GENERAL PRINCIPLES Practice

INCOME TAXATION
Name:__________________________ Date:_________________________
Section:________________________ GENERAL PRINCIPLES OF TAXATION
1. The principal purpose of taxation is

a. To encourage the growth of home industries through the proper use of tax exemptions and
tax incentives
b. To implement the police power of the state
c. The reduce excessive inequalities of wealth
d. To raise revenues for governmental needs
2. The aspects of taxation are

a. Legislative in character c. Shared by the legislative and executive departments
b. Executive in character d. Judicial in power
3. Taxation as distinguished from police power and power of eminent domain

a. Property is taken to promote the general welfare
b. Maybe exercised only by the government
c. Operates upon the whole industry
d. There is generally no limit as to the amount that may be imposed
4. Which of the inherent powers maybe exercised even by public service corporations and public entries
a. Power of taxation c. Power of eminent domain
b. Police power d. A and C\
5. Which of the following statements is correct?

a. The President is authorized to increase or decrease national internal revenue tax rates
b. One of the nature of taxation is the reciprocal duties of protection and support between the
state and subjects thereof
c. Every sovereign government has the inherent power to tax
d. Income tax is an indirect tax
6. This is an inherent limitation on the power of taxation

a. Rule on uniformity and equity in taxation
b. Due process of law and equal protection of the laws
c. Non-impairment of the jurisdiction of the Supreme Court in tax cases
d. Tax must be for public purpose
7. This is a constitutional limitation on the power of taxation

a. Tax laws must be applied within the territorial jurisdiction of the state
b. Exemption of government agencies and instrumentalities from taxation
c. No appropriation of public money for religious purposes
d. Power to tax cannot be delegated to private persons or entities
8. They exist independent of the constitution being fundamental powers of the state, except
a. Power of taxation b. Police power c. Power of eminent domain d. People power
9. The power to acquire private property upon payment of just compensation for public purpose
a. Power of taxation b. Police power c. Power of eminent domain d. Power of recall
10. The power to regulate liberty and property to promote the general welfare
a. Police power b. Power of taxation c. Power of eminent domain d. super power
11. The power to demand proportionate contributions from persons and property to defray the expenses of the
government
a. Power of taxation b. Police power c. Power of eminent domain d. National power
12. Basic principles of a sound tax system, except

a. Fiscal adequacy c. Administrative feasibility
b. Equality or theoretical justice d. Intellectual sensitivity
13. The tax imposed should be proportionate to the taxpayer’s ability to pay
b. Equality or theoretical justice d. Economic consistency
14. The sources of revenue as a whole, should be sufficient to meet the demands of public expenditures
/etd
b. Equality or theoretical justice d. Revenue generation
15. The tax laws must be capable of convenient, just and effective administration
b. Equality or theoretical justice d. Internal acceptability
16. Our National Internal Revenue Laws are

a. Political in nature b. Penal in nature c. Criminal in nature d. Civil in nature
17. Subject to inherent and constitutional limitations, the power of taxation is regarded as supreme, plenary,
unlimited and comprehensive
a. Basis of taxation b. Situs of taxation c. Scope of taxation d. Theory of taxation
18. Statement 1 – The point on which a tax is originally imposed is impact of taxation
Statement 2 – Police power is superior to the non-impairment clause of the constitution
Statements 3 – As a rule, taxes are subject to set-off or compensation
Statements 4 - As a rule, provisions on validity of tax exemptions are resolved liberally in the favor of the
taxpayer
Statement 1 Statement 2 Statement 3 Statement 4
a. True False False False
b. True True False True
c. True True False False
d. False True False True
19. The levying or imposition of tax and the collection of the tax are processes which constitute the taxation
system
a. Basis of taxation b. Aspects of taxation c. Nature of taxation d. Theory of taxation
20. The process or means by which the sovereign, through its law-making body raises income to defray the
expenses of the government
a. Toll b. License fee c. Taxation d. Assessment
21. Enforced proportional contributions from persons and property levied by the state by virtue of its
sovereignty for the support of the government and for all public needs
a. Toll b. License fee c. Taxation d. Assessment
22. Persons or things belonging to the same class shall be taxed at the same rate
a. Simplicity in taxation c. Equality in taxation
b. Reciprocity in taxation d. Uniformity in taxation
23. The tax should be proportional to the relative value of the property to be taxed
a. Simplicity in taxation c. Equality in taxation
b. Reciprocity in taxation d. Uniformity in taxation
24. The following are the nature of taxation, except

a. Inherent in sovereignty c. Subject to inherent and constitutional limitations
b. Essentially legislative in character d. Subject to approval by the people
25. It literally mean “place of taxation”; the country that has the power and jurisdiction to levy and collect the
tax.
26. 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
27. The reciprocal duties of support and protection between the people and the government
28. A tax must be imposed for public purpose. Which of the following is not a public purpose
a. National defense c. Improvement of the sugar and coconut industries
b. Public education d. Improvement of a subdivision road
29. Which is not an essential characteristic of a tax?

a. It is unlimited as to amount c. It is proportionate in character
/etd
b. It is payable in money d. It is an enforced contribution
30. Special assessment is an enforced proportional contribution from owners of land especially benefited by
public improvement. Which one of the following is not considered as one of its characteristics?
a. It is levied on land
b. It is based on the government’s need of money to support its legitimate objectives
c. It is not a personal liability of the persons assessed
d. It is based solely on the benefit derived by the owners of the land
31. It is the privilege of not being imposed a financial obligation to which others are subject
a. Tax incentive b. Tax exemption c. Tax amnesty d. Tax credit
32. As to scope of the legislative power to tax, which is not correct?

a. Where there are no constitutional restrictions, and provided the subjects are within the
territorial jurisdiction of the state, Congress has unlimited discretion as to the persons,
property or occupations to be taxed
b. In the absence of any constitutional prohibition, the House of Representatives has the right
to levy a tax of any amount it sees fit
c. The discretion of Congress in imposing taxes extends to the mode, method or kind of tax, if
not restricted by the constitution
d. The sole arbiter of the purpose for which taxes shall be levied is CIR, provided the purpose
is public but the courts may review the levy of the tax to determine whether or not the
purpose is public
33. Which of the following is a nature of taxation?

a. The power is exercised by legislative action c. It is generally payable is money
b. It is essentially an administrative function d. Without it the state can continue to exist
34. Which of the following is not a determinant of the place of taxation?

a. Source of the income c. Residence of the taxpayer
b. Citizenship of the taxpayer d. Amount of tax to be imposed
35. An escape from taxation where the tax burden is transferred by the one on whom the tax is imposed or
assessed to another
a. Shifting b. Exemption c. Transformation d. Capitalization
36. An escape from taxation where the producer or manufacturer pays the tax and endeavors to recoup
himself by improving his process of production thereby turning out his units of products at a lower cost
37. An escape from taxation where there is a reduction in the price of the taxed object equal to the capitalized
value of future taxes which the taxpayer expects to be called upon to pay
38. The use of illegal or fraudulent means to avoid or defeat the payment of tax
a. Exemption b. Shifting c. Avoidance d. Evasion
39. The use of legal or permissible means to minimize or avoid taxes

a. Exemption b. Shifting c. Avoidance d. Evasion
40. Synonymous to tax evasion

a. Tax dodging b. Tax minimization c. Tax exemption d. Tax evasion
41. Synonymous to tax avoidance

a. Tax dodging b. Tax minimization c. Tax exemption d. Tax evasion
42. In every case of doubt, tax statutes are construed

a. Strictly against the government and the taxpayer
b. Liberally in favor of the government and the taxpayer
c. Strictly against the government and liberally in favor of the taxpayer
d. Liberally in favor of the government and strictly against the taxpayer
43. In every case of doubt, tax exemptions are construed

a. Strictly against the government and the taxpayer
b. Liberally in favor of the government and the taxpayer
c. Strictly against the government and liberally in favor of the taxpayer
d. Liberally in favor of the government and strictly against the taxpayer
/etd
44. In case of conflict between the Tax Code and the Philippine Accounting Standards (PAS)
a. PAS shall prevail over the Tax Code c. PAS and Tax Code shall be both disregarded
b. Tax Code shall prevail over PAS d. The taxpayer may choose between the PAS or the Tax Code
45. Tax of a fixed amount imposed upon all persons residing within a specified territory without regard to their
property or occupation they may be engaged
a. Personal, poll or capitation b. Property c. Excise d. Regressive
46. Tax imposed on personal or real property in proportion to its value or on some other reasonable method of
apportionment
47. Tax imposed upon the performance of an act, the enjoyment of privilege or the engaging in an occupation
48. Tax which is demanded from the person whom the law intends or desires to pay it
a. Direct b. Indirect c. Excise d. Percentage
49. Tax which is demanded from one person in the expectation and intention that he shall indemnify himself at
the expense of another
a. Direct b. Indirect c. Excise d. Percentage
50. Tax which imposes a specific sum by the head or number or by some standard of weight or measurement
and which requires no assessment other than a listing classification of the objects to be taxed
a. Specific b. Ad-valorem c. Excise d. Income
51. Tax of a fixed proportion of the amount or value of the property with respect to which the tax is assessed
a. Specific b. Ad-valorem c. Excise d. Percentage
52. Tax based on a fixed percentage of the amount of property, income or other basis to be taxed
a. Proportional b. Progressive c. Regressive d. Indirect
53. Tax where the rate decreases as the tax base increases
54. Tax where the rate increases as the tax base increases
55. Which of the following statements is not correct?

a. Tax burdens shall neither be imposed nor presumed to be imposed beyond what the statute expressly
and clearly states because tax statutes should be constructed strictly against the government
b. Tax exemptions, tax amnesty, tax condonations and their equivalent provisions are not presumed and,
when granted, are strictly construed against the taxpayer because such provisions are highly
disfavored by the government
c. Exemptions from taxation are highly disfavored in law and he who claims tax exemption must be able
to justify his claim it right
d. The Bureau of the Internal Revenue has the duty and the exclusive power of enacting, implementing
and interpreting tax laws
56. The strongest of all inherent powers of the state because without it, the government can neither survive
nor dispense any of its other powers and functions effectively.
a. Police Power b. Power of Eminent Domain c. Power of Taxation d. Power of Recall
57. This power is superior to the non-impairment clause and is broader in application because it is a power to
make and implement the laws.
a. Power of Taxation b. Power of Recall c. Power of Eminent Domain d. Police Power
58. 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. Income tax liabilities shall be paid by the inhabitants even if foreign invaders occupy our country
c. Taxes may be imposed retroactively by law, but unless so expressed by such law, these taxes must
only be imposed prospectively.
d. Tax laws are either political or penal in nature.
59. Which of the following is not a constitutional limitation on the Power of Taxation?
a. No person shall be deprived of life, liberty or property without due process of law.
b. No person shall be denied the equal protection of the law.
/etd
c. No person shall be imprisoned for debt or non-payment of tax.
d. No law granting any tax exemption shall be passed without the concurrence of a majority of all the
members of Congress.
60. 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 maybe imposed.
d. Limited to the cost of regulation.
61. Police power as distinguished from the power of eminent domain:

a. Just compensation is received by the owner of the property.
b. Maybe exercised by private individuals.
c. May regulate both liberty and property.
d. Property is taken by the government for public purpose.
62. A tax wherein both the incidence of or the liability for the payment of the tax as well as the burden of the
tax falls on the same person.
a. Direct tax b. Value added tax c. Indirect tax d. Percentage tax
63. Which one of the following is not a characteristic or element of a tax?

a. It is an enforced contribution . c. It is based on the ability to pay.
b. It is legislative in character. d. It is payable in money or in kind
64. Tax as distinguished from license fees:

a. Limited to cover cost of regulation c. Non-payment does not necessarily render the business
illegal
b. A regulatory measure. d. Imposed in the exercise of police power
65. The power to impose taxes is exercised by

a. The President b. The Supreme Court c. Bureau of Internal Revenue d.
Congress
66. 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;
67. Which of the following is not an example of excise tax:

a. Transfer tax; b. Sales tax; c. Real property tax; d. Income tax.
68. The following are similarities of the inherent power of taxation, eminent domain, and police power, except
one:
a. Are necessary attributes of sovereignty; c. Compensation is received;
b. Superior to the non-impairment clause of the constitution d. Are legislative in character.
69. Which of the following is not a scheme of shifting the incidence of taxation?
a. The manufacturer 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 a 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.
70. Which if 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 enabling the state to
impose taxes.
71. License fee as distinguished from tax:

a. No-payment does not necessary render the business illegal; c. imposed in the exercise of taxing
power
/etd
b. A revenue raising measure; d. Limited to cover cost of regulation
72. Value-added tax is an example of:

a. Graduated tax; b. Progressive tax; c. Regressive tax; d. Proportional tax.
73. Which tax principle is described in the statement ‘The more income earned by the taxpayer, the more tax
he has to pay.’
a. Fiscal adequacy b. Theoretical justice c. Administrative feasibility d. Inherent in sovereignty
74. The most superior and least limitable among the fundamental powers of the state:
a. Power of recall b. Police power c. Power of taxation d. Power of eminent domain
75. One of the characteristics of a tax is that:

a. It is generally based on contract; c. It is generally assignable;
b. It is generally payable in money; d. It is generally subject to compensation.
76. The following are the characteristics of our internal revenue laws except:
a. Political in nature; c. Generally prospective in application
b. Civil in nature; d. May operate retrospectively if congress so provides
77. Which of the following has no power to impose taxes?

a. Provinces b. Cities c. Barangays d. Barrios
78. Tax as distinguished from special assessment:

a. Not a personal liability of the person assessed c. exceptional as to time and place
b. Based wholly on benefits d. based on necessity and is to raise
revenues
79. 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. Uniformity in taxation
80. Which of the following may not raise money for the government?
a. Power of taxation b. Police power c. Eminent domain d. License fees
81. No person shall be imprisoned for non-payment of this:

a. Excise tax b. Value added tax c. Income tax d. Poll tax
82. This is a demand of ownership:

a. License fee b. Tax c. Toll d. Customs duties
83. Income tax is generally regarded as

a. An excise tax b. a tax on persons c. a property tax d. tax on profits
84. Which of the following is not acceptable for legally refusing to pay the tax?
a. That the right of the state to collect the tax has prescribed
b. That there is no jurisdiction to collect the tax
c. That the tax law was declared as unconstitutional
d. That there is no benefit derived from the tax
85. A law granting tax exemption requires the concurrence of

a. Majority vote of members of Congress c. ¾ vote of members of Congress
b. 2/3 vote of members of Congress d. unanimous vote of members of Congress
86. No person shall be imprisoned for debt or non-payment of poll tax. This is a (an)
a. Inherent limitation c. International limitation
b. Constitutional limitation d. Territorial limitation
87. The Department of Finance thru its officers entered into a contract with foreign investors granting them
exemption from all forms of taxes to encourage investments in the Phils. The contract is
a. Void, unless the President ratifies
b. Void, because the power to grant tax exemption is vested in Congress
c. Valid, if the President has authorized the officers to enter into such contract
d. Valid, because the purpose is to promote public welfare
88. Tax as distinguished from debt

a. No imprisonment for non-payment c. based on contract
/etd
b. May be paid in kind d. based on law
89. Congress can impose a tax at any amount and at anytime shows that
a. Taxation is an inherent power of the estate c. Taxation is a very broad power of the state
b. Taxation is essentially a legislative power d. Taxation is based on taxpayer’s ability to pay
90. The amount required is dictated by the needs of the government in:
a. License fee b. Tax c. Toll d. Debts
91. A charge imposed on land for special benefits derived resulting from public improvements
a. Tax b. Toll c. License d. Special assessment
92. Which of the following are National Internal Revenue Taxes?

I. Income tax III. Donor’s tax V. Other Percentage Tax VII. Documentary stamp tax
II. Estate tax IV. Value Added tax VI. Excise tax
a. I, II, III, IV b. I, II, III, IV, V c. I, II, III, IV, V, VI d. I, II, III, IV, V, VI, VII
93. The three fundamental powers of the state are

I. Inherent in the state and may be exercised by the state without need of any constitutional grant
II. Not only necessary but indispensable
a. True, true b. True, false c. False, true d. False, false
94. The three fundamental powers of the state are

95. I. Police power regulates both liberty and property while the power of eminent domain and the power of
taxation affect only property rights
II. Police power and the power of taxation may be exercised only by the government while the power of
eminent domain may be exercised by some private entities.
96. I. The property taken in police power is destroyed while the property taken under the power of eminent
domain and power of taxation are not destroyed.
II. In power of taxation, the compensation received is the protection afforded to the citizens; in police power
the compensation received is the altruistic feeling that somehow you contributed to the promotion of the
general welfare; in power of eminent domain, the compensation received is the just compensation paid for
the property taken.
97. I. The point on which a tax is originally imposed is impact of taxation

II. The point on which a tax burden finally rests or settles down is incidence of taxation
99. I. Police power is superior to the non-impairment clause of the constitution

II. Power of taxation is inferior to the non-impairment clause of the constitution
100. I. No person shall be imprisoned for debt or non-payment of tax

II. Tax laws are civil and penal in nature because there are penalties provided in case of violation
101. I. Tax may be collected in an unlimited amount

II. License fee may be collected in an unlimited amount
102. I. Tax is imposed to raise revenue

II. License fee is imposed to raise revenue
103. I. Tax is a demand of sovereignty

II. Toll is a demand of sovereignty
104. I. Tax is imposed on persons, property and property rights

II. Special assessments is imposed on persons, property and property rights
/etd
105. I. Imposition of tax is a legislative act
II. Imposition of tax is an administrative act
106. I. A state has the power to tax even if not granted by the constitution
II. A state cannot exercise police power if not granted by the constitution
107. I. There can only be a tax if there is a law imposing the tax
II. The power to tax may include the power to destroy
108. I. Due process of law in taxation under the constitution is a grant of power
II. Provisions in the Philippine constitution on taxation are grant of power
109. I. In the Philippines, there may be double taxation

II. Taxation may be used to implement the police power of the state
110. I. License fee is a charge imposed under police power

II. Special assessment is levied on lands only
111. I. Tax is imposed regardless of public improvement

II. Special assessment is imposed based on public improvements
112. I. Tax avoidance is the use by the taxpayer of legal or fraudulent means to avoid or defeat taxes
II. Tax evasion is the use by the taxpayer of illegal or fraudulent means to avoid or defeat taxes
113. I. One of the essential characteristics of a tax is it is unlimited in amount

II. A tax is generally unlimited because it is based on the needs of the state
114. I. 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 and is essentially a
legislative function
II. Even in the absence of any constitutional provision, taxation power falls to Congress as part of the
general power of law-making
115. I. The president has the power to veto a revenue bill even if such bill was already approved by Congress
II. The President is superior to Congress as he/she can veto any bill even if already approved by
Congress
116. A system of taxation where the amount of revenue from indirect taxes are more than the direct taxes is
a. Progressive system c. Proportional system
b. Regressive system d. Schedular system
117. Congress passed a law which granted tax amnesty to those who have not paid their income taxes in 2010
but did not provide for the refund to those who paid. Is the law valid?
a. No, this will encourage taxpayers not to pay their taxes
b. Yes, Congress has the sole discretion of determining whom to tax
c. No, the grant of amnesty is the sole prerogative of the President
d. Yes, Congress provided for a valid classification
118. Congress passed a law imposing taxes on income earned out of a 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?
a. No, because laws are intended to be prospective, nut retroactive
b. No, the law is arbitrary in that it txes income that has already been spent
c. Yes, since tax laws are the lifeblood of the nation
d. Yes, tax laws are an exception; they can be given retroactive effect.
/etd
119. Money collected from taxation shall not be paid to any religious dignitary EXCEPT when
a. The religious dignitary is assigned to the Philippine Army
b. It is paid by a local government unit
c. The payment is passed in audit by the COA
d. It is part of a lawmaker’s pork barrel
120. 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?
a. Power to destroy theory c. Sumptuary theory
b. Lifeblood theory d. Symbiotic theory
121. Double taxation in its general sense means taxing the same subject twice during the same taxing period.
In this sense, double taxation
a. Violates substantive due process c. Violates the right to equal protection
b. Does not violate substantive due process d. Does not violate the right to equal protection
122. The actual effort by the government to effect the exaction of what is due from the taxpayer is known as
a. Assessment b. Levy c. Payment d. Collection
123. Although the power of taxation is basically legislative in character, it is NOT the function of Congress to
a. Fix with certainty the amount of taxes c. Identify who should collect the tax
b. Collect the tax levied under the law d. Determine who should be subject to tax
124. An example of a tax where the concept of progressivity finds application is the
a. Income tax on individuals c. Value-added tax on certain articles
b. Excise tax on petroleum products d. Amusement tax on boxing exhibitions
125. The power to tax is the power to destroy. Is this always so?
a. No. The Executive Branch decide not to enforce a tax law which it believes to be confiscatory.
b. Yes. The tax collectors should enforce a tax law even if it results to the destruction of the property
rights of the taxpayer.
c. Yes. Tax laws should always be enforced because without taxes the very existence of the State is
endangered.
d. No. The Supreme Court may nulify a tax law, hence, property rights are not affected
126. Revenue Regulations (RRs) are:

a. Issuances signed by the secretary of finance, upon recommendation of the CIR, that specify,
prescribe or define rules and regulations for the effective enforcement of the provisions of the National
Internal Revenue Code (NIRC) and related statutes
b. Issuances that publish pertinent and applicable portions, as well as amplification, of laws, rules,
regulations, precedents issued by the BIR and other agencies/ offices.
c. Issuances that provide directives or instructions; prescribe guidelines; and outline processes,
operations, activities, workflows, methods and procedures necessary in the implementation of stated
policies, goals, objectives, plans, programs of the Bureau in all areas of operations, except auditing
d. None of the above
127. Revenue Memorandum Circulars (RMCs) are:
128. Revenue Memorandum Orders (RMOs) are:

/etd
129. The following are the powers of the CIR except:

a. After a return has been filed or when no return is filed, the CIR may authorize the examination of any
taxpayer, and the assessment of the correct amount of tax
b. The CIR has the power to issue Summons or Subpoena Duces Tecum to a taxpayer, an officer or
employee of a taxpayer, or to any person having possession of records relating to the business of a
taxpayer
c. The CIR has the power to take the testimony of a person, under oath, that may be relevant or
material to the inquiry
d. The CIR has the power to inquire into a taxpayer’s bank deposits in all instances
130. 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?
Statement 1: It is so because the state has the supreme power to command and enforce obedience to
its will from the people within its jurisdiction.
Statement 2: 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.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both Statement are correct
d. Both statement are incorrect
131 The following statements correctly described the power of the State to tax, except:
a. It is a power inherent in every sovereign state to imposed 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 functions.
b. The State can exercise the power of taxation only if it is expressly mentioned in the Constitution.
c. It passes a legislative undertaking through the enactment of laws by the Congress which will be
implemented by the Executive Branch of the government through its Bureau of Internal Revenue to
raise revenue for the inhabitants in order to pay the necessary expenses of the government.
d. It is a way of collecting and apportioning the cost of government among those who
are privileged to enjoy its benefits.
132. Which statement is wrong?
a. The power of taxation may be exercised the government, its political subdivisions, and public utilities.
b. Generally, there is no limit on the amount of tax that may be imposed.
c. The money contributed as tax becomes part of public funds.
d. The power to tax is subject to inherent and constitutional limitations..
133. They exist independent of the constitution being fundamental power of the state, expect
b. Police power d. Power of recall
/etd
134. 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.
c. Both statement are correct
135. Statement 1: The Constitution cannot take away the inherent powers of the State but may only
prescribe its limitations.
Statement 2: No laws are necessary to confer the inherent powers of the State upon any government
exercising sovereignty.
136. The power to demand proportionate contribution from persons and property to defray the necessary
expenses of the government.
137. The power to regulate liberty and property to promote the general welfare

138. Which of the following statement is not correct?
a. The government automatically possesses the power to collect taxes from its inhabitants
b. The government can enforce contribution upon its citizens only when the Constitution grants it
c. Taxation power exist inseparably with the state
d. The state has the supreme power to command and enforce contribution from the people within
its jurisdiction
139. Statement 1: People pay taxes which their government uses to expand its power and territorial
domination.
Statement 2: People demand from their government certain responsibilities and then provide the
government with the means to carry them out.
140. Statement 1: Taxation and Police Power may be exercised simultaneously

Statement 2: In the exercise of taxation, the State can tax anything at any time and at any amount.
141. Statement 1: The power of taxation must first be expressly granted, either by law or by the Constitution,
before the State may validly exercise it.
Statement 2: The Philippine government may subject the land where embassies of foreign government are
located to real property taxes.
142. One of the following is a false statement about double taxation. Which is it?
a. There is no constitutional prohibition on double taxation.
b. Direct duplicate taxation is a valid defense against a tax measure if it is violative of the equal
protection clause.
/etd
c. Absence of any of the elements of direct double taxation makes it indirect duplicate taxation.
d. A 20% final withholding tax on interest income on bank deposits and a 5% gross receipts tax on
banks is a direct duplicate taxation.
143. Which of the following statement is correct?

a. Indirect double taxation violates the Constitutional provision of uniformity and equal protection.
b. There is direct double taxation in taxation in taxing the income of the corporation and again subject the
portion of that income declared as dividend to final tax.
c. Indirect double taxation is legal as long as there is no violation of equal protection and uniformity
clauses of the Constitution.
d. All of the above
144. ”Equality in taxation” means:

I. Progressive system of taxation shall be applied.
II. The tax laws are 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.
a. I only c. III only
b. II only d. I, II and III
145. Statement 1: Uniformity in the imposition and/or collection of taxes means that all taxable articles or kinds
of property of the same class shall be taxed at the sme rate. This requirement is complied with the tax operates
with the same force and effect in every place where the subject of it is found.
Statement 2: Uniformity rule is not violated when different articles are taxed at different amounts provided that
the rate is uniform on the same class everywhere with all people at all times.
c. Both statements are correct
d. Both statements are incorrect
146. 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 similar circumstances and conditions, both in
the privileges conferred and liabilities imposed.
II. The purpose is to protect persons beloging to the same class against intentional and arbitrary discrimination.
III. There is denial of equal protection of laws if there is discrimination in the implementation of tax laws.
a. I and II only
b. I and III only
c. II and III only
d. I, II and III
147. May the Philippine government require tax withholding on the salaries of Filipino employees working in
the American Embassy in the Philippines?
a. No, because this will violate the rule on international comity.

b. No, because on the Philippine government would impose the requirement of tax withholding on the
salaries of Filipino employees working in the Philippine Embassy in the Philippines, this world in effect
require that the American government be constituted as the withholding agent of the Philippine
government in so far as the taxes of the salaries of the Filipino employees are concerned
c. Both A and B
148. This stems from the principle that we pay taxes for the protection and services provided by taxing
authority which could not be provided outside the territorial boundaries of the taxing state.
a. The tax imposed should be for public purpose.

b. There should be no proper delegation of the taxing power.
c. The power to tax is limited territorial jurisdiction of the taxing government.
d. Exemption of government entities from taxation.
/etd
149. Compliance with procedural requirements must be followed strictly to avoid collision between the state's
power to tax and the individuals recognized rights.
a. Due process of law

b. Equality in taxation
c. Non-infringement of religious freedom
d. Non-impairment of obligations and contracts.
"Things work out best for those who make the best of how things work out." John Wooden
Tax Handout of CPA Review School of Accountancy
/etd

GENERAL PRINCIPLES Practice

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GENERAL PRINCIPLES Practice

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INCOME TAXATION

1. The principal purpose of taxation is

2. The aspects of taxation are

3. Taxation as distinguished from police power and power of eminent domain

5. Which of the following statements is correct?

6. This is an inherent limitation on the power of taxation

7. This is a constitutional limitation on the power of taxation

12. Basic principles of a sound tax system, except

16. Our National Internal Revenue Laws are

24. The following are the nature of taxation, except

29. Which is not an essential characteristic of a tax?

32. As to scope of the legislative power to tax, which is not correct?

33. Which of the following is a nature of taxation?

34. Which of the following is not a determinant of the place of taxation?

39. The use of legal or permissible means to minimize or avoid taxes

40. Synonymous to tax evasion

41. Synonymous to tax avoidance

42. In every case of doubt, tax statutes are construed

43. In every case of doubt, tax exemptions are construed

55. Which of the following statements is not correct?

58. Which of the following statements is not correct?

61. Police power as distinguished from the power of eminent domain:

63. Which one of the following is not a characteristic or element of a tax?

64. Tax as distinguished from license fees:

65. The power to impose taxes is exercised by

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

70. Which if the following statements is not correct?

71. License fee as distinguished from tax:

72. Value-added tax is an example of:

75. One of the characteristics of a tax is that:

77. Which of the following has no power to impose taxes?

78. Tax as distinguished from special assessment:

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

82. This is a demand of ownership:

83. Income tax is generally regarded as

85. A law granting tax exemption requires the concurrence of

88. Tax as distinguished from debt

92. Which of the following are National Internal Revenue Taxes?

93. The three fundamental powers of the state are

94. The three fundamental powers of the state are

97. I. The point on which a tax is originally imposed is impact of taxation

99. I. Police power is superior to the non-impairment clause of the constitution

100. I. No person shall be imprisoned for debt or non-payment of tax

101. I. Tax may be collected in an unlimited amount

102. I. Tax is imposed to raise revenue

103. I. Tax is a demand of sovereignty

104. I. Tax is imposed on persons, property and property rights

109. I. In the Philippines, there may be double taxation

110. I. License fee is a charge imposed under police power

111. I. Tax is imposed regardless of public improvement

113. I. One of the essential characteristics of a tax is it is unlimited in amount

120. Which theory

126. Revenue Regulations (RRs) are:

127. Revenue Memorandum Circulars (RMCs) are:

128. Revenue Memorandum Orders (RMOs) are:

129. The following are the powers of the CIR except:

132. Which statement is wrong?

a. Power of taxation c. Power of eminent domain

138. Which of the following statement is not correct?

140. Statement 1: Taxation and Police Power may be exercised simultaneously

143. Which of the following statement is correct?

144. ”Equality in taxation” means:

a. No, because this will violate the rule on international comity.

a. The tax imposed should be for public purpose.