TAX: CHAPTER 1

General Principles of Taxation; Multiple Choice

Taxation as distinguished from police power and power of eminent domain.

A. Property is taken to promote the general welfare.

B. Maybe exercised only by the government.

C. Operates upon the whole citizenry.

D. There is generally no limit as to the amount that may be imposed.

D. There is generally no limit as to the amount that may be imposed.

The following are constitutional limitations, except

A. No imprisonment for non-payment of poll tax.

B. Non-impairment of the obligation of contracts.

C. Rule of uniformity and equity in taxation.

D. Exemption from income tax of charitable institutions, cemeteries, churches, personage or convents appurtenant thereto, as well as all lands, buildings and improvements actually, directly and exclusively used for religious, charitable and educational purposes.

D. Exemption from income tax of charitable institutions, cemeteries, churches, personage or convents appurtenant thereto, as well as all lands, buildings and improvements actually, directly and exclusively used for religious, charitable and educational purposes.

Which of the following statements is correct?

A. The President is authorized to increase or decrease national internal revenue tax rates.

B. One of the nature of taxation is the reciprocal duties of protection and support between the state and subjects thereof.

C. Every sovereign government has the inherent power to tax.

D. Income tax in an indirect tax.

C. Every sovereign government has the inherent power to tax.

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

D. Improvement of a subdivision road

Which is not an essential characteristic of a tax?

A. It is unlimited as to amount.

B. It is payable in money.

C. It is proportionate in character.

D. It is an enforced contribution.

A. It is unlimited as to amount.

Special assessment is an enforced proportional contribution from owners of land especially benefited by public improvement. Which one of the following is not considered as one of its characteristics?

A. It is levied on land.

B. It is based on the government’s need of money to support its legitimate objectives.

C. It is not a personal liability of the persons assessed.

D. It is based solely on the benefit derived by the owners of the land.

B. It is based on the government’s need of money to support its legitimate objectives.

It is the privilege of not being imposed a financial obligation to which others are subject.

A. Tax incentive

B. Tax exemption

C. Tax amnesty

D. Tax credit

B. Tax exemption

As to scope of the legislative power to tax, which is not correct?

A. 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.

B. In the absence of any constitutional prohibition, Congress has the right to levy a tax of any amount it sees fit.

C. The discretion of Congress in imposing taxes extends to the mode, method or kind of tax, unless restricted by the constitution.

D. The sole arbiter of the purpose or which taxes shall be levied is Congress, provided the purpose is public and the courts may not review the levy of the tax to determine whether or not the purpose is public.

D. The sole arbiter of the purpose or which taxes shall be levied is Congress, provided the purpose is public and the courts may not review the levy of the tax to determine whether or not the purpose is public.

Which of the following is a nature of taxation?

A. The power is granted by legislative action.

B. It is essentially an administrative function.

C. It is generally payable in money.

D. Without it the state can continue to exist.

A. The power is granted by legislative action.

Which of the following is not a determinant of the place of taxation?

A. Source of the income

B. Citizenship of the taxpayer

C. Residence of the taxpayer

D. Amount of tax to be imposed

D. Amount of tax to be imposed

Which of the following statements is not correct?

A. An inherent limitation of taxation may be disregarded by the application of a constitutional limitation.

B. The property of an educational institution operated by a religious order is exempt from property tax, but its income is subject to income tax.

C. The prohibition of delegation by the state of the power of taxation will still allow the BIR to modify the rules in time for filing of returns and payment of taxes.

D. The power of taxation is shared by the legislative and executive departments of the government.

C. The prohibition of delegation by the state of the power of taxation will still allow the BIR to modify the rules in time for filing of returns and payment of taxes.

Statement 1 – The point on which tax is originally imposed is impact of taxation.

Statement 2 – Eminent domain is inferior to non-impairment clause of the constitution.

Statement 3 – As a rule, taxes are subject to set-off or compensation.

Statement 4 – As a rule, provisions on the validity of tax exemptions are resolved liberally in favor of the taxpayer.

A. 1 - True, 2 - False, 3 - False, 4 - True

B. 1 - False, 2 - True, 3 - True, 4 - False

C. 1 - True, 2 - True, 3 - False, 4 - False

D. 1 - False, 2 - False, 3 - True, 4 - True

C. 1 - True, 2 - True, 3 - False, 4 - False

A tax system where the revenues are supplied mostly by indirect taxes.

A. Schedular

B. Proportional

C. Progressive

D. Regressive

C. Progressive

A tax system where the greater bulk of the tax revenues is derived by direct taxes.

A. Schedular

B. Proportional

C. Progressive

D. Regressive

C. Progressive

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.

D. Tax must be for the public purpose.

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.

C. No appropriation of public money for religious purposes.

They exist independent of the constitution being fundamental powers of the state, except

A. Power of Taxation

B. Police Power

C. Power of Imminent Domain

D. Power of Recall

D. Power of Recall

The power to acquire private property upon payment of just compensation for public purpose

A. Power of Taxation

B. Police Power

C. Power of Imminent Domain

D. Power of Recall

C. Power of Imminent Domain

The power to regulate liberly and property to promote the general welfare.

A. Power of Taxation

B. Police Power

C. Power of Imminent Domain

D. Power of Recall

B. Police Power

The power to demand proportionate contributions from persons and property to defrat the expenses of the government.

A. Power of Taxation

B. Police Power

C. Power of Imminent Domain

D. Power of Recall

A. Power of Taxation

Basic Principles of a sound tax system, except

A. Fiscal Adequacy

B. Equality or Theoretical Justice

C. Administrative Feasibility

D. Intellectual Sensitivity

D. Intellectual Sensitivity

The tax imposed should be proportionate to the taxpayer’s ability to pay.

A. Fiscal Adequacy

B. Equality or Theoretical Justice

C. Administrative Feasibility

D. Intellectual Sensitivity

B. Equality or Theoretical Justice

The sources of revenue as a whole, should be sufficient to meet the demands of public expenditures.

A. Fiscal Adequacy

B. Equality or Theoretical Justice

C. Administrative Feasibility

D. Intellectual Sensitivity

A. Fiscal adequacy

The tax laws must be capable of convenient, just and effective administration.

A. Fiscal Adequacy

B. Equality or Theoretical Justice

C. Administrative Feasibility

D. Intellectual Sensitivity

C. Administrative Feasibility

Persons or things belonging to the same class shall be taxed at the same rate.

A. Simplicity in taxation

B. Reciprocity in taxation

C. Equality in taxation

D. Uniformity in taxation

D. Uniformity in taxation

The tax should be proportional to the relative value of the property to be taxed.

A. Simplicity in taxation

B. Reciprocity in taxation

C. Equality in taxation

D. Uniformity in taxation

C. Equality in taxation

The following are the nature of taxation, except

A. Inherent in sovereignty

B. Essentially legislative in character

C. Subject to inherent and constitutional limitation

D. Subject to approval by the people

D. Subject to approval by the people

It literally means “place of taxation”; the country that has the power and jurisdiction to levy and collect the tax.

A. Basis of taxation

B. Situs of taxation

C. Scope of taxation

D. Theory of taxation

B. Situs of taxation

The existence of the government is a necessity and that the state has the right to compel all individuals and property within its limits to contribute.

A. Basis of taxation

B. Situs of taxation

C. Scope of taxation

D. Theory of taxation

D. Theory of taxation

The reciprocal duties of support and protection between the people and the government.

A. Basis of taxation

B. Situs of taxation

C. Scope of taxation

D. Theory of taxation

A. Basis of taxation

Subject to inherent and constitutional limitations, the power of taxation is regarded as supreme, plenary, unlimited and comprehensive.

A. Basis of taxation

B. Situs of taxation

C. Scope of taxation

D. Theory of taxation

C. Scope of taxation

Our National Internal Revenue Laws are

A. Political in nature

B. Penal in nature

C. Criminal in nature

D. Civil in nature

D. Civil in nature

The levying or imposition of tax and the collection of the tax processes which constitute the taxation system.

A. Basis of taxation

B. Aspects of taxation

C. Nature of taxation

D. Theory of taxation

B. Aspects of taxation

The process or means by which the sovereign, through it's law-making body raises income to defray the expenses of the government

A. Toll

B. License Fee

C. Taxation

D. Assessment

C. Taxation

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

B. License Fee

C. Taxes

D. Assessment

C. Taxes

An escape from taxation where the tax burden is transferred by the one on whom the tax is imposed or assessed to another.

A. Shifting

B. Exemption

C. Transformation

D. Capitalization

A. Shifting

An escape from taxation where the producer or manufacturer pays the tax and endeavors to recoup himself by improving his process of production, thereby turning out his units of products at a lower cost.

A. Shifting

B. Exemption

C. Transformation

D. Capitalization

C. Transformation

An escape from taxation where there is a reduction in the price of the taxed object equal to the capitalized value of future taxes which the taxpayer expects to be called upon to pay.

A. Shifting

B. Exemption

C. Transformation

D. Capitalization

D. Capitalization

The use of illegal or fraudulent means to avoid or defeat the payment of tax.

A. Exemption

B. Shifting

C. Avoidance

D. Evasion

D. Evasion

The use of legal or permissible means to minimize or avoid taxes

A. Exemption

B. Shifting

C. Avoidance

D. Evasion

C. Avoidance

Synonymous to tax evasion

A. Tax dodging

B. Tax minimization

C. Tax exemption

D. Tax evasion

A. Tax dodging

Synonymous to tax avoidance

A. Tax dodging

B. Tax minimization

C. Tax exemption

D. Tax evasion

B. Tax minimization

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.

C. Strictly against the government and liberally in favor of the taxpayer.

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.

D. Liberally in favor of the government and strictly against the taxpayer.

In case of conflict between the Tax Code and the Philippine Accounting Standards (PAS).

A. PAS shall prevail over the Tax Code.

B. Tax Code shall prevail over PAS.

C. PAS and Tax Code shall be both disregarded.

D. The taxpayer may choose between the PAS or the Tax Code.

B. Tax Code shall prevail over PAS

Tax of a fixed amount imposed upon all persons residing within a specified territory without regard to their property or occupation they may be engaged.

A. Personal, poll or capitation

B. Property

C. Excise

D. Regressive

A. Personal, poll or capitation

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

B. Property

C. Excise

D. Regressive

B. Property

Tax imposed upon performance of an act, the enjoyment of privilege or the engaging in an occupation.

A. Personal, poll or capitation

B. Property

C. Excise

D. Regressive

C. Excise

Tax which is demanded from the person whom the law intends or desires to pay it.

A. Direct

B. Indirect

C. Excise

D. Percentage

A. Direct

Tax which is demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another.

A. Direct

B. Indirect

C. Excise

D. Percentage

B. Indirect

Tax which imposes a specific sum by the head or number or by some standard of weight or measurement and which requires no assessment other than a listing or classification of the objects to be taxed.

A. Specific

B. Ad-valorem

C. Excise

D. Income

A. Specific

Tax of a fixed proportion of the amount or value of the property with respect to which the tax is assessed.

A. Specific

B. Ad-valorem

C. Excise

D. Income

B. Ad-valorem

Tax based on a fixed percentage of the amount of property, income or other basis to be taxed.

A. Proportional

B. Progressive

C. Regressive

D. Indirect

A. Proportional

Tax where the rate decreases as the tax base increases.

A. Proportional

B. Progressive

C. Regressive

D. Indirect

C. Regressive

Tax where the rate increases as the tax base increases.

A. Proportional

B. Progressive

C. Regressive

D. Indirect

B. Progressive

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.

C. Exemptions from taxation are highly disfavored in law and he who claims tax exemption must be able to justify his claim or right.

D. The House of Representatives has the duty and the exclusive power of constructing and interpreting tax laws.

D. The House of Representatives has the duty and the exclusive power of constructing and interpreting tax laws.

The strongest of all inherent powers of the state because without it, the government can neither survive nor dispense any of its other powers and functions effectively.

A. Police Power

B. Power of Eminent Domain

C. Power of Taxation

D. Power of Recall

C. Power of Taxation

This power is superior to the non-impairment clause and is broader in application because it is a power to make and implement laws.

A. Power of Taxation

B. Power of Recall

C. Power of Eminent Domain

D. Police Power

D. Police Power

Which of the following statements is not correct?

A. An inherent limitation of taxation may be disregarded by the application of a constitutional limitation.

B. Income tax liabilities shall be paid by the inhabitants even if foreign invaders occupy our country.

C. Taxes may be imposed retroactively by law, but unless so expressed by such law, these taxes must only be imposed prospectively.

D. Tax laws are either political or penal in nature.

D. Tax laws are either political or penal in nature.

Which of the following is not a constitutional limitation on the Power of Taxation?

A. No person shall be deprived of life , liberty or property without due process of law.

B. No person shall be denied the equal protection of the law.

C. No person shall be imprisoned for debt or non-payment of tax.

D. No law granting any tax exemption shall be passed without the concurrence of a majority of all the members of Congress.

C. No person shall be imprisoned for debt or non-payment of tax.

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.

C. One in which there is generally no limit on the amount that maybe imposed.

D. Limited to the cost of regulation.

C. One in which there is generally no limit on the amount that maybe imposed.

Police power as distinguished from the power of eminent domain:

A. Just compensation is received by the owner of the property.

B. Maybe exercised by private individuals.

C. May regulate both liberty and property.

D. Property is taken by the government for public purpose.

C. May regulate both liberty and property.

A tax wherein both the incidence 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. Value added tax

C. Indirect tax

D. Percentage tax

A. Direct Tax

Which one of the following is not a characteristic or element of a tax?

A. It is an enforced contribution.

B. It is legislative in character.

C. It is based on the ability to pay.

D. It is payable in money or in kind.

D. It is payable in money or in kind.

Tax as distinguished from license fees:

A. Limited to cover cost of regulation.

B. A regulatory measure.

C. Non-payment does not necessarily render the business illegal.

D. Imposed in the exercise of police power.

C. Non-payment does not necessarily render the business illegal.

The power of taxation is exercised by

A. The President

B. The Supreme Court

C. Bureau of Internal Revenue

D. Congress

D. Congress

One of the characteristics of internal revenue laws is that they are:

A. Criminal in nature

B. Penal in nature

C. Political in nature

D. Generally prospective in application

D. Generally prospective in application

Which of the following is not an example of excise tax:

A. Transfer tax

B. Sales tax

C. Real property tax

D. Income tax

C. Real property tax

The following are similarities of the inherent power of taxation, eminent domain, and police power, except one:

A. Are necessary attributes of sovereignty

B. Superior to the non-impairment clause of the constitution.

C. Compensation is received.

D. Are legislative in character.

B. Superior to the non-impairment clause of the constitution.

Which of the following is not a scheme of shifting the incidence of taxation?

A. The manufacturer transfers the tax to the consumer by adding the tax to the selling price of the goods sold;

B. The purchaser asks for a discount or refuse to buy at regular prices unless it is reduced by the amount equal to the tax he will pay;

C. Changing the terms of the sale like FOB shipping point in the Philippines to FOB destination abroad, so that the title passes abroad instead of in the Philippines;

D. The manufacturer transfers the sales tax to the distributor, then in turn to the wholesaler, in turn to the retailer and finally to the consumer.

C. Changing the terms of the sale like FOB shipping point in the Philippines to FOB destination abroad, so that the title passes abroad instead of in the Philippines;

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.

D. The provisions of taxation in the Philippine Constitution are grants of power and not limitations on taxing powers.

License fee as distinguished from tax:

A. Non-payment does not necessary render the business illegal.

B. A revenue raising measure

C. Imposed in the exercise of taxing power.

D. Limited to cover cost of regulation.

D. Limited to cover cost of regulation.

Value-added tax is an example of:

A. Graduated tax

B. Progressive tax

C. Regressive tax

D. Proportional tax

D. Proportional tax

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

B. Theoretical Justice

C. Administrative Feasibility

D. Inherent in sovereignty

B. Theoretical Justice

The most superior and least limitable among the fundamental powers of the state:

A. Power of Recall

B. Police Power

C. Power of Taxation

D. Power of Eminent Domain

B. Police Power

One of the characteristics of a tax is that:

A. It is generally based on contact.

B. It is generally payable in money.

C. It is generally assignable.

D. It is generally subject to compensation.

B. It is generally payable in money.

The following are the characteristics of our internal revenue laws except:

A. Political in nature.

B. Civil in nature.

C. Generally prospective in application.

D. May operate retrospectively if congress so provides.

A. Political in nature

Which of the following has no power of taxation?

A. Provinces

B. Cities

C. Barangays

D. Barrios

D. Barrios

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 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 a Senate version approved separately, and then consolidated, with both houses approving the consolidation version.

D. May be recommended by the President to Congress.

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

Tax as distinguished from special assessment:

A. not as a personal liability of the person assessed.

B. based wholly on benefits

C. exceptional as to time and place

D. based on necessity and is to raise revenues

D. based on necessity and is to raise revenues

Under this basic principle of a sound tax system, the Government should not incur a deficit:

A. Theoretical justice

B. Administrative feasibility

C. Fiscal Adequacy

D. Uniformity in taxation

C. Fiscal Adequacy

Which of the following may not raise money for the government?

A. Power of Taxation

B. Police Power

C. Eminent Domain

D. License Fee

C. Eminent DOmain

No person shall be imprisoned for non-payment of:

A. Excise Tax

B. Value Added Tax (VAT)

C. Income Tax

D. Poll Tax

D. Poll Tax

This is a demand of ownership:

A. License fee

B. Tax

C. Toll

D. Customs duties

C. Toll

Income tax is generally regarded as:

A. Excise tax

B. Tax on persons

C. Property tax

D. Tax on profits

A. Excise Tax

Which of the following is not 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.

D. That there is no benefit derived from the tax.

D. That there is no benefit derived from the tax.

It is important to know the source of income for income tax purposes, i.e. from within or without the Philippines because

A. The Philippines imposes income tax on income from sources within and without of a non-resident citizen.

B. Some individual taxpayers are citizens while others are aliens.

C. Separate graduated rates are imposed on different types of income.

D. Some taxpayers are taxed on their worldwide income while others are taxable only upon income from sources within the Phils.

D. Some taxpayers are taxed on their worldwide income while others are taxable only upon income from sources within the Phils.

A law granting tax exemption requires the concurrence of

A. Majority vote of members of congress

B. 2/3 vote of members of Congress.

C. 3/4 vote of members of Congress.

D. Unanimous vote of members of Congress.

A. Majority vote of members of congress

No person shall be imprisoned for debt or non-payment of poll tax. This is a(an)

A. Inherent Limitation

B. Constitutional Limitation

C. International Limitation

D. Territorial Limitation

B. Constitutional Limitation

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 Phils. The contract is

A. Void, unless the President ratifies

B. Void, because the power to grant tax exemption is vested in Congress.

C. Valid, if the President has authorized the officers to enter into such contract.

D. Valid, because the purpose is to promote public welfare.

B. Void, because the power to grant tax exemption is vested in Congress.

Tax as distinguished from debt

A. No imprisonment for non-payment

B. May be paid in kind

C. Based on contract

D. Based on law

D. Based on law

Congress can impose a tax at any amount and at anytime shows that

A. Taxation is an inherent power of the state.

B. Taxation is essentially a legislative power.

C. Taxation is a very broad power of the state.

D. Taxation is based on taxpayers’ ability to pay.

C. Taxation is a very broad power of the state.

The amount required is dictated by the needs of the government in:

A. License fee

B. Tax

C. Toll

D. Debts

B. Tax

A charge imposed on land for special benefits derived resulting from public improvements.

A. Tax

B. Toll

C. License

D. Special assessment

D. Special assessment

Which of the following are National Internal Revenue Taxes?

I. Income Tax

II. Estate Tax

III. Donor’s Tax

IV. Value Added Tax

V. Other Percentage Tax

VI. Excise Tax

VII. Documentary Stamp Tax

A. I, II, III, IV

B. I, II, III, IV, V

C. I, II, III, IV, V, VI

D. I, II, III, IV, V, VII

D. I, II, III, IV, V, VII

The Bureau of Internal Revenue shall have a chief and four (4) assistant chiefs to be known as

A. Secretary and Assistant Secretaries

B. Secretary and Undersecretaries

C. Commissioner and Assistant Commissioners

D. Commissioners and Deputy Commissioners

D. Commissioners and Deputy Commissioners

The three fundamental powers of the state are:

I. Inherent in the state and may be exercised by the state without need of any constitutional grant.

II. Not only necessary but indispensable

A. True; True

B. True; False

C. False; True

D. False; False

A. True; True

The three fundamental powers of the state are

I. Methods by which the state interfere with private rights.

II. Exercised primarily by the legislature

A. True; True

B. True; False

C. False; True

D. False; False

A. True; True

I. Police power regulates both liberty and property while the power of eminent domain and the power of taxation affect only property rights.

II. 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

A. True; True

B. True; False

C. False; True

D. False; False

A. True; True

I. The property taken in police power is destroyed while the property taken under the power of eminent domain and power of taxation are not destroyed.

II. In power of taxation, the compensation received is the protection afforded to the citizens; in police power the compensation received is the altruistic feeling that somehow you contributed to the promotion of the general welfare; in power of eminent domain, the compensation received is the just compensation paid for the property taken.

A. True; True

B. True; False

C. False; True

D. False; False

A. True; True