Principles of Taxation (Review)

Question 1

The three fundamental powers of the state may be exercised only by the government

Answer 1

FALSE.
Eminent domain may be granted to public service companies.

Question 2

Taxation is a process or means by which the sovereign, through its law-making body raises income to defray the expenses of the government

Answer 2

TRUE.

Question 3

Eminent domain may be exercised even by public service corporations and public entities

Answer 3

TRUE

Question 4

Police power regulates both liberty and property.

Answer 4

TRUE

Question 5

Taxes are raised to cover the cost of governance

Answer 5

TRUE

Question 6

Toll is one of the taxes collected by the government

Answer 6

FALSE.
Toll is paid for the use of another’s property.

Question 7

License fees are imposed in the exercise of police power

Answer 7

TRUE

Question 8

License fee is imposed to raise revenue

Answer 8

FALSE.
License fee is imposed for a regulatory purpose

Question 9

Tax is generally unlimited because it is based on the needs of the State.

Answer 9

TRUE

Question 10

The amount imposed in the exercise of police power depends on whether the activity is useful or not

Answer 10

TRUE

Question 11

The distinction of a tax from permit or license fee is that a tax is one in which there is generally no limit on the amount that may be imposed.

Answer 11

TRUE

Question 12

Debt, as distinguished from tax, may be paid in kind

Answer 12

TRUE

Question 13

Under the equal protection clause of the constitution, all persons subject to legistlation shall be treated alike under dissimilar circumstances and condtions, both in the privileges conferred and liabilities imposed

Answer 13

FALSE.
Persons should be treated alike in similar circumstances.

Question 14

Tax laws are civil and penal in nature because there are penalties provided in the case of violation.

Answer 14

FALSE.
Tax laws are not penal in nature

Question 15

Special assessment is a tax.

Answer 15

FALSE
Special assessment is a charge imposed on real property (land).

Question 16

Special assessment is imposed on persons, property, and property rights.

Answer 16

FALSE
Special assessment is a charge imposed on real proprty (land).

Question 17

The Philippine government may subject the land where embassies of foreign governments are located to real property taxes.

Answer 17

FALSE
Principle of International Comity

Question 18

A revenue bill may originate from the Senate and on which the same bill the House of Representatives may propose amendments.

Answer 18

FALSE
Revenue bills originate exclusively from the House of Representatives

Question 19

A person may refuse to pay on the ground that he will not receive a benefit from the tax

Answer 19

FALSE

Question 20

In the exercise of the power of taxation, the State can tax anything at any time

Answer 20

TRUE

Question 21

In cases of deductions and exemptions, doubts shall be resolved liberally in favor of the government

Answer 21

TRUE

Question 22

Levying of local government taxes should be exercised only by the legislative branch of the local government

Answer 22

TRUE

Question 23

The taxing power of provinces, municipalities and cities precede from a constitutional grant

Answer 23

TRUE

Question 24

Taxation is regressive when their rate goes up depending on the resources of the person affected

Answer 24

FALSE
In this case, taxation is progressive

Question 25

No law granting any tax exemption shall be passed without the concurrence of 2/3 of all the members of Congress

Answer 25

FALSE
It requires the concurrence of majority of the members of Congress

Question 26

There is no constitutional prohibition against double taxation in the Philippines. It is something not favored, but nevertheless permissible

Answer 26

TRUE

Question 27

“Global system of income taxation” means separate graduated rates are imposed on different types of income

Answer 27

FALSE.
“Schedular system of income taxation”

Question 28

One of the schemes of shifting the incidence of tax burden is by transferring the sales tax of a manufacturer to the distributor, then in turn to the wholesaler, to the retailer and finally to the consumer

Answer 28

TRUE

Question 29

Transformation is a 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

Answer 29

TRUE

Question 30

In case of ambiguity, tax laws shall be interpreted liberally in favor of the government.

Answer 30

FALSE.
In favor of the taxpayer

Question 31

Which of the following statements is incorrect?
a. Taxes are the revenues raised in the exercise of the police power of the State
b. One of the special characteristics of tax is it is unlimited in amount
c. The threee fundamental powers of the State are inherent in the State and may be exercised without the need of any constitutional grant
d. All of the above

Answer 31

Taxes are the revenues raised in the exercise of the police power of the State

Question 32

The State, having sovereignty can enforce contributions upon its citizens even without a specific provision in the Constitution authorizing it. Which of the following will justify the foregoing statement?
a. It is so because the State has the supreme power to command and enforce obedience to its will form the people within its jurisdiction
b. Any provision in the Constitution regarding taxation does not create rights for the sovereignty to have the power to tax but it merely constitutes limitations upon the supremacy of tax power
c. Both “a” and “b”
d. Neither “a” nor “b”

Answer 32

Both:
a. It is so because the State has the supreme power to command and enforce obedience to its will form the people within its jurisdiction
b. Any provision in the Constitution regarding taxation does not create rights for the sovereignty to have the power to tax but it merely constitutes limitations upon the supremacy of tax power

Question 33

Statement 1: The distinction of a tax from permit or license fee is that a tax is imposed for regulation
Statement 2: Non-payment of tax does not necessarily render a business illegal

a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer 33

FALSE. The distinction of a tax from permit or license fee is that a tax is imposed for regulation.
TRUE. Non-payment of tax does not necessarily render a business illegal.

Question 34

The primary purpose of taxation is to raise revenue for the support of the government. However, taxation is often employed as a devise for regulation by means of which, certain effects or conditions envisioned by the government may be achieved such as:
a. Taxation may be used to provide incentive to greater production through grant of tax exemption
b. Taxation can strengthen weak enterprises by creating conditions conducive to their growth through grant of tax exemptions
c. Taxes may be increased in periods of prosperity to curb spending power and halt inflation or lowered in periods of slump to expand the business and ward off depression
d. All of the above

Answer 34

a. Taxation may be used to provide incentive to greater production through grant of tax exemption
b. Taxation can strengthen weak enterprises by creating conditions conducive to their growth through grant of tax exemptions
c. Taxes may be increased in periods of prosperity to curb spending power and halt inflation or lowered in periods of slump to expand the business and ward off depression

Question 35

Which of the following statements is correct?
a. The purpose of taxation may also be “compensatory”, meaning it may be used to make up for the benefit received
b. Taxes may be imposed for the equitable distribution of wealth and income in society.
c. Both “a” and “b”
d. Neither “a” nor “b”

Answer 35

a. The purpose of taxation may also be “compensatory”, meaning it may be used to make up for the benefit received
b. Taxes may be imposed for the equitable distribution of wealth and income in society.

Question 36

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
b. Lifeblood theory
c. Sumptuary theory
d. Symbiotic doctrine

Answer 36

Lifeblood theory

Question 37

On theoretical basis of taxation, which of the following statements is true?
a. People pay taxes which their government uses to expand its powers and territorial domination
b. People demand form their govenment certain responsibilities and then provide this government with the means to carry them out
c. State needs taxation to exist, while people must support taxation because they need the presence of the state
d. “b” and “c”

Answer 37

State needs taxation to exist, while people must support taxation because they need the presence of the state

Question 38

Incidence of taxation means:
a. Shifting of tax
b. Refunds of tax
c. Payment of tax
d. Imposition of tax

Answer 38

Payment of tax

Question 39

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

Answer 39

Collection

Question 40

Statement 1: Symbiotic relation is the reason why the government would impose taxes on the income of resident citizens derived from sources outside the Philippines.
Statement 2: Jurisdiction is the reason why citizens must provide support to the state so the latter could continue to give protection.

a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer 40

FALSE. Symbiotic relation is the reason why the government would impose taxes on the income of resident citizens derived from sources outside the Philippines.
FALSE. Jurisdiction is the reason why citizens must provide support to the state so the latter could continue to provide protection.

Question 41

A law passed by Congress which granted tax amnesty to those who have not paid income taxes for a certain year and at the same time providing for the refund of taxes to those who have already paid them. The law is:
a. Valid because there is a valid classification
b. Not valid because those who did not pay their taxes are favored over those who have paid their taxes
c. Valid because it was Congress that passed the law and it did not improperly delegate the power to tax
d. Not valid because only the President with the approval of the Congress may grant amnesty

Answer 41

Valid because there is a valid classification

Question 42

Congress passed a new law imposing taxes on income earned out of particular acitvity that was not previously taxed. The law, however, taxed income already earned in the fiscal year when the law took effect. Is the law valid?
a. No because the laws are intended to be prospective, not retroactive
b. No, the law is arbitrary in that it taxes income that has already been spent
c. Yes, since the tax laws are the lifeblood of the government
d. Yes, tax laws are an exception; they can be given retroactive effect

Answer 42

Yes, tax laws are an exception; they can be given retroactive effect

Question 43

Due to an uncertainty whether or not a new tax law is applicable to printing companies, ABC Printers submitted a legal query to the BIR on that issue. The BIR issued a ruling that printing companies are not covered by the new law. Relying on this ruling, ABC Printers did not pay the said tax. Subsequently, however, the BIR reversed the ruling and issued a new one stating that the tax covers printing companies. Could the BIR assess ABC Printeres for back taxes corresponding to the years before the new ruling?
a. Yes, because taxation is the rule and exemption is the exception
b. Yes, because taxes are the lifeblood of the government
c. No, the BIR is not allowed to reverse its ruling
d. No, reversal of ruling shall not be given a retroactive application if it will be prejudicial to the taxpayer

Answer 43

No, reversal of ruling shall not be given a retroactive application if it will be prejudicial to the taxpayer

Question 44

The Constitution requires that all revenue bills shall originate “exclusively” from the House of Representatives. Assume that in 2014, Congressman Uro proposed an expansion of the coverage of the value added tax to be known as e-vat law. The proposed bill was approved by the House of Representatives later that year. However, the EVAT version of the Senate became the EVAT law.

Which of the following statements will justify the enacted EVAT law?
I. The Constitution simply means that the initiative of filing revenue, tariff or tax bills must come from the House of Representatives on the theory that, elected as they are from the districts, the Members of the House can be expected to be more sensitive to the local needs and problems
II. It is not the law but the revenue bill which is required by the Constitution to “originate exclusively” in the House of Representatives because a bill originating in the House may undergo such extensive changes in the Senate that the result may be a rewriting of the whole, and a distinct bill may be produced.

Answer 44

Both justify the enacted EVAT Law:
I. The Constitution simply means that the initiative of filing revenue, tariff or tax bills must come from the House of Representatives on the theory that, elected as they are from the districts, the Members of the House can be expected to be more sensitive to the local needs and problems
II. It is not the law but the revenue bill which is required by the Constitution to “originate exclusively” in the House of Representatives because a bill originating in the House may undergo such extensive changes in the Senate that the result may be a rewriting of the whole, and a distinct bill may be produced.

Question 45

The Constitution requires that all revenue bills shall originate “exclusively” from the House of Representatives. Assume that in 2014, Congressman Uro proposed an expansion of the coverage of the value added tax to be known as e-vat law. The proposed bill was approved by the House of Representatives later that year. However, the EVAT version of the Senate became the EVAT law.

Assuming Senatory Bobadilla filed in the Senate a substitute e-vat bill “in anticipation” of its receipt of the bill from the House. The proposal is totally different from the version of the lower house. Which of the following statements will justify the filing of a substitute bill by Honorable Senator Bobadilla?

I. To insist that a revenue statute not only the bill which initiated the legislative process culminating in the enactment of the law - must substantially be the same as the House bill would be to deny the Senate’s power not only to “ concur with amendments” but also to “propose amendments”
II. It would be to violate the coequality of legislative power of the two houses of Congress and in fact make the House superior to the Senate. Given the power of the Senate to propose amendments, it can propose its own version even with respect to bills which are required by the Constitution to originate in the House
III. Filing in the Senate of a substitute bill in anticipation of its receipt of the bill from the House is not prohibited under the Constitution, so long as the action by the Senate as a body is withheld pending receipt of the House Bill

Answer 45

To insist that a revenue statute not only the bill which initiated the legislative process culminating in the enactment of the law - must substantially be the same as the House bill would be to deny the Senate’s power not only to “ concur with amendments” but also to “propose amendments”

Question 46

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

Answer 46

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

Question 47

Statement 1: The aspects of taxation are shared by the legislative and executive branches of the government
Statement 2: Taxes should be prospective and should not be given retroactive effect because they are burdens.

a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer 47

True. The aspects of taxation are shared by the legislative and executive branches of the government
False. Taxes should be prospective and should not be given retroactive effect because they are burdens.

Question 48

The power of taxation is basically legislative in character. Which of the following is a legislative function?
a. Fix with certainty the amount of tax
b. Identify who should collect the tax
c. Determine who should be subject to tax

Answer 48

Legislative functions:
a. Fix with certainty the amount of tax
b. Identify who should collect the tax
c. Determine who should be subject to tax

Question 49

As to scope of legislative power to tax, which of the following is correct?
a. The power to tax is supreme, plenary, comprehensive, and without any limit because the existence of the government is a necessity
b. The discretion of Congress in imposing taxes extends to the mode, method, and kind of tax, even if the constitution provides otherwise
c. Congress has the right to levy a tax of any kind at any amount as it sees fit, even in the absence of any constitutional provision
d. The sole arbiter of the purpose for which taxes shall be levied is Congress, provided that the purpose is public and the courts may not review the levy of the tax to determine whether or not the purpose is public

Answer 49

Congress has the right to levy a tax of any kind at any amount as it sees fit, even in the absence of any constitutional provision

Question 50

The following are the aspects of taxation:
I. Levy or imposition of the tax on persons, property, or excises
II. Collection of taxes already levied
III. Sufficiency of government sources to satisfy its expenditure

Answer 50

Aspects of taxation:
I. Levy or imposition of the tax on persons, property, or excises
II. Collection of taxes already levied

Question 51

Which of the following is incorrect?
a. Selecting the kind of tax is a legislative but not administrative function.
b. Fixing the amount of tax is a legislative but not administrative function
c. Prescribing the rules of taxation is a legislative but not administrative function
d. Assessment of the tax liability is a legislative but is not administrative function

Answer 51

Assessment of the tax liability is a legislative but is not administrative function— FALSE

Question 52

Which of the following is correct?
a. Fixing of tax rates is a legislative and administrative function
b. Valuation of object of tax is a legislative but not administrative function
c. Collection of tax is a legislative but not administrative function
d. Assessment of tax liability is not a legislative but is an administrative function

Answer 52

Assessment of tax liability is not a legislative but is an administrative function—TRUE

Question 53

Statement 1: Inherent powers of the State exist independent of the constitution
Statement 2: The taxing power of the local government units precede from a constitutional grant

a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer 53

TRUE. Inherent powers of the State exist independent of the constitution
TRUE. The taxing power of the local government units precede from a constitutional grant

Question 54

The following are the characteristics of the State’s power to tax, except:
a. The strongest of all inherent powers of the State
b. Involves power to destroy
c. Both “a” and “b”
d. Neither “a” nor “b”

Answer 54

Characteristics of the State’s power to tax:
a. The strongest of all inherent powers of the State
b. Involves power to destroy

Question 55

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 lcoal govenment unit
d. Neither the local executive nor the legislative branch of the local government can exercise the power

Answer 55

The legislative branch of the local government only

Question 56

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

Answer 56

Constitutional grant

Question 57

Statement 1: Eminent domain may raise money for the government
Statement 2: Barrios, barangays, municipalities/cities and provinces may collect tax from its inhabitants

a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer 57

FALSE. Eminent domain may raise money for the government
FALSE. Barrios, barangays, municipalities/cities and provinces may collect tax from its inhabitants

Question 58

The following are the nature of taxation, except:
a. Inherent in sovereignty
b. Essentially a legislative function
c. Subject to inherent and constitutional limitation
d. Subject to the approval of the people

Answer 58

Subject to approval of the people

Question 59

“The power to tax involves power to destroy” means”:
a. The power to tax is viewed as the power to destroy in the sense that a lawful tax cannot be defeated just because its exercise would be destructive or would bring about insolvency to a taxpayer
b. The principle implies that an imposition of lawful regulatory taxes would be destructive to the taxpayers and business establishments because the government can compel payment of tax and forfeiture of property through the exercise of police power
c. Both “a” and “b”
d. Neither “a” nor “b”

Answer 59

Both:
a. The power to tax is viewed as the power to destroy in the sens that a lawful tax cannot be defeated just because its exercise would be destructive or would bring about insolvency to a taxpayer
b. The principle implies that an imposition of lawful regulatory taxes would be destructive to the taxpayers and business establishments because the government can compel payment of tax and forfeiture of property through the exercise of police power

Question 60

There can be no tax unless there is a law imposing the tax is consistent with the doctrine of:
a. Uniformity in taxation
b. Due process of law
c. Non-delegation of the power of tax
d. All of the above

Answer 60

Non-delegation of the power of tax

Question 61

“The tax should be based on taxpayer’s ability to pay.” In relation to this, which of the following is not correct?
a. No person shall be imprisoned for non-payment of tax
b. A graduated tax table is in consonance with this statement
c. As a theory of taxation, this is called the “ability to pay theory”
d. As a basic principle of taxation, this is called “theoretical justice”

Answer 61

No person shall be imprisoned for non-payment of tax

Question 62

The rule of “No estoppel against the government” means:
a. Rule of law that in the performance of its government functions, the state cannot be estopped by the neglect of its agents and officers
b. The government is not estopped by the mistakes or errors of its agents; erroneous application and enforcement of law by public officers do not block the subsequent correct application of the statutes
c. Both “a” and “b”
d. Neither “a” nor “n”

Answer 62

Both:
Rule of law that in the performance of its government funcitons, the state cannot be estopped by the neglect of its agents and officers
b. The government is not estopped by the mistakes or errors of its agents; erroneous application and enforcement of law by public officers do not block the subsequent correct application of the statutes

Question 63

Progressivity of taxation is also mandated in the Constitution.

Statement 1: Our income tax system is one good example of such progressivity because it is built on the principle of the taxpayers’ ability to pay
Statement 2: Taxation is progressive when their rate goes up depending on the resources of the person affected.

a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer 63

TRUE. Our income tax system is one good example of such progressivity because it is built on the principle of the taxpayers’ ability to pay
TRUE. Taxation is progressive when their rate goes up depending on the resources of the person affected.

Question 64

One of the characteristics of our internal revenue laws is that they are:
a. Political in nature
b. Penal in nature
c. Generally prospective in operation although the tax statute may nevertheless operate retrospectively provided it is clearly the legislative intent
d. Criminal in nature

Answer 64

Generally prospective in operation although the tax stature may nevertheless operate retrospectively provided it is clearly the legislative intent

Question 65

Which of the following distinguishes tax from license fee?
A. Non-payment does not necessarily render the business illegal
b. A regulatory measure
c. Imposed in exercise of police power
d. Limited to cover cost of regulation

Answer 65

Non-payment does not necessarily render the business illegal

Question 66

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

Answer 66

Revenue regulations

Question 67

Statement 1: A revenue regulation must not be contrary to the provision of the law that it implements
Statement 2: A revenue regulation cannot expand the provision of the law that it implements by imposing a penalty when the law that authorizes the revenue regulation does not impose a penalty

a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer 67

TRUE. A revenue regulation must not be contrary to the provision of the law that it implements
TRUE. A revenue regulation cannot expand the provision of the law that it implements by imposing a penalty when the law that authorizes the revenue regulation does not impose a penalty

Question 68

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 govenment and liberally in favor of the taxpayer
d. Liberally in favor of the government and strictly against the taxpayer

Answer 68

Strictly against the govenment and liberally in favor of the taxpayer

Question 69

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

Answer 69

Liberally in favor of the government and strictly against the taxpayer

Question 70

Which of the following statement is correct?
I. A tax cannot be imposed without clear and express words for that purpose
II. The provisions of a taxing act are not to be extended by implication
III. If the law is repealed, taxes assessed before repeal of the law may no longer be collected.
IV. Tax law is ex post facto in application

Answer 70

Correct statements:
I. A tax cannot be imposed without clear and express words for that purpose
II. The provisions of a taxing act are not to be extended by implication

Question 71

Which of the following factors are determinants to the “Situs” of taxation?
I. Nature, kind or classification of the tax being imposed
II. Subject matter of the tax (person, property, rights or activity)
III. Citizenship of the taxpayer
IV. Residence of the taxpayer
V. Place of the excise, privilege, business or occupation
VI. Source of the income subject to tax

Answer 71

I. Nature, kind or classification of the tax being imposed
II. Subject matter of the tax (person, property, rights or activity)
III. Citizenship of the taxpayer
IV. Residence of the taxpayer
V. Place of the excise, privilege, business or occupation
VI. Source of the income subject to tax

Question 72

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

Answer 72

Personal, poll or capitation tax

Question 73

Tax of fixed proportion of the amount or value of the property tih respect to which the tax is assessed
a. Ad valorem
b. Specific
c. Excise
d. Regressive

Answer 73

Ad valorem

Question 74

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

Answer 74

Proportional

Question 75

Which of the following is a characteristic of taxation which distinguishes it from police power and eminent domain?
a. For public purposes
b. Legislative in nature
c. Generally payable in money
d. Inferior to non-immpairment clause in the Constitution

Answer 75

Generally payable in money

Question 76

The following are basic principles of sound tax system:
I. It should be capable of being effectively enforced
II. It must be progressive
III. Sources of revenue must be sufficient to meet government expenditures and other public needs
IV. It should be exercised to promote public welfare

Answer 76

Basic principle of sound tax system:
I. It should be capable of being effectively enforced
II. It must be progressive
III. Sources of revenue must be sufficient to meet government expenditures and other public needs

Question 77

The sources of revenue should be sufficient to meet the demands of public expenditures. This refers to:
a. Equality or theoretical justice
b. Fiscal adequacy
c. Administrative feasibility
d. Rule of appointment

Answer 77

Fiscal adequacy

Question 78

The tax should be imposed proportionate to the taxpayer ability to pay
a. Equality or theoretical justice
b. Fiscal adequacy
c. Administrative feasibility
d. Rule of apportionment

Answer 78

Equality or theoretical justice

Question 79

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

Answer 79

Administrative feasibility

Question 80

Statement 1: Inherent limitations are the natural restrictions to safeguard and ensure that the power of taxation shall be exercised by the government only for the betterment of the people whose interest should be served, enhanced, and protected
Statement 2: Constitutional limitations are provisions of the fundamental law of the land that restrict the supreme, plenary, unlimited and comprehensive exercised by the State of its inherent power to tax

a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer 80

TRUE. Inherent limitations are the natural restrictions to safeguard and ensure that the power of taxation shall be exercised by the government only for the betterment of the people whose interest should be served, enhanced, and protected
TRUE. Constitutional limitations are provisions of the fundamental law of the land that restrict the supreme, plenary, unlimited and comprehensive exercised by the State of its inherent power to tax

Question 81

“Equality in taxation” means
I. Progressive system of taxation shall be applied
II. The tax laws and their application must be fair, just, reasonable and proportionate to one’s ability to pay
III. The tax laws shall give emphasis on direct rather than indirect taxes or on the ability-to-pay principle of taxation

Answer 81

I. Progressive system of taxation shall be applied
II. The tax laws and their application must be fair, just, reasonable and proportionate to one’s ability to pay
III. The tax laws shall give emphasis on direct rather than indirect taxes or on the ability-to-pay principle of taxation

Question 82

Which of the following statements correctly described “Equal protection” clause of the Constitution regarding the government’s power to tax?
I. All persons subject to legislation shall be treated alike under dissimilar circumstances and conditions, both in the privileges conferred and the liabilities imposed
II. The purpose is to protect persons belonging to the same class against intentional and arbitrary discrimination
III. There is denial of equal protection of laws if there is discrimination in the implementation of tax laws

Answer 82

II. The purpose is to protect persons belonging to the same class against intentional and arbitrary discrimination
III. There is denial of equal protection of laws if there is discrimination in the implementation of tax laws

Question 83

Which of the following restrictions on the power of taxation recognizes that the country’s tax laws shall not be applied to the property of foreign government?
a. Taxation is inherently a legislative function
b. Exercise of taxation is subject to international comity
c. Due process of law
d. Equal protection of law

Answer 83

Exercise of taxation is subject to international comity

Question 84

There is an inherent limitation on the power of taxation
a. The rule on taxation shall be uniform and equitable
b. No law impairing the obligations of contracts shall be enacted
c. Charitable institutions, churches, personages or conventments, appurtenants thereto, mosques and nonprofit cemeteries and all kinds of lands, buildings and improvements actually, directly and exclusively used for religious or charitable purposes shall be exempt fromt taxation
d. The tax laws cannot apply to the property of foreign governments

Answer 84

The tax laws cannot apply to the property of foreign governments

Question 85

Exemption from tax is a privilege, which is being looked upon by law with disfavor because everyone should be sharing the burden of taxation. On account of this view, exemption from tax is construed strictly against the taxpayer, except in certain situations like:
a. Exemption is granted to the impoverished sector in certain situation
b. Exemption relates to a public official
c. Exemption referes to public property
d. All of the above

Answer 85

Exemption is granted to the impoverished sector in certain situation

Question 86

Tax exemption is made different from tax amnesty:
a. It is a privilege or freedom from tax burden
b. It allows immunity all criminal, civil, and adminstrative liabilities arising from non-payments of taxes
c. Amount foregone by the government is substantial
d. It applies to all past, present and future tax obligations

Answer 86

It is a privilege or freedom from tax burden

Question 87

Statement 1: Tax exemption applies only to government entities that exercise proprietary functions
Statement 2: All government entities regardless of their functions are exempted from taxes because it would be impractical for the government to be taxing itself

a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer 87

FALSE. Tax exemption applies only to government entities that exercise proprietary functions
FALSE. All government entities regardless of their functions are exempted from taxes because it would be impractical for the government to be taxing itself

Question 88

Which of the following statements correctly described the tax exemptions of the government?
I. The State cannot be taxed without its consent, otherwise, such is derogation to its sovereignty
II. Tax exemption applies only to governmental entities through which the government immediately and directly exercises its governmental functions like the Department of Justice, Department of Foreign Affairs, Philippine National Police, and the like
III. Government agencies performing government functions are exempt from tax unless expressly taxed, while those performing proprietary functions are subject to tax unless expressly exempted

Answer 88

I. The State cannot be taxed without its consent, otherwise, such is derogation to its sovereignty
II. Tax exemption applies only to governmental entities through which the government immediately and directly exercises its governmental functions like the Department of Justice, Department of Foreign Affairs, Philippine National Police, and the like
III. Government agencies performing government functions are exempt from tax unless expressly taxed, while those performing proprietary functions are subject to tax unless expressly exempted

Question 89

Which of the following is to be regarded as tax minimization through legal means?
a. Not declaring all taxable income
b. Padding of expenses for deduction form income
c. Opting to transfer the property through sale rather than through donation where tax liability would be higher
d. All of the above

Answer 89

Opting to transfer the property through sale rather than through donation where tax liability would be higher

Question 90

Which of the following is correct?
a. Tax avoidance, or tax minimization, through legal means, is not punishable by law
b. Deliberate reduction of taxable income that has been received is an example of tax avoidance
c. Evasion of the tax takes place only when there are no proceeds on the part of the government
d. All of the above

Answer 90

Tax avoidance, or tax minimization, through legal means, is not punishable by law

Question 91

Statement 1: An attempt to minimize one’s tax constitute fruad, taxpayer may diminish his liability by any means which the law permits
Statement 2: To avoid is legal but to evade is illegal. The legal rights of the taxpayer to decrease the amount of what otherwise would be his taxes, altogether avoid them, by means which the law permits, cannot be doubted.

a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer 91

FALSE. An attempt to minimize one’s tax constiture fruad, taxpayer may diminish his liability by any means which the law permits
TRUE. To avoid is legal but to evade is illegal. The legal rights of the taxpayer to decrease the amount of what otherwise would be his taxes, altogether avoid them, by means which the law permits, cannot be doubted.

Question 92

Which of the following is an element of double taxation?
I. Same kind of tax
II. Same subject matter
III. Same taxable period
IV. Same taxing authority

Answer 92

I. Same kind of tax
II. Same subject matter
III. Same taxable period
IV. Same taxing authority

Question 93

Double taxation in its general sense means taxing the same subject twice during the same taxing period. In this sense, double taxation:
a. Violates substantive due process
b. Does not violate substantive due process
c. Violates the right to equal protection
d. Does not violate the right to equal protection

Answer 93

Violates the right to equal protection

Question 94

Statement 1: There can be double taxation where the state merely imposes tax on every separate and distinct business in which a person is engaged
Statement 2: There is no objectionable double taxation if the tenements in the city are subjects to real estate tax while the business of leasing said property are also subject to real dealer’s tax

a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer 94

FALSE. There can be double taxation where the state merely imposes tax on every separate and distinctbusiness in which a person is engaged
TRUE. There is no objectionable double taxation if the tenements in the city are subjects to real estate tax while the business of leasing said property are also subject to real dealer’s tax

Question 95

Ligaya Educational Foundation, Inc., a stock educational institution organized for profit, decided to lease for commercial use a 1,500 sq. m. portion of the school. The school actually, directly, and exclusively used the rents for the maintenance of its school buildings, including payment of janitorial services. Is the leased portion subject to real property tax?
a. Yes, since Ligaya is a stock and for-profit educational institution
b. No, since the school actually, directly, and exclusively used the rents for educational purposes
c. No, but it may be subject to income taxation on the rents it receives
d. Yes, since the leased portion is not acutally, directly, and exclusively used for educational purposes

Answer 95

Yes, since Ligaya is a stock and for-profit educational institution