ROUND 2: BASIC PRINCIPLES

QUESTION 1: How many principles are there behind the concept of Taxation?
A. 1
B. 2
C. 3
D. 4
Correct Answer: C. 3

There are 3 Basic Principles behind the concept of Taxation, which are as follows:
1. Fiscal Autonomy
2. Theoretical Justice
3. Administrative Feasibility

QUESTION 2: Fiscal Autonomy maintains that the sources of government revenue must be
_____________ to meet governmental expenditures and other public needs. Which word best fits
the blank?
A. lesser
B. sufficient
C. more than the needed
D. efficient
Correct Answer: B. Sufficient

FISCAL AUTONOMY
- Maintains that the sources of government revenue must be SUFFICIENT to MEET governmental
expenditures and other public needs.
- TAX = GOVERNMENTAL EXPENDITURES AND PUBLIC NEEDS

PEOPLE
Needs/Necessities
Examples: Roads,
Education, Medical
Services
TAX TAX

Appropriations
Government
Art. 24 & 25 (1987
Constitution) Notes the needs of
House of Representatives the people and
collects these taxes

TAX

IMPORTANCE OF THIS PRINCIPLE:

 Without Taxation, the nation will not survive since it is the country’s source of revenue. It is very
significant in making the government perform its function to serve its people. Lifeblood Doctrine

Introduction to Law | TAXATION 1

QUESTION 3: BASED ON THEORETICAL JUSTICE, THE SYSTEM OF TAXATION MUST
BE BASED ON THE TAXPAYER’S __________?
A. Face Value
B. Talents
C. Net Worth
D. Ability to Pay
Correct Answer: D. Ability to Pay

THEORETICAL JUSTICE
- It emphasizes that the system of taxation must be based on the taxpayer’s ABILITY TO PAY.

The government’s basis of the tax that is being collected is the declared salary of the payer.
With the ability to pay principle, minimum wage earners are given tax exemptions to cope up with their
daily living cost and those who are earning above this minimum wage are obligatory to pay their monthly
taxes. The monthly income is proportional to the tax that is being paid.
Example: Personal Income Tax under the Train Law

 As the income increases, tax also

increases.
IMPORTANCE OF THIS PRINCIPLE:
With the ability to pay principle, tax payers will have reasonable taxes and will give a fair share of what
they have earned to the government.

QUESTION 4: Administrative Feasibility refers to the maintenance of an administrative agency

capable of enforcing tax laws and its collection.
A. ABSOLUTELY TRUE
B. FALSE
Correct answer: A. True

ADMINISTRATIVE FEASIBILITY
- Means that tax laws should be capable of being enforced; not burdensome; convenient as to time
and manner of payment.

Introduction to Law | TAXATION 2

BUREAU OF INTERNAL REVENUE - The primary administrative agency tasked with the
enforcement of tax laws and collection of taxes.

Examples for Administrative Feasibility:

Making the filing of taxes more convenient through the ff:
- Electronic Filing and Payment System o EFPS - Online
- More branches or Offices
- Accredit banks to collect

IMPORTANCE OF THIS PRINCIPLE:

This is for the effective collection of taxes and its better implementation.
It will be easier for people to pay their taxes.

Introduction to Law | TAXATION 3