INCOME TAXATION

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

False

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

True

Eminent domain may be exercise even by public service corporations and public entities.

True

Police power regulates both liberty and property.

True

Taxes are raised to cover the cost of governance.

True

Toll is one of the taxes collected by the government.

False

License fees are imposed in the exercise of police power.

True

License fee is imposed to raise revenue.

False

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

True

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

True

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.

True

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

True

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

False

Tax law are civil and penal in nature because there are penalties provide in the case of violation.

False

Speciai assessment is a tax.

False

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

False

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

False

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

False

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

False

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

True

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

True

Levying of local goverment taxes should be exercise only by the legislative branch of the local government.

True

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

True

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

False

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

False

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

True

"Global system of income taxation" means separate graduated rates are imposed on different types of income.

False

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.

True

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.

True

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

False

Which of the following statement is incorrect?

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

The State, having sovereignty can enforce contributions (tax) upon its citizens even without a specific provision in the Constitution authorizing it. Which of the following will justify the foregoing statement?

Both "a" and "b"

a. It is so because the State has the supreme power to command and enforce obedience to its will from 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.

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.

Only statement 2 is correct

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:

All of the above

Which of the following statement is correct?

Both "a" and "b"

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.

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?

Lifeblood theory

On theoretical basis of taxation, which of the following statements is true?

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

Incidence of taxation means

Payment of tax

The actual effort exerted by the government to effect the exaction of what is due from the taxpayer is known as

Collection

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.

Both statements are incorrect

A law was 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:

Valid because there is a valid classification.

Congress passed a new law imposing taxes on income earned out of particular activity that was not previously taxed. The law, however, taxed incomes already earned within the fiscal year when the law took effect. Is the law valid?

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

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 Printers for back taxes corresponding to the years before the new ruling?

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

Which of the following statements will justify the enacted EVAT law?

I. The constitution simply means that the initiative for 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.

Both I and Il

Assuming Senator 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 reversion 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."

Il. 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.

I, Il and III

Being legislative in nature, the power to tax may not be delegated, except:

All of the choices

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.

Only statement 1 is correct

The power of taxation is basically legislative in character. Which If the following is a legislative function?

Fix with certainty the amount of tax - Yes

Identify who should collect the tax - Yes

Determine who should be subject to tax - Yes

As to scope of legislative power to tax, which of the following is correct?

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

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

I and Il only

Which of the following is incorrect?

Assessment of tax liability - Yes (Legislative) - No (Administrative)

Which of the following is correct?

Assessment of tax liability - Yes (Legislative) - Yes (Administrative)

Statement 1: Inherent powers of the State exist independent of the constitution.

Statement 2: The taxing power of the local goverment units precede from a constitutional grant.

Statements 1 and 2 are true

The following are characteristics of the State's power to tax, except

Neither "a" nor "b"

a. The strongest of all inherent powers of the State

b. Involves power to destroy

Levying of locai government taxes may be exercised by:

The legislative branch of the local government only

Where does taxing power of the provinces, municipalities and cities precede from?

Constitutional grant

Statement 1: Eminent domain may raise money for the government.

Statement 2: Barrios, barangays, municipalities/cities and provinces may collect taxes from its inhabitants.

Statements 1 and 2 are false

The following are the nature of taxation, except

Subject to the approval of the people

"The power to tax involves power to destroy" means:

Both "a" and "b"

a. The power to tax is viewed as the power to destroy in the sense that a lawfui 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.

There can be no tax unless there is a law imposing the tax is consistent with the doctrine of

Non-delegation of the power of tax

"The tax should be based on taxpayer's ability to pay". In relation to this, which of the following is not correct?

No person shall be imprisoned for non-payment of tax

Rule of "No estoppel against the government" means:

Both a and b

a. Rule of law that in the performance of its governmental 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 statutes.

Progressively 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 taxpayer's ability to pay.

Statement 2: Taxation is progressive when their rate goes up depending on the resources of the person affected.

Statements 1 and 2 are true

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

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

Which of the following distinguishes tax from license fee

Non-payment does not necessarily render the business illegal

The least source of tax laws:

Revenue regulations

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 penalty.

Statements 1 and 2 are true

In every case of doubt, tax statutes are construed

Strictly against the government and liberally in favor of the taxpayer

In every case of doubt, tax exemptions are construed

Liberally in favor of the government and strictly against the taxpayer

Which of the following statements is correct?

I and II only

I. A tax cannot be imposed without clear and express words for that purpose.

Il. The provisions of a taxing act are not to be extended by implication.

Which of the following factors are determinants to the "Situs" of taxation?

I, II, III, IV, and V

I. Nature, kind or classification of the tax being imposed.

II. Subject matter of the tax (person, property, rights or activity)

I!!. Citizenship of the taxpayer

IV. Place of the excise, privilege, business or occupation

V. Source of the income subject to tax

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

Personal, poll or capitation tax

Tax of fixed portion of the amount or value of the property with respect to which the tax assessed

Ad-valorem

Tax base on a fix percentage of the amount of property, income or other basis to be taxed

Proportional

Which of the following is a characteristic of taxation which distinguishes it from the power and eminent domain?

Generally payable in money

The following are basic principles of sound tax system

I. It should be capable of being effectively enforced

Il. It must be progressive

IlI. Sources of revenue must be sufficient to meet government expenditures and other public needs

IV. It should be exercised to promote public welfare

I, II, and III only

The sources of revenue should be insufficient to meet the demands of public expenditures. This refers to

Fiscal adequacy

The tax should be imposed proportionate to the taxpayer ability to pay

Equality or theoretical justice

The tax law must be capable of convenient just and effective administration

Administrative feasibility

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.

Statements 1 and 2 are true

"Equally in taxation" means:

I. Progressive system of taxation shall be applied.

Il. 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.

I, Il and III

Which of the following statements correctly described "Equal protection" clause of the Constitution regarding the government's power to tax?

1. All persons subject to legislation shall be treated alike under dissimilar circumstances and conditions, both in the privileges conferred and liabilities imposed.

Il. The purpose is to protect persons belonging to the same class against intentional and arbitrary discrimination.

IlI. There is denial of equal protection of laws if there is discrimination in the implementation of tax laws.

Il and Ill only

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?

Exercise of taxation is subject to international comity

This is an inherent limitation on the power of taxation.

The tax laws cannot apply to the property of foreign governments

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 situation like:

Exemption is granted to the impoverished sector in certain situation

Tax exemption is made different from tax amnesty:

It is a privilege or freedom from tax burden

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

Statements 1 and 2 are false

Which of the following statements correctly described the tax exemption of the government?

I. The state cannot be taxed without its consent, otherwise, such is derogation to its sovereignty.

Il. Tax exemption applies only to government 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 governmental functions are exempt from tax unless expressiy taxed, while those performing proprietary functions are subject to tax unless expressly exempted.

I, II, and III

Which of the following is to be regarded as tax minimization through legal means?

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

Which of the following is correct?

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

Statement 1: An attempt to minimize one's tax constitute fraud, 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 a taxpayer to decrease the amount of what otherwise would be his taxes altogether avoid them, by means which the law permits, cannot be doubted.

Statement 1 is false but statement 2 is true

Which of the following is an element of double taxation?

I. Same kind of tax

II. Same subject matter

Ill. Same taxable period

IV. Same taxing authority

All of the above

Double taxation in its generai sense means taxing the same subject twice during the same taxing period. In this sense, double taxation

Violates substantive due process.

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.

Statement 1 is false but statement 2 is true

Ligaya Educational Foundation, Inc., a stock educational institution organized for profit, decided to lease for commercial use a 1,500 sq.m. portion of its 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?

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

For purposes of taxation, which of the following statements regarding partnership is correct?

I. Classified into two major categories, partnership in trade and general professional partnership.

II. Partnership in trade is taxable as a corporate taxpayer.

III. General professional partnership is exempt from income tax

I, II and III

Statement 1: All partnerships are taxed in the same manner as a corporation.

Statement 2: The income of a general commercial partnership is also subject to MCIT or Regular Corporate Income Tax (RCIT), whichever is higher.

Statement 1 is false but statement 2 is true

A taxable partnership may be subject to the following taxes under CREATE Act:

I. Minimum corporate income tax

II. Gross income tax

III. Improperly accumulated earnings tax

I only

A partnership is formed by persons for sole purpose of exercising their common profession, no part of the income of which is derived from engaging in any trade or business.

General professional partnership

A general professional partnership is exempt from income tax but is required to file an income tax return

Because the net income of the partnership will be traced into the income tax return of the partners.