question 76

Which of the following statements constitutes tax avoidance?
a. Deliberate failure of a taxpayer to pay the taxes due to the government
b. Connotes fraud through the use of pretenses and forbidden devices to lessen or defeat taxes
c. Punishable by law
d. Maybe contrary to the intent of the legislature but nevertheless does not violate the law

Question 77

The least source of tax laws
a. Statutes c. Revenue regulations
b. Presidential decrees d. Tax treaties or conventions

Question 78

All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the
a. Office of the President c. Senate
b. House of Representatives d. Supreme Court

Question 79

Which statement is wrong? Tax laws
a. Must originate from the House of Representatives and on which same bill the Senate may propose amendments
b. May originate from the Senate and on which same bill the House of Representatives may propose amendments
c. May have a House version and Senate version approved separately
d. May be recommended by the President to Congress

Question 80

Which of the following is not considered as a step in making a revenue regulation effective?
a. Recommendation by the Commissioner of Internal Revenue to the Secretary of Finance
b. Approval by the Secretary of Finance
c. Legislation by Congress
d. Publication in a newspaper of general circulation

Question 81

The Commissioner of Internal Revenue is granted certain powers under the Tax Code. Which of the following is not a power granted to the Commissioner under the Code?
a. Interpret tax laws and decide tax cases
b. Issue summons and subpoena
c. Enact tax laws and make amendments
d. Make assessment and prescribe additional requirements

Question 82

Which of the following statements is incorrect with respect to the power of the President?
a. Congress may authorize the President to fix within specified limits tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the government
b. The President can veto any particular item in a revenue or tariff bill, but the veto shall not affect the items or items to which he does not object
c. The power of taxation can be delegated to the President of the Philippines
d. The President of the Philippines is empowered to grant tax exemption on certain class of taxpayers

Question 83

The place or authority that has the right to impose and collect taxes
a. Territoriality c. Situs of taxation
b. International comity d. Transformation

Question 84

A fundamental rule in taxation is that “the property of one country may not be taxed by another country.” This is known as
a. International law c. Reciprocity
b. International comity d. International inhibition