GENERAL PRINCIPLES OF TAXATION Dela Cruz/De Vera/Lopez/Liamado 1, The pring purpose of taxation is i To encourage the growth of home industries through the proper use of tax exemptions and tax incentives b. To implement the police power of the state ©. The reduce excessive inequalities of wealth d. To raise revenues for needs 2. The aspects of taxation are a. Legislative in character b, Executive in character c. Shared by the legislative and executive departments 4d. Judicial in character 3. Taxation as distinguished from police power and power of eminent domain a. Property is taken to promote the general welfare b. May be exercised only by the government ©. Operates upon the whole citizenry d. There is generally no limit as to the amount that may be imposed 4. Which of the inherent powers may be exercised even by public service corporations and public entities a. Power of taxation c. Power of eminent domain b. Police power d. AandC 5. Which of the following statements is correct? a. Income tax is an indirect tax. b. Our National Internal Revenue Laws are criminal in nature. c. The theory of taxation states that the power of taxation is supreme, plenary, unlimited, and comprehensive. d. Taxation is subject to inherent and constitutional limitations. 6. 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 d. Tax must be for public purpose 7. This is a constitutional limitation on the power of taxation a. Tax laws must be applied within the territorial juris b. Exemption of government agencies and instrument c. No appropriation of public money for religious d. Power to tax cannot be delegated to private p 8. The power to acquire private property upon a. Power of taxation b. Police power b, Power of taxation10. The tax imposed should be proportionate to the taxpayer's ability to pay a. Fiscal adequacy c, Administrative feasibility >, (Baualifjer theoretical justiced. Economic consistency 11. The sources of revenue as a whole, should be~sufficiént to meet the demands of public expenditures - a if c. Administrative feasibility b. Equality or theoretical justice d. Revenue generation 12. The tax laws must be capable of convenient, just and effective administration . Fiscal adequacy c. Administrative feasibility — b. Equality or theoretical justice d. Psychological compatability 13, Statement 1 — The point on which a tax is originally imposed is impact of taxation 7 ‘Statement 2 — Police power is superior to the non-impairment clause of the constitution T Statement 3~As a rule, taxes are subject to set-off or compensation F Statement 4— As a rule, provisions on the validity of tax exemptions are resolved liberally in favor of the taxpayer icy against tue tnypayer F Statement 1 Statement2 Statement3 Statement 4 a True False False False b. True True False True c. False | False d. False True False False 14, Enforced proportional contributions from persons and property levied by the state by virtue of its sovereignty for the support of the government and for all public needs a Toll Cs b. License fee d. Asessment 15. Persons or things belonging to the a. Simplicity in taxation, b. Reciprocity in taxation 16. Which is not an essential characteristic of a tax? ¢, Itis proportionate in character a b. Itis payable in money d. It is an enforced contribution 17. Special assessment is an enforced proportional contribution from owners of land especially benefited by the public improvement. Which one of the following ig not considered as one of its characteristics? : a. It is levied on land jectives b c. It is nota personal ity of the persons assessed d. Itis based solely on the benefit derived by the owners of the land 18, It is the privilege of not being imposed a financial obligation to which others are subject a, Tax incentive c. Tax amnesty a d, Tax credit 19, As to scope of the legislative power to tax, which is not correct? ; mc fa. Where there are no constitutional restrictions, and provided the subjects are within the territorial jurisdiction of the state, Congress has unlimited discretion as to the persons, property or occupations to be taxed. 2 : : b. In the absence of any constitutional prohibition, the House of Representatives has the right to levy a tax of any amount it sees fit. celia iia Tae BId)|3 ©, The discretion of Congress in imposi i f re gress in imposing taxes extends to the mode, method or kind of tax, if hot restricted by the constitution. ray will tae ‘Commissioner of the purpose is public. POL PEEY ; whether or not the purpose is public. 20. Which of the following is a nature of taxation? a b. Itis essentially an administrative function . It is generally payable in money d. The state can exist without it 21. The use of illegal or fraudulent means to avoid or defeat the payment of tax a. Shifting c. Avoidance b. Exemption ~ d. (Evasion — 22. The use of legal or permissible means to minimize or avoid taxes a. Shifting °. b, Exemption . Evasion 23. Synonymous to tax evasion _ «gd a ¢. Tax exemption b. Tax minimization d. Tax shield 24, Synonymous to tax avoidance je] a. Tax dodging ¢. Tax exemption ®, Tax minimization) 4. Tax evasion 25. In case of doubt tax stafutes-are construed a. Strictly against the government and the taxpayer . Liberally in favor of the government and the taxpayer c. ly in favor of the taxpayer | 4. Liberally in favor of the government and strictly against the taxpayer 26. In 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 ¢. Strictly against the government and liberally in favor of the taxpayer a ‘taxpayer 27. Incase of conflict between the Tax Code and the Philippine Accounting Standards (PAS) a. PAS shall vail over the Tax Code = ex Cod sal val per PAS ‘ ©. PAS and Tax Code arded d. The taxpayer may choose between the PAS or the Tax Code 28, Tax of a fixed amount imposed upon all persons residing within a specified territory without to income, or occupation they may be engaged in a c. Excise b. Property d. Regressive 29. Tax imposed on personal or real property in proportion to its value or on some other reasonable method of apportionment a. Personal, poll or capitation ©. Excise b, Bees! d. Regressive 30. Tax imposed upon the performance of an act, the enjoyment of privilege or the engaging in an occupation. ‘a. Personal, pol! or capitation © b.. Property a ive Tax 87-011 the person whom the law intends or desires to pay it Indirect ©. Excise 4, Income 32. Tax which is demanded from one person in the expectation and intention that he shall indemnify imself at the exy of another a. Direct a c. Property 4. Income 33. Tax which imposes a specific sum by the head or number or by some standard of weight or ment and which requires no assessment other than a listing or classification of the to be a. b. Ad-valorem c. Excised. Income 34, Tax of a fixed proportion of the amount or value of the property with respect to which the tax is assessed a. Specific ©. Excise db. ealesy d. Percentage 35. Tax based on a fixed percentage of the amount of property, income or other basis to be taxed. a. (Proportional | —_c. Regressive b. Progressive d. Indirect 36, Tax where the rate decreases as the tax base increases a, Proportional b. Progressive c. Regressive — d. Indirect 37 Tax where the rate increases as the tax base increases a, Proportional b. c. Regressive 4. Indirect 38. Which of the following statements is not correct? a, Tax burdens shall neither be imposed nor presumed to be imposed beyond what the statute expressly and clearly states because tax statutes. should be construed strictly against the government. b, Tax exemptions, tax amnesty, tax condonations and their equivalent provisions are not presumed and, when granted, are strictly construed against the taxpayer because such provisions are highly disfavored by the government. ¢. Exemptions from taxation are highly disfavored in law and he who claims tax exemption must be able to. his claim or: d, the exclusive power of enacting, — 39. The strongestof all inherent powers of the state because without it, the government can neither survive nor dispense any of its other functions effectively. a. Police Power e b. Power of Eminent Domain d. Power of Greystone 40. This power is superior to the non-impairment clause and is‘broadep in application because it is the power to make and implement the laws. a. Power of Taxation ‘pees Domain 'b. Power of Recall | Which of the following statements is not comect?._ i! i "An inherent limitation of taxation may be disregarded by the application of a constitutional b. Tnoome tax liabilities shall be paid by the inhabitants even if foreign invaders occupy our g. Tones may be imposed retroactively by law, but unless so expressed by such law, these taxes rust only be imposed prospectivels a. Pashia cer politcal o enna ‘ Tax 87-0142. Which of the following is not a constitutional limitation on the Power of Taxation? _ No person shall be deprived of life, liberty or property without due process of law. : No shall be denied the equal protection of the law. poll tae 4. No law granting any tax exemption shall be passed without the concurrence of a majority of all the members of Congress. 43. The distinction of a tax from permit or license fee is that a tax is: a. Imposed for regulation. b. One which involves an exercise of police power. < Onsin which here general ofiniton te smn that many be imposed d. Limited to the cost of regulation. 44. Police power as distinguished from the power of eminent domain: a. Just compensation is received by the owner of the property. b. May be exercised by private individuals. c. 4. “Property is taken by the government for public purpose. 45. A tax wherein both the impact of or the liability for the payment of the tax as well as the burden of the tax falls on the same person. a. Direct tax b. VAT _, Indirect tax d. Percentage tax 46. Which one of the following ig noth characteristic or element of a tax? a. Itis an enforced contribution. b. Itis legislative in character. c. Itis based on the ability to pay. &. Iipayableln money Orla i ny 47. Tax as distinguished from license fee a. Limited to cover cost of regulation. b. Are; ‘measure. . 4d. Imposed in the exercise of police power 48. oe eee impose taxes is exercised by the 'b. Supreme Court c. BIR d. Congress 49. One of the characteristics of internal revenue laws is that they are: a. Criminal in nature . Political in nature b. Penal in nature a 50. Which of the following is fiot an example of excise tax: a. Transfer tax; . Sales tax ~~ &- Real ogee tax 4. Income tax Fit trpaiementclause a _ Are legislative in character.52. 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; Wwnuert (pone of Jer c. Forthe exercise of the power of taxation, the state can tax anything at ay time; a. 1 in the Philippine Constitution are grants of power enabling the Fat vont A power ower 53. License fee as distinguished from tax: ‘a. Non-payment does not necessary render the business illegal; b. A revenue raising measure; ‘x ¢. Imposed in the exercise of taxing power *. a. EER aoier an ch aR 54, Value-added tax is an example of a: a. Graduated tax b. Progressive tax c. Regressive tax. (Proportional tax» 55. Which tax principle is described in the statement “The more income earned by the taxpayer, the ‘more tax he has to pay.” a. Fiscal adequacy ¢, Administrative feasibility b 4d. Inherent in sovereignty 56. One of the characteristics of a tax is that: a. Itis generally based on contract; b ¢. Itis generally assign: 4. This generally subject to compensation, Ww) ipsa 57. The foll are the characteristics of our internal revenue |a\ a. b. Civil in nature; c. Generally prospective in application d. May operate retrospectively if Congress so provides 58. Which of the following statements is wrong? A revenue bill: a. Must originate from the House of Representatives and on which same bill the Senate may amendments; ©. May have a House version and a Senate version approved separately, and then consolidated, with both houses approving the consolidation version. d. May be recommended by the President to Congress. 59. Tax as distinguished from 4. nota personal liability eee b. based wholly on benefits c fi as to time and d. and’ 60. Under this basic principle of a sound ernment should not incur a deficit? a. Theoretical justice © a b. Administrative feasibility d. Ur in taxation 61. Which of the following may not raise mon a. Power of taxation c. Power 'b. Police power d. License fees62. No person shall be imprisoned for non-payment of this: a. Excise tax b. VAT —c. Income tax Poll tax 63. This is a demand of ownership: a. License fee b. Tax ¢.(Toll | 4. Customs duties 64. Income tax is getierally regarded as a. D. atax on persons ©. aproperty tax d. tax on profits 65. Which of the following isaob acceptable for legally refusing to pay the tax? a. That the right of the state to collect the tax has prescribed b. That there is no jurisdiction to collect the tax c. That the tax law was declared as unconstitutional 4. hat there sno Benefit dived fom the tx ei we 66. A law granting tax exemption requires the concurrence of a. by b, 23 vote of members of Congress. * ¢. % vote of members of Congress 4. unanimous vote of members of Congress 67. No person shall be imprisoned for debt or non-payment of a poll.tax. This is a (an) a, Inherent limitation ¢, International limitation . Constitutional limitation, _d._ Territorial limitation 68. The Department of Finance thru its officers entered into a contract with foreign investors, ‘granting them exemption from all forms of taxes to encourage investments in the Philippines. ‘The contract is a. Void, unless the President ratifies b. c, Valid, jorized the officers to enter into such contract d. Valid, because the purpose is to promote public welfare 69. Tax as distinguished from debt ‘@. no imprisonment for non-payment déet —_c. based on contract det b. may be paid in kind devt d. 70. Congress can impose a tax at any amount and at any time shows that a. Taxation is an inherent power of the estate b. Taxation is tially a legislative ©. ._ Taxation is based on taxpayers” ability to pay 71. A charge imposed onand for special benefits derived resulting from public improvements a, Tax b. Toll c. License d. 72. Which of the following are National Internal*Revenue Taxes? ‘V. OPT: I. Income tax II. Donor’s tax ‘Vil. DST IL. Estate tax Iv. VAT VIL Excise tax a Ul \ = sons : b& LU, ay. a - d.73. The three fundamental powers of the state are 1. Inherent in the state and may be exercised by the state without need of any constitutional ‘grant. II. Not only necessary but indispensable. TM. Methods by which the state interferes with pi IV. Exercised primarily by the legislature. c. Half true, half false d. None of the above a. b. All false 74, 1. Police power regulates both liberty and property while the power of the power of taxation affect only property rights. + Tl. Police power and the power of taxation may be exercised only by the government while the power of eminent domain may be exercised by some private entities. T TIL. The property taken in police power is destroyed while the property taken under the power of eminent domain and power of taxation is not destroyed. IV. In the power of taxation, the compensation received is the protection of the state afforded to its citizens; in police power, a higher standard of living is enjoyed by the citizens; and in the power of eminent domain, a citizen receives just compensation for the property taken from him. 1 a. (Alltue ) —b. All false ¢. Half true d, None of the above 75. I. The point on which a tax is originally imposed is impact of taxation. 7 TL. The point on which a tax burden finally rests or settles down is incidence of taxation. 1 IIL, Police power is;superiopto the non-impairment clause of the constitution. T ior to the non-impairment clause of the constitution IV. Power of taxation is not supe c. Half true d. None of the above (Allie! b. All false 76. I. Noperson shall be imprisoned for debt or non-payment of tax. jal av 1, Tax laws are civil and penal in nature because there are criminal penalties when they are violated. IIL Taxes may be collected in an unlimited amount. IV. License fees may be collected in an unlimited amount. a b. Two statements are true, c. Three statements are true d. All statements are true. 77. 1. Tax is imposed on persons, property, and property rights, Il. Special assessment is imposed on persons, property and property rights. Il. Tax collection is a legislative act. IV. Imposition of tax is an i a . c, Three statements are true d. All statements are true. if there is a law imposing the tax. T 78, 1. There can only be a iclude the power to destroy. 7 II. The power to tax' incly ming, tras. Tru, false c. False,79. & oe Process of law in taxation under the constitution is a grant of power. i visions in the Philippine constitution on taxation are grants of power. 5 There may be double taxation in the Philippines. IV. Taxation may be used to implement the police power of the state. a. One statement is true b. Two statements are true. ¢. Three statements are true d. All statements are true. 80. I. License fee is a charge imposed under police power. IL. Special assessment is levied on lands only. IHL. Tax is imposed regardless of public improvements. TV. Special assessment is imposed regardless of public improvements. a. One statement is true b. Two statements are true. . Threestatementsare rie) 4, All statements are true 81. 1. One of the essential characteristics of a tax is itis unlimited in amount. + IL A tax is generally unlimited because it is based on the ‘needs of the state. a, True, true . Tru, false ©. False,true False, false 82. A system of taxation where the amount of revenue from indirect taxes are more than the direct taxes is a, Progressive b. Regressive . Proportional d. Schedular 83. Congress passed a law which granted tax amnesty to those who have not paid their income taxes in 2010 but did not provide for the refund to those who paid. Is the law valid? a. No, this will encourage taxpayers not to pay their taxes b. Yes, Congress has the sole discretion of determining whom to tax c. No, the grant of amnesty is the sole prerogative of the President a cree 84, Money collected from taxation shall not be paid to any religious dignitary EXCEPT when a. gis iy ed Pape Am b. It is paid by a local government unit. c. The payment is passed in audit by the COA. d. It is part of a lawmaker’s pork barrel. 85. 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. 4d. No money, no honey theory 86. 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 a. 87. Although the power of taxation is basically legislative in character, it is NOT the function of Congressto . a. Fix with certainty the amount of taxes b. (Collect the tax levied under the law pic. ¢. Identify who should collect the tax d. Determine who should be subject to the tax88. An example ofa tax where the concept of progressivity finds application is the a n individuals b, Excise tax on petroleum products c. Value-added tax on certain art . Amusement tax on boxing exhibitions 89. The power to tax is the power to destroy. Is this always so? a. No. The Executive Branch may decide not to enforce a tax law which it believes to be confiscatory. b. Yes. The tax collectors should enforce a tax law even if it results to the destruction of the property rights of the taxpayer, c. Yes. The tax laws should always be enforced because without taxes the very existence of the State is endangered. (GGA ape a, tcane, ort rght are no mT. 7 90. This is oi an inherent limitation on the power of taxation: a. Double taxation, though not probibited, is disfavored. b. c. Public purpose of taxation 4. Territoriality 91. Revenue regulations (RRs) are: a g ssuances that publish pertinent and sonia Pare as well as amplifications, of laws, rules, regulations and precedents issued by the BIR and other agencies/offices. ¢. Issuances that provide directives or instructions; prescribe guidelines; and outline processes, operations, activities, workflows, methods and procedures necessary in the implementation of stated policies, goals, objectives, plans and programs of the Bureau in all areas of operations, except auditing. d, None of the above. 92. Revenue Memorandum Circulars (RMCs) are: a. Issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, that specify, prescribe or define rules and regulations for the effective enforcement of the provisions of the National Internal Revenue Code (NIRC) and related statutes b. amplifications, of | agencies/offices. cc. Issuances that provide directives or instructions; prescribe guidelines; and outline processes, operations, activities, workflows, methods and procedures necessary in the implementation of stated policies, goals, objectives, plans and programs of the Bureau in all areas of operations, except auditing, d. None of the above, 93, Revenue Memorandum Orders (RMOs) are: ‘a. Issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, that specify, prescribe or define rules and regulations for the effective enforcement of the provisions of the National Internal Revenue Code (NIRC) and related statutes, b.. Issuances'that publish pertinent and ete oe as well as amplifications, of laws, rules, regulations and precedents issued .IL 4, None of the above. 4 The folfowing dre the powers ofthe CIR except a ea 4 Teturn has been filed or when no return is filed, the CIR may authorize the ae of any taxpayer, and the assessment of the correct amount of tax. CIR has the power to issue Summons or Subpoena Duces Tecum to a taxpayer, an officer or employee of a taxpayer, or to any person having possession of records relating to the business of a taxpayer. ©. The CIR-has the power to take the testimony of a person, under oath, that may be relevant or material to the inquiry, 4. Mhe CIR has the power to inquire nt a wexpayer's bank deposits inal instances: b. 95. What is tax mapping? a) It is equivalent to tax assessment within the applicable reglementary periods depending on whether the taxpayer is guilty of fraud or not. BIR of a taxpayer's compliance with registration and after its business operations such as the following: branches; (b) payment of annual registration fee and iness; (c) authority to print receipts and invoices; (4) ‘on every sale; (¢) the contents of such receipts and register machines, point-of-sale machines, and” (g) registration of books of accounts. ©) This is the directory of the Revenue District Offices of the BIR with a listing of all officers and revenue agents. 4d) None of the above. b) 96. Dante Company is a hotel company registered as a local economic enterprise (“LEE”) of the City of Dapitan. The company is asserting that, as an LEE owned and operated by a local government unit (“LGU”), it should no longer be required to pay income taxes to the BIR. It ‘argues that all revenues collected by it must accrue exclusively to the city government of Dapitan. Is the company correct? a) Yes. Since the company is owned by an LGU which itself is exempt from taxes imposed by the Tax Code, the same privileges must also be accorded to it. b) Yes. Under Section 18 of the Local Government Code, LGUs are authorized to generate their own sources of revenues, and the allocation of the same shall accrue exclusively to them. ° i f an in its corporate” to tax just like any other d) None of the above. 97. Mr. Compton sells shoes in Makati through a retail store. He pays the VAT on his gross sales to ‘the BIR and the municipal license tax based on the same gross sales to the City of Makati. He ‘comes to you for advice because he thinks he is being subjected to double taxation, What advice will you give him? a, Yes, there is double taxation and it is progressive. b. The City of Makati has no taxing power. c. Yes, there is double taxation and this is ille; a it other by sting aunties ‘THE END