EVALUATION EXAM

1. 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.

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

a. Criminal in nature; c. Political in nature;
b. Penal in nature; d. Generally prospective in application.

3. One of the characteristics 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 statue may nevertheless operate retrospectively provided
its clearly the legislative intent;
d. Answer not given.

4. In case of conflict between tax laws and generally accepted accounting principles (GAAP):
a. Both tax laws and GAAP shall be enforced; c. Tax laws shall prevail over GAAP;
b. GAAP shall prevail over tax laws; d. The issues shall be resolved by the courts

5. The following are similarities of the inherent power of taxation, eminent domain, and police power, except one:
a. Are necessary attributes of sovereignty; c. Affect all persons or the public;
b. Interfere with private rights and property; d. Are legislative in implementation.

6. Tax as distinguished from license fee:

a. Non- payment does not necessarily render the c. Imposed in the exercise of police power;
business illegal; d. Limited to cover cost of regulation.
b. A regulatory measure;

7. Which statement refers to police power as distinguished from taxation?

a. It can only be imposed on specific property or properties;
b. The amount imposed depends on whether the activity is useful or not;
c. It involves the taking of property by the government;
d. The amount imposed has no limit.

8. 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 may be imposed;
d. Answer not given.

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

a. Transfer tax; c. Real property tax;
b. Sales Tax; d. Income tax.

10. Value-added tax is an example of:

a. Graduated tax; c. Regressive tax;
b. Progressive tax; d. Proportional tax.

11. The power of taxation is inherent in sovereignty being essential to the existence of every government. Hence,
even if not mentioned in the Constitution the state can still exercise the power.
It is essentially a legislative function. Even in the absence of any constitutional provision, taxation power fails
to Congress as part of the general power of law making.
a. False, false; c. True, True;
b. False, True d. True, False.

12. Which of the following is not a scheme of shifting the incidence of taxation?
a. The manufacture 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.

13. The proportional contribution by persons and property levied by the law-making body of the State by virtue of
its sovereignty for the support of the government and all public needs is referred as:
a. Taxes; c. License fee;
b. Special assessments; d. Answer not given.
14. One of the characteristics of tax is that:
a. It is generally based on contract; c. It is generally assignable;
b. It is generally payable in money; d. Answer not given.

15. Tax of a fixed proportion of the value of the property with respect to which the tax is assessed and requires the
intervention of assessors or appraisers to estimate the value of such property before the amount due from each taxpayer
can be determined is known as:
a. Specific; c. Special or regulatory;
b. Ad valorem; d. Answer not given.

16. 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 Bureau of Internal Revenue
to modify the rules on time for filing of returns and payment of taxes;
d. The power of taxation is shared by the legislative and executive departments of government.

17. Which statement is correct? A revenue regulation, as a source of tax law, is:
a. Promulgated by the bureau of Internal Revenue;
b. Promulgated by the Department of Finance;
c. Promulgated by the Department of Finance upon the recommendation of the Bureau of Internal Revenue;
d. An interpretation of the revenue law by the Bureau of the Internal Revenue.

18. Congress enacted a law increasing the personal exemptions of individuals under the income tax law to a uniform
P50, 000 for all individuals, regardless of status of the individuals. The law took effect sometime within the year. The
Secretary of Finance will allow the increase on personal exemption to a date:
a. On the effectivity of the law within the year;
b. As of the beginning of the year in which the law was passed by Congress;
c. As at the beginning of the succeeding year;
d. Only when Congress passes a law clearly stating the effectivity of the increase.

19. Which of the following has no power of taxation?

a. Provinces; c. Barangays;
b. Cities; d. Barrios.

20. A tax must be imposed for a public purpose. Which of the following not a public purpose?
a. National defense; c. Improvement of the sugar industry;
b. Public Education; d. None of the above.

21. The basic community tax of P5. 00 of an individual is as to who bears the burden:
a. A personal tax; c. A national tax;
b. A direct tax; d. An ad valorem tax.

22. A person was given by a special law the privilege to operate a public utility (franchise), in consideration of which,
he was required by that law to pay a franchise tax. This franchise can be amended by:
a. An amendment of that special law only;
b. An amendment of that special law or a law of general application;
c. An amendment of a revenue regulation;
d. None of the above.

23. A tax on business is:

a. Direct tax; c. Property tax;
b. Indirect tax d. none of the above.

24. Which is the correct and best statement? A tax reform at any given time underscores the fact that:
a. Taxation is an inherent power of the state;
b. Taxation is essentially a legislative power;
c. Taxation is a power that is very broad;
d. The state can and should adopt progressive taxation.

25. Which statement gives the correct answer? That a feasibility study needs or need not look into the taxes of
different political subdivisions of government which may be alternative sites of the business is because:
a. Provinces, cities and municipalities must have uniform taxes between and among themselves;
b. The local taxes of one political subdivision need not be uniform with the local taxes of another political
subdivision;
c. Businesses that are subject to national business taxes are exempt from local business taxes;
d. Local business taxes may be credited against national business taxes.

26. In all, except one, there can be a classification of the subject matter being required to shoulder the burden.
Which is the exception?
a. Tax; c. Toll;
b. License fee; d. Eminent domain;

27. There can be no tax unless there is a law imposing the tax is consistent with the doctrine or principle of:
a. Uniformity of taxation;
b. Due process of law;
c. Non-delegation of the power to tax;
d. The power of taxation is very broad and the only limitation is the sense of responsibility of the members of the
legislature to their constituents.

28. Which of the following is not an element of direct double taxation?

a. Two taxes; c. Same year;
b. Same subject matter; d. Same amount.

29. Statement 1: The value-added tax is a property tax;

Statement 2: The estate tax is a direct tax.

a. The two statements are correct;

b. The two statement are wrong;
c. The first statement is correct while the second statement is wrong;
d. The first statement is wrong while the second statement is correct.

30. Statement 1: Because the power of taxation is inherent in state, the inherent limitation on the power of taxation
always applies.
Statement 2: Inherent limitations on the power of taxation must give way to constitutional limitations.
a. The first statement is true while the second statement is false;
b. The first statement is false while the second statement is true;
c. Both statements are true;
d. Both statements are false;

31. Which statement is wrong? “The tax should be based on the taxpayer’s ability to pay”.
a. As a basic principle of taxation, this is called “theoretical justice;”
b. As a theory of taxation, this is called “ability-to pay-theory”
c. No person shall be imprisoned for non-payment of a tax;
d. A graduated tax table is in consonance with this rule.

32. Statement 1: The power of Tax can be delegated to units of local government, but with limitations as may be
imposed by law.
Statement 2: The power to tax cannot be delegated to the executive department of the National Government.
a. The first statement is true while the second statement is false;
b. The first statement is false while the second statement is true;
c. Both statements are true;
d. Both statements are false;

33. Which statement is false?

a. A tax is a demand of sovereignty while toil is a demand of property ownership.
b. Non-payment of a tax does not make the activity taxed unlawful;
c. A grant of police power to a unit of local government carries with it a grant of the power to tax.
d. Customs duty is a tax.

34. Under this basic principle of a sound tax system, the Government should not incur a deficit:
a. Theoretical justice; c. Fiscal adequacy;
b. Administrative feasibility; d. None of the above.

35. 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; c. Taxation is essentially a legislative power;
b. Taxation is a very broad power of the state; d. None of the above.

36. The city of Manila, claiming that it can impose taxes under the Local Government Code, imposed a tax on banks
(in addition to the percentage tax on banks imposed in the National Internal Revenue Code). The banks within the City
of Manila objected for the various reasons given below.

Which would justify the objection of the banks?

a. The power of taxation cannot be delegated; c. Uniformity in taxation;
b. The rule on double taxation; d. None of the above.

37. The amount required is dictated by the needs of the government in:
a. License fee; c. Toll;
b. Tax d. None of the above.

38. No person shall be imprisoned for non-payment of this:

a. Property tax; c. Poll tax;
b. Excise tax; d. None of the above.

39. As a basic principle of taxation, that “Taxes must be bases on the taxpayer’s ability to pay” is called:
a. Equality in taxation; c. Theoretical justice;
b. Ability-to-pay” theory; d. Equity in taxation.

40. Which of the following may not raise money for the government?
a. Power of taxation; c. Eminent domain;
b. Police power; d. None of the above.

41. Which is not an essential characteristic of tax?

a. It is unlimited as to amount; c. It is proportionate in character;
b. It is payable in money; d. It is regular payment.

42. Statement 1: Direct double taxation involves two taxes by the same taxing authority (e.g. National
Government);
Statement 2: Indirect double taxation involves two taxes by two different taxing authorities (e.g., National
Government and a unit of local government).
a. The first statement is true while the second statement is false;
b. The first statement is false while the second statement is true;
c. Both statements are true;
d. Both statements are false.

43. Statement 1: Direct double taxation is prohibited by the Philippine Constitution;

Statement 2: Indirect double taxation is allowed by the Philippine Constitution.
a. The first statement is true while the second statement is false;
b. The first statement is false while the second statement is true;
c. Both statements are true;
d. Both statements are false.

44. Statement 1: Tax evasion, which is the use of means to escape a tax that is already a liability, is prohibited by
law, and is punishable;
Statement 2: Tax avoidance, which is the use of means to prevent an accrual of a tax, or to minimize a tax that
may accrue, is likewise prohibited by law and is punishable.
a. The first statement is true while the second statement is false;
b. The first statement is false while the second statement is true;
c. Both statements are true;
d. Both statements are false.

45. Statement 1: A tax amnesty that forgives tax delinquency of prior years is a legislative act of the Government;
Statement 2: A tax compromise that lowers the delinquent tax due from a taxpayer is an executive act pursuant
to a legislative grant of power to the Executive Department of the Government.
a. The first statement is true while the second statement is false;
b. The first statement is false while the second statement is true;
c. Both statements are true;
d. Both statements are false.

46. It refers to a mode of transferring & acquiring properties left by the decedent.
a. Estate transfer c. Donation
b. Succession d. Execution of a will

47. The property, rights & obligations of a person which are not extinguished by his death & those which have
accrued thereto since the opening of succession.
a. Inheritance c. Estate
b. Capital d. Devisee

48. The estate tax accrues from the moment of:

a. The fixing of notice of c. The death of the decedent
death d. The filing of estate tax return
b. Expiration of a months after death

49. The gift tax paid on a donation mortis causa, if any:

a. Exempts the property from estate tax.
b. Has no effect since the gift will be subject to another gift tax.
c. Shall form as a tax credit to be deducted from the estate tax due.
d. Is invalid & the tax will not be credited at all.

50. Which shall not form part of the gross estate of a decedent:
a. Intangible personal property of non-resident alien decedent without reciprocity law
b. Revocable transfer
c. Transfer passing special power of appointment
d. Life insurance where the executor is the beneficiary & it is irrevocable