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;
b. Penal in nature;
c. Political 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;
b. GAAP shall prevail over tax laws;
c. Tax laws shall prevail over GAAP;
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;
b. Interfere with private rights and property;
c. Affect all persons or the public;
d. Are legislative in implementation.

6. Tax as distinguished from license fee:

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

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
of the State by virtue of its sovereignty for
public needs is referred as:
a. Taxes;
b. Special assessments;
property levied by the law-making body
the support of the government and all
c. License fee;
d. Answer not given.

14. One of the characteristics of tax is that:

a. It is generally based on contract;
b. It is generally payable in money;
c. It is generally assignable;
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;
b. Ad valorem;
c. Special or regulatory;
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;
b. Cities;
c. Barangays;
d. Barrios.

20. A tax must be imposed for a public purpose. Which of the following not a public
purpose?
a. National defense;
b. Public Education;
c. Improvement of the sugar industry;
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;
b. Same subject matter;
c. Same year;
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;
b. Administrative feasibility;
c. Fiscal adequacy;
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;
b. Taxation is a very broad power of the state;
c. Taxation is essentially a legislative power;
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;
b. The rule on double taxation;
c. Uniformity in taxation;
d. None of the above.

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

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

a. Property tax;
b. Excise tax;
c. Poll 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;
b. Ability-to-pay” theory;
c. Theoretical justice;
d. Equity in taxation.

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

41. Which is not an essential characteristic of tax?

a. It is unlimited as to amount;
b. It is payable in money;
c. It is proportionate in character;
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 death
b. Expiration of a months after death
c. The death of the decedent
d. The filing of estate tax return

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