Unit 4. Taxation

Question 1

_________ is the power of the state to demand proportionate contribution from persons and property in order to promote public welfare to defray the expenses of the government.

Answer 1

Taxation

Question 2

Purpose of Taxation (2)

Answer 2

1. Primary (fiscal purpose)
2. Secondary (sumptuary/compensatory purpose)

Question 3

___________ (_________ purpose) – to raise revenue and funds to defray the necessary expenses of the government.

Answer 3

Primary; fiscal

Question 4

___________ (____________________- purpose) – to regulate, to promote general welfare, to reduce social inequality, and to promote economic growth.

Answer 4

Secondary; sumptuary/compensatory

Question 5

Basic Principle of Sound Tax System (3)

Answer 5

1. Fiscal Adequacy
2. Administrative Feasibility
3. Theoretical Justice

Question 6

______________ – the sources of government revenue must be sufficient to meet government expenditures and other public needs.

Answer 6

Fiscal Adequacy

Question 7

_________________ – tax law must be capable of convenient, just and effective administrative – free from confusion and uncertainty.

Answer 7

Administrative Feasibility

Question 8

_________________ – A good tax system must be based on the taxpayer’s ability to pay. This suggests that taxation must be progressive conformably with the constitutional mandate that congress shall be evolve a progressive system of taxation.

Answer 8

Theoretical Justice

Question 9

Theoretical Justice suggests that taxation must be ____________ conformably with the constitutional mandate that congress shall be evolve a ___________ system of taxation.

Answer 9

progressive; progressive

Question 10

Philippine Tax Structure (2)

Answer 10

1. Territorial tax system
2. Progressive tax rates

Question 11

The country imposes a ________________, meaning only Philippine-sourced income is subject to Philippine taxes.

Answer 11

territorial tax system

Question 12

The country imposes a territorial tax system, meaning only __________________ income is subject to Philippine taxes.

Answer 12

Philippine-sourced

Question 13

The Philippines taxes its resident citizens on their _____________ income.

Answer 13

worldwide

Question 14

Non-resident citizens and aliens, whether or not resident in the Philippines, are taxed only on income from sources within the _______________.

Answer 14

Philippines

Question 15

It also uses _________________________, wherein the higher the income is, the higher the tax rates used. This is to ensure _______ among the income earners.

Answer 15

progressive tax rates; equity

Question 16

Philippine Tax Laws (5)

Answer 16

1. The Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Act)
2. Tax Reform for Acceleration and Inclusion (TRAIN) Law
3. Article VI, Section 28 of the Constitution;
4. The National Internal Revenue Code; and
5. Local Government Code of 1991.

Question 17

Constitutional Limitations (1987) - 15

Answer 17

1. Due Process of Law
2. Equal Protection of the Law
3. Uniformity in Taxation
4. Progressive System of Taxation
5. Non-imprisonment for Non-payment of Poll Tax
6. Free Worship Rule
7. Exemption of Religion, Charitable or Education Entities, Non-profit Cemeteries, Churches and Mosque from Property Taxes
8. Non-Appropriation of Public Funds for the Benefit of any Church or System of Religion
9. Concurrence of a Majority of ALL Members of Congress to Pass Law Granting Exemption
10. Tax Bills shall Originate Exclusively in the House of Representatives, but Senate may Propose Amendments
11. Non-Diversification of Tax Collection
12. Non-Delegation of the Power of Taxation
13. Non-Impairment of the Supreme Court Jurisdiction
14. Each Local Government Unit Shall Exercise the Power to Create its Own Sources of Revenue
15. Exemption from Taxes of the Revenues and Assets of Non-Profit, Non-Stock Educational Institutions

Question 18

____________________: No one should be deprived of his life, or property without due process of law.

The law established procedures which must be adhered in making assessments and in enforcing collections.

Failure of the government to observe their rules violates the requirement of due process.

Answer 18

Due Process of Law

Question 19

_________________________: Taxpayers under similar circumstances and conditions should be treated equally both in terms of rights conferred and obligations imposed.

Answer 19

Equal Protection of the Law

Question 20

_________________________: Requires the uniform application and operation, without discrimination, of the tax in every place where the subject of tax is found.

Answer 20

Uniformity in Taxation

Question 21

Tax rates increase as the tax base increase. This is consistent with the taxpayer’s ability to pay and reduces social inequality.

Answer 21

Progressive System of Taxation

Question 22

No one shall be imprisoned for mere inability to pay debt. Non-payment of poll tax is only punishable by a surcharge.

Answer 22

Non-imprisonment for Non-payment of Poll Tax

Question 23

Properties and revenues of religion institutions such as offerings are not subject to tax. This exemption does not extend to income from properties or activities of religious institutions that are proprietary or commercial in nature.

Answer 23

Free Worship Rule

Question 24

Constitutional exemptions from property tax applies for properties actually directly, and exclusively used for chartable, religious and educational.

Answer 24

Exemption of Religion, Charitable or Education Entities, Non-profit Cemeteries, Churches and Mosque from Property Taxes

Question 25

To support freedom of religion, the government should not favor any particular system of religion by appropriating public funds or property in support thereof.

Answer 25

Non-Appropriation of Public Funds for the Benefit of any Church or System of Religion

Question 26

Tax should never be diversified or used for private purpose.

Answer 26

Non-Diversification of Tax Collection

Question 27

Congress cannot take away from the Supreme Court the power given to it by the Constitution as the final arbiter of tax cases.

Answer 27

Non-Impairment of the Supreme Court Jurisdiction

Question 28

This is a constitutional recognition of the local autonomy of local governments and an express delegation of the taxing power.

Answer 28

Each Local Government Unit Shall Exercise the Power to Create its Own Sources of Revenue

Question 29

Taxes in the Philippines (8)

Answer 29

1. Capital Gains Tax
2. Documentary Stamp Tax
3. Donor’s Tax
4. Estate Tax
5. Income Tax
6. Percentage Tax
7. Value-Added Tax
8. Excise Tax

Question 30

________________ is a tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro sales and other forms of conditional sale.

Answer 30

Capital Gains Tax

Question 31

___________________ is a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, rights, or property incident thereto.

Answer 31

Documentary Stamp Tax

Question 32

___________ is a tax on a donation or gift, and is imposed on the gratuitous transfer of property between two or more persons who are living at the time of the transfer.

Answer 32

Donor’s Tax

Question 33

____________ is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers which are made by law as equivalent to testamentary disposition.

Answer 33

Estate Tax

Question 34

___________- is a tax on all yearly profits arising from property, profession, trades or offices or as a tax on a person’s income, emoluments, profits and the like.

Answer 34

Income Tax

Question 35

________________ is a business tax imposed on persons or entities who sell or lease goods, properties or services in the course of trade or business whose gross annual sales or receipts do not exceed P550,000 and are not VAT-registered.

Answer 35

Percentage Tax

Question 36

________________ is a business tax imposed and collected from the seller in the course of trade or business on every sale of properties (real or personal) lease of goods or properties (real or personal) or vendors of services. It is an indirect tax, thus, it can be passed on to the buyer.

Answer 36

Value-Added Tax

Question 37

_____________ is a tax on the production, sale or consumption of a commodity in a country. It applies to goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition; and to imported goods.

Answer 37

Excise Tax

Question 38

_____________________________ is the tax withheld from individuals receiving purely compensation income.

Answer 38

Withholding Tax on Compensation

Question 39

Three kinds of Withholding Tax (3)

Answer 39

1. Expanded Withholding Tax
2. Final Withholding Tax
3. Withholding Tax on Government Money Payments

Question 40

________________________ is a kind of withholding tax which is prescribed only for certain payors and is not creditable against the income tax due of the payee for the taxable year. Income Tax withheld constitutes the full and final payment of the Income Tax due from the payee on the said income.

Answer 40

Final Withholding Tax

Question 40

___________________ is a kind of withholding tax which is prescribed only for certain payors and is creditable against the income tax due of the payee for the taxable quarter year.

Answer 40

Expanded Withholding Tax

Question 41

_______________________________________________ is the withholding tax withheld by government offices and instrumentalities, including government-owned or -controlled corporations and local government units, before making any payments to private individuals, corporations, partnerships and/or associations.

Answer 41

Withholding Tax on Government Money Payments