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2. Taxation as defined;
Statement 1: it is a power inherent in every sovereign state to impose a charge or burden upon persons,
properties or rights to raise revenues for the use and support of the government and to enable it to discharge
its inappropriate functions.
Statement 2: A power that is very broad and exercised both by the legislative and executive branch of the
government.
A. Statements 1 & 2 are false
B. Statement 1 is true but statement 2 is false
C. Statement 1 is false but statement 2 is true
D. Statements 1 and 2 are true
4. 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?
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.
C. Both "a" and "b”
D. Neither "a” nor “b”
Purpose of Taxation
5. 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. Examples of this are as follows, except:
A. Taxation can strengthen anemic enterprises or provide incentive to greater production through grant of tax
exemptions or creation of conditions conducive to their growth.
B. Taxes on imports may be decrease to protect local industries against foreign competition or increased to
encourage foreign trade.
C. Taxes may be increased in periods of prosperity to curb spending power and halt inflation or lowered in
periods of slump to expand business and ward off depression.
D. Taxes may be levied to reduce inequalities in wealth and income,
8. Statement 1: The purpose of taxation may also be "compensatory", meaning, it may be used to make up for
the benefit received (i.e., excise tax on gasoline consumed by vehicle owners using roads)
Statement 2: Taxes may be imposed for the equitable distribution of wealth and income in society.
A. Statements 1 & 2 are false
B. Statement 1 is true but statement 2 is false
C. Statement 1 is false but statement 2 is true
D. Statements 1 and 2 are true
10. 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 C. Scope of taxation
B. Situs of taxation D. Theory of taxation
11. The reciprocal duties of support and protection between the people and the government
A. Basis of taxation C. Scope of taxation
B. Situs of taxation D. Theory of taxation
14. That the legislative body can impose a tax at any amount underscores the legal truism 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. -Answer not given.
23. The power to acquire private property upon payment of just compensation for public purpose
A. Power of taxation C. Power of eminent domain
B. Police power D. Power of recall
24. The power to regulate liberty and property to promote the general welfare
A. Power of taxation C. Power of eminent domain
B. Police power D. Power of recall
25. The power to demand proportionate contribution from persons and property to defray the necessary expenses
of the government
A. Power of taxation C. Power of eminent domain
B. Police power D. Power of recall
26. Which of the following may not raise money for the government
A. Power of taxation C. Eminent domain
B. Police power D. License Fees
29. Statement 1: The constitution is the source of the State's taxing power.
Statement 2: The police power of the government may be exercised through taxation.
A. Statements 1 & 2 are false
B. Statement 1 is true but statement 2 is false
C. Statement 1 is false but statement 2 is true
D. Statements 1 and 2 are true
31. Statement 1: A revenue regulation must not be contrary to the provision of the law that it implement
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 a penalty.
A. Statements 1 & 2 are false
B. Statement 1 is true but statement 2 is false
C. Statement 1 is false but statement 2 is true
D. Statements 1 and 2 are true
33. Where does taxing power of the provinces, municipalities and cities precede from?
A. Constitutional grant
B. Legislative enactment
C. Presidential decree or Executive act
D. Local legislation
34. How will the local government units be able to exercise their taxing powers?
A. By local legislation
B. By authority conferred by Congress
C. By the issuance of the Department of Finance
D. By the help of the Bureau of Internal Revenue
39. Statement 1: A tax cannot be imposed without clear and express words for that purpose.
Statement 2: The provisions of a taxing act are not to be extended by implication.
A. Statements 1 & 2 are false
B. Statement 1 is true but statement 2 is false
C. Statement 1 is false but statement 2 is true
D. Statements 1 and 2 are true
44. “The tax should be based on taxpayer's ability to pay". In relation to this, which of the following is not correct?
A. No person shall be imprisoned for non-payment of tax
B. A graduated tax table is in consonance with this statement
C. As a theory of taxation, this is called "ability to pay theory"
D. As a basic principle of taxation, this is called "theoretical justice"
48. One of the characteristic of our internal revenue laws is that they are
A. Political in nature
B. Penal in nature
C. Generally prospective in operation although the tax statute may nevertheless operate retrospectively
provided it is clearly the legislative intent
D. Criminal in nature
50. It literally means “place of taxation” the country that has the power and jurisdiction to levy and collect the tax.
A. Basis of taxation C. Scope of taxation
B. Situs of taxation D. Theory of taxation
51. Which of the following factors are determinants to the "Situs" of taxation?
I. Nature, kind, or classification of the tax being imposed.
52. 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
A. Personal, poll or capitation tax C. Excise tax
B. Property D. Regressive
53. Tax imposed on personal or real property in proportion to its value or some other reasonable method of
apportionment
A. Personal, poll or capitation tax C. Excise tax
B. Property D. Regressive
54. Tax which is demanded from the persons whom the law intends or desires to pay it
A. Direct C. Excise
B. Indirect D. Income
55. Tax which is demanded from one person in the expectation and intention that he shall indemnify himself at the
expense of another
A. Direct C. Excise
B. Indirect D. Income
56. Tax which imposes a specific sum by the head or number or by some standards of weight or measurement and
which requires no assessment other than a listing or classification of the objects to be taxed
A. Ad-valorem C. Excise
B. Specific D. Revenue
57. Tax fixed proportion of the amount or value of the property with respect to which the tax assessed
A. Ad-valorem C. Excise
B. Specific D. Revenue
58. Tax base on a fix percentage of the amount of property, income or other basis to be taxed
A. Progressive C. Regressive
B. Proportional D. Indirect
59. Tax where the rate decreases as the tax base increases
A. Progressive C. Regressive
B. Proportional D. Indirect
60. Tax where the rate increases as the tax base increases
A. Progressive C. Regressive
B. Proportional D. Indirect
62. Persons or thing belonging to the same class shall be taxed at the same rate
A. Simplicity of taxation C. Equality of taxation
B. Reciprocity of taxation D. Uniformity of taxation
63. Which of the following is a characteristic of taxation which distinguishes it from police power and eminent
domain?
A. For public purposes
B. Legislative in nature
C. Generally payable in money
D. Inferior to non-impairment clause in the Constitution
66. The sources of revenue should be sufficient to meet the demands of public expenditures. This refers to
A. Equality or theoretical justice
B. Fiscal adequacy
C. Administrative feasibility
D. Rule of apportionment
67. The tax should be imposed proportionate to the taxpayer ability to pay
A. Equality or theoretical justice
B. Fiscal adequacy
C. Administrative feasibility
D. Rule of apportionment
68. The tax law must be capable of convenient just and effective administration
A. Equality or theoretical justice
B. Fiscal adequacy
C. Administrative feasibility
D. Rule of apportionment
Limitations
70. 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.
A. Statements 1 & 2 are false
B. Statement 1 is true but statement 2 is false
C. Statement 1 is false but statement 2 is true
D. Statements 1 and 2 are true
72. Which of the following statements correctly described "Equal protection” clause of the Constitution regarding
the government's power to tax?
I. All persons subject to legislation shall be treated alike under dissimilar circumstances and conditions, both
in the privileges conferred and liabilities imposed.
II. The purpose is to protect persons belonging to the same class against intentional and
A. I and II only C. II and III only
B. I and III only D. I, II and III
73. "No person shall be imprisoned for nonpayment of Poll Tax". Which of the following statements correctly
described the foregoing Constitutional limitation on the State's power to tax?
I. The term "Poll tax” means a tax imposed on a person as a resident within a territory of the taxing authority with
regard to his property, business or occupation.
II. Imprisonment for nonpayment of other taxes or imposition of fine would be contrary to the Constitution
A. I only C. Both I and II
B. II only D. Neither] nor II
75. Taxes are public money which should be used for public purposes. Which of the following is not regarded as
for public purposes?
A. Appropriation for public education
B. Appropriation for comprehensive agrarian reform program of the gov't
C. Appropriation for the church
76. The person or property taxed must be subject to the jurisdiction of the taxing State. This inherent limitation is
called
A. International comity C. No-encroachment policy
B. Territoriality C. Double taxation
77. Which of the following restrictions on the power of taxation recognizes that the country's tax laws shall not he
applied to the property of foreign government?
A. Taxation is inherently a legislative function
B. Exercise of taxation is subject to international comity
C. Due process of law
D. Equal protection of law
81. 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
A. Statements 1 & 2 are false
B. Statement 1 is true but statement 2 is false
C. Statement 1 is false but statement 2 is true
D. Statements 1 and 2 are true
Tax Avoidance/Evasion
Double Taxation
Escape from Taxation
82. Which of the following is to be regarded as tax minimization through legal means?
A. Not declaring all taxable income
B. Padding of expenses for deduction from income
C. Opting to transfer the property through sale rather than through donation where tax liability would be
higher
D. All of the above
84. 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.
A. Statements 1 & 2 are false
B. Statement 1 is true but statement 2 is false
C. Statement 1 is false but statement 2 is true
D. Statements 1 and 2 are true
86. Double taxation is defined as taxing the same property twice when it should be taxed but once. But there is
no constitutional prohibition against double taxation in the Philippines. Which of the following statement is/are
true?
I- A license tax may be levied upon a business or occupation although the land or property used in connection
therewith is subject to property tax.
II- Both a license fee and a tax cannot be imposed on the same business or occupation for selling the same
article.
A. I only C. Both I and II
B. II only D. Neither I nor II
87. Statement 1: Most common tax remedies from double taxation are tax deductions and tax credits.
Statement 2: The benefit of credit against income tax for taxes of foreign countries should be allowed to a
citizen of the Philippines or Domestic Corporation but not to an alien individual and foreign corporation.
A. Statements 1 & 2 are false
B. Statement 1 is true but statement 2 is false
C. Statement 1 is false but statement 2 is true
D. Statements 1 and 2 are true
88. Which of the following is a method of avoiding the occurrence of double taxation?
A. Allowing reciprocal exemption either by law or by treaty.
B. Reduction of the Philippine tax rate.
C. Allowance of tax credit for foreign taxes paid
D. All of the above.
End of Handouts
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