INCOME TAXATION

GENERAL PRINCIPLES OF TAXATION

CONCEPT, NATURE, AND CHARACTERISTICS OF TAXATION AND TAXES
UNIT 1

Meaning of Taxation
The power of taxation is very broad, vital and supreme for any sovereign state. Moreover, this power is essential to its

existence. Without such power, the state cannot fulfill its fundamental obligations to its citizens which is to provide
services such as protection, education, social welfare, and health care. For the government to do this, it needs money to

defray its expenditures. Such money is generated through the imposition of taxes which are pooled together into what

are known as public funds.

Taxation is process or means by which the sovereign, through its law-making body, raises income to defray the
necessary expenses of the government.

As a power, taxation refers to the inherent power of the state to demand enforced contributions for public purposes.

Purpose and Scope of Taxation

The primary purpose of taxation on the part of the government is to provide funds or property with which to promote

the general welfare and protection of citizens.

Taxation may also be exercised to attain the various social and economic (non-revenue) objectives. These includes:

shifting wealth from the rich to the poor, maintaining price stability, stimulating economic growth, and encouraging full
employment.

In the most broadest and general sense, taxation includes every imposition of charge or burden by the sovereign power

upon persons, property, or property rights for the use and support of the government in the discharge of their functions.

Theory and Basis of Taxation

1. Existence of the Government. Taxation is the lifeblood of the nation. A state cannot exist without exercising this

power. Every action of the government needs money derived from taxes. Thus, taxation is a system for ensuring that
the government is able to fulfil its mandated duties to the people.

2. Reciprocal duties of State and Inhabitants. In return for his contribution in form of taxes, the taxpayer receives the

general advantages and protection which the government affords to the taxpayer and his property (benefits received

principle).

3. Public purpose requirement for lawful Taxation.

All inhabitants can enjoy the privileges and protection by the government even those who do not pay taxes. From

the taxes received, the government renders no special or commensurate benefit to any particular property or person.

The person taxed enjoys the privileges of living in an organized society established and safeguarded by the devotion

of taxes for public purposes. A person therefore, cannot object to or resist from the payment of taxes solely because
he did not receive any personal benefit arising out from the tax. What matters in taxation is that the tax imposition is

for a public purpose.

Nature of the Power of Taxation
1. It is inherent in sovereignty. Taxation is essential to the existence of every government. The government can exercise

taxation even if the constitution is silent about it.

2. It is legislative in character. The power to tax is exclusively a legislative act and cannot be exercised by the executive

or judicial branch of the government.

3. It is subject to constitutional and inherent limitations. The power of taxation is subject to certain limitations and

restrictions. Most of these limitations are specifically provided in the constitution or implied there from or inherent in

the nature of the taxation power.

Aspects of Taxation
The exercise of the power of taxation involves two aspects:

1. Levying or imposition of the tax which is a legislative act; and

2. Collection of the tax levied which is essentially administrative in character.

 The two processes together constitute the country’s “taxation system”.

Basic Principles of a Sound Tax System

1. Fiscal Adequacy – Means that the sources of revenue are sufficient to meet government expenditures.

2. Equality or Theoretical Justice – Means that the tax burden must be proportionate to the tax payer’s ability to pay

or ability-to-pay principle. Taxation should be uniform as well as equitable.

3. Administrative Feasibility – Means that tax laws should be capable of convenient, just and effective administration

or enforcement at a reasonable cost. This means that each tax in the system should be:

 clear and plain to the taxpayer;

 capable of uniform enforcement by the government officials;

 convenient as to time, place, and manner of payment; and

 not duly burdensome upon or discouraging to business activities.

Inherent Powers of the State

The Philippines as a sovereign state has several powers to implement its plans and programs. These powers are either
vested by the constitution or are inherent to the state. The three inherent powers are:

1. Taxation Power – refers to the inherent power of the state to exact an enforced contribution upon persons, properties

and rights for the purpose of generating revenues for the use and support of the government. It is the strongest of

all powers of the state.

2. Eminent Domain – refers to the inherent power of the state to take private property for public use upon payment to

the owner of just compensation with the observance of due process.

3. Police Power – refers to the inherent power of the state to enact such laws in relation to persons and property as

may promote public health, public morals, public safety and the general welfare of the people. This power springs

from the obligation of the State to protect its citizens and provide for the safety and welfare of society. Examples:

Requiring a license for the practice of a profession or right to drive motor vehicles; punishing vagrancy and prostitution;
regulating the use of traffic on roads; regulating prices of commodities and rents, etc.
These powers are inherent in every sovereign state because they are necessary for the government to function and

promote the general welfare of its citizens, without these powers, the government is powerless and cannot effectively

administer its programs and protect its people. Since this powers are inherent in the sovereign state, these powers can
be exercised without constitutional authority, since these are ingrained in the state since the establishment of its

government.

Limitations of the Power of Taxation

Taxation is not an absolute power that can be exercised by the legislature any way it pleases. It has the following

limitations:

1. Constitutional Limitations – Those restrictions found in the Philippine Constitution or implied from its provisions.

2. Inherent Limitations – Those which spring from the nature of the taxing power itself although they may or may not
be provided in the Constitution.

Constitutional Limitations:
1. Due Process. According to the constitution, no person shall be deprived of life, liberty, or property without due
process of law, nor shall any person be denied the equal protection of the law.

Example: A law is passed requiring all Filipino income earners to pay an income tax of 80% of their gross income. Is

the law valid?

Answer: No. Taxes which are excessive and beyond the paying capacity of the taxpayers are confiscatory, oppressive
and may result into deprivation of the taxpayer’s property without due process.

2. Equal Protection of the Laws. According to the constitution, no person or class of persons shall be deprived of the

same protection of laws enjoyed by other persons or other classes in the same place and in like circumstances.

3. Rule of uniformity and equity in taxation. The rule of taxation shall be uniform and equitable. According to the

constitution, the Congress shall evolve a progressive system of taxation.

Uniformity of taxation means that all the taxable persons or property of the same nature shall be taxed at a uniform

or same rate. There is uniformity of taxation when the tax operates with the same force and effect on this subject

wherever found.

4. Non-imprisonment for non-payment of poll tax. According to the constitution, no person shall be imprisoned for
non-payment of debt or non-payment of a poll tax.

In the United States, a Poll tax is levied on adults and often linked to the right to vote, it is usually fixed in amount.

Example: Evander refused to pay the basic community tax of P5.00 and the additional tax of P1.00 for every P1,000.00

of his income from business. Can he be imprisoned for non-payment?

Answer: He cannot be imprisoned for non-payment of the basic tax of P5.00. However, imprisonment will be

sanctioned for his failure to pay the additional community tax because it is not a poll tax.

5. Non-impairment of the obligations of contracts. According to the constitution, no law impairing the obligations

of contracts shall be passed.

Example: The government entered into a contract with Abala Lines. The condition provided that Abala Lines shall

carry government mails. In return, the former shall be exempt from the payment of income tax. Can the Congress

later on pass a law revoking such exemption?

 Answer: No. since the granting of the tax exemption is based on a valid contract. The imposition of such law would

weaken the obligation of contracts. The obligation of contract is impaired or weakened or lessened when its terms

or conditions are changed by law or by treaty without the consent of the other, thereby weakening the position of
the latter.

6. Non-infringement/breach of religious freedom – According to the constitution, no law shall be made respecting

the establishment of religion, or prohibiting the free exercise thereof. The free exercise of religious profession and

worship, without discrimination or preference, shall forever be allowed.

Example: A religious group engaged in the sale of bibles and other religious articles was required to pay taxes on the

sales of the merchandise. Is the imposition of the tax valid?

Answer: No. To require such religious group to pay taxes would impair its free exercise and enjoyment of religious

freedom and worship, as well as its rights and dissemination of religious beliefs.
7. No appropriation for religious purposes – No public money or property shall be appropriated, applied, paid or

employed, directly or indirectly, for the use, benefit, or support of any sect, church, denomination, sectarian institution,

or system of religion, or of any priest, preacher, minister, or other religious teacher, or dignitary as such, except when

such priest, preacher, minister, or dignitary is assigned to the armed forces, or to any penal institution, or government
orphanage or leprosarium.

8. Exemption of religious, charitable or educational entities, non-profit cemeteries, and churches from taxation

– Charitable institutions, churches, and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries,

and all lands, buildings and improvements, actually, directly, and exclusively used for religious, charitable, or

educational purposes shall be exempt from taxation. The word “exclusive” means primarily (mostly or mainly) rather

than solely.
 Who are exempt: Charitable, educational and religious institutions

 What taxes are exempt: Real Property Tax

9. Exemption of revenues and assets of non-stock, non-profit educational institutions and donations for

education purposes from taxation – All revenues and assets of non-stock, non-profit educational institutions used

actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties.
Subject to the conditions prescribed by law, all grants, endowments, donations or contributions used actually, directly,

and exclusively for educational purposes shall be exempt from tax.

 Who are exempt: Non-stock, non-profit educational institutions

 What taxes are exempt: Income tax, Property tax, Customs Duties

10. Concurrence by a majority of all members of the Congress for the passage of a law granting any tax exception

– According to the constitution, no law granting any tax exemption shall be passed without the concurrence of a

majority of all the members of the Congress. Quorum is not enough.

11. Power of the President to veto any particular item or items in a revenue or tariff bill – The President shall have
the power to veto/reject any particular item or items in an appropriation, revenue or tariff bill, but the veto shall not

affect the item or items to which he does not object.

12. Non-impairment of the jurisdiction of the Supreme Court in tax cases – According to the constitution, the

Supreme Court shall have the power to review, revise, reverse, modify or affirm on appeal or certiorari as the law or

the Rules of Court may provide.

Example: The Congress enacted a law declaring that the decisions of the Court of Tax Appeals shall be final and non-

appealable for purposes of improving the tax collection of the government. Is the law valid?

Answer: No, such law shall violate the constitutional limitation on the non-impairment of the jurisdiction of the

Supreme Court in tax cases.

Inherent Limitations
1. Requirement that levy must be for a public purpose

2. Non-delegation of the legislative power to tax. The people created a legislative department for the exercise of
legislative power. Thus, this power should not be delegated to any other person or body. However, delegation of this

power is permitted in the following cases:

a. Delegation to the President – The Congress may by law authorize the President to fix within specified limits, and

subject to such limitations and restrictions as it may impose tariff rates, import and export quotas, tonnage and
wharfage dues, and other duties or imports, within the framework of the national development program of the

government.

b. Delegation to local governments – Section 5, Article X of the Constitution provides that “each local government

unit shall have the power to create its own sources of revenues and levy taxes, fees and charges, subject to such

guidelines and limitations as the Congress may provide, consistent with the basic policy of the local autonomy.

Such taxes, fees and charges shall accrue exclusively to the local governments.

c. Delegation to administrative bodies. This is otherwise known as the “power of subordinate legislation.”
3. Exemption from taxation of government entities – As a rule, the government may not tax itself so as its

corresponding agencies. However, Congress is allowed by the Philippine Constitution from requiring the government,

or any of its agencies or instrumentalities such as the Armed Forces of the Philippines to pay taxes if it so desires

The rule is:

 Government Agencies performing governmental functions. These are tax exempt unless expressly taxed.

Examples: GSIS, PhilHealth, DepEd, BIR, Bureau of Customs, NBI

 Government Agencies performing proprietary functions. Subject to tax unless expressly exempted. Examples:

Mass Railway Transit (MRT), Light Railway Transit (LRT), Philippine Gaming Corporation (PagCor)
4. International Comity – Comity means, mutual respect among nations, the mutual recognition among nations of one

another’s laws, customs, and institutions. As a result, the property of a foreign state may not be taxed by another
state.

Example: The United States Embassy in the Philippines is being taxed by the Bureau of Customs to pay customs duties

on all properties being transported to the Philippines, for use in the embassy by the ambassador and other diplomatic

officers. May the US government be required to pay? Answer: No, under international comity the property of a
foreign state or government may not be the subject of taxation by another. This principle is based on the sovereign

equality among states under international law, by virtue of which one state cannot exercise its sovereign power over

another
5. Territoriality

Example: A law is passed requiring owners of lands in Indonesia to pay real property tax in the Philippines. Is the law

valid?
Answer: No. A state cannot tax a property lying outside its borders or lay an excise or privilege tax upon the exercise

or enjoyment of a right or privilege in another state. The reason is that the properties located within the jurisdiction

of another state generally do not receive protection from the Philippine Government. Moreover, the tax laws of

particular country do not operate beyond a its jurisdictional limits.

Meaning of Taxes
Taxes are enforced proportional and pecuniary contributions from persons and property levied imposed by the law-

making body (i.e. legislative branch) of the state having jurisdiction over the subject of the burden for the support of the
government and all public needs.

Essential Characteristics of Taxes

1. Taxes are enforced contributions. A tax is not dependent upon the will of the taxpayer. Taxes are not voluntary

payment or donation, and its imposition assent, open or implied, on the person taxed.

2. Taxes are proportionate in character. A tax is laid by some rule of apportionment or is ordinarily based on the

taxpayer’s ability to pay.

3. Taxes are generally payable in money. A tax is understood to be a pecuniary burden – to be discharged alone in

the form of money which must be in legal tender.

4. Taxes are levied on persons or property. A t ax may also be imposed on acts, transactions, rights or privileges. In

each case, however, it is only the person who pays the tax. Property is resorted for the purpose of ascertaining the

amount of tax that must be paid and enforcing payment in case of default on the part of the taxpayer.

5. Taxes are levied by the state which has jurisdiction over the person or property. The object to be taxed must be

subject to the jurisdiction of the taxing state. Although a state can tax all persons within its jurisdiction for all the

property left by them, yet its taxing power necessarily stops at the state boundary lines. It cannot reach over into

another jurisdiction to seize upon person or property for purposes of taxation.

6. Taxes are levied by the law-making body of the state. The power to tax is a legislative power which under the

Constitution, only the Congress can exercise the enactment of tax statutes.
The power to tax is also vested to local legislative bodies, they are now given direct authority to levy taxes, fees, and

other charges pursuant to the Constitution, subject to such guidelines and limitations as may be provided by the law.

7. Taxes are levied for public purpose or purposes. Taxes are collected to provide income for public purposes such

as support to the government, administration of laws, or the payment of public expenses. Revenues derived from
taxes cannot be used for purely private purposes or for the exclusive benefit of private persons.

Classification of Taxes
There are many different kinds of taxes and these can be classified according to various criteria:

1. As to Subject Matter
 a. Personal Tax or Capitation or Poll Tax – Refers to that fixed amount imposed upon certain classes of persons,

or upon persons residing within the territorial jurisdiction of the state regardless of their property, profession or

occupation. Example: Community tax

b. Property Tax – Are taxes imposed on property, whether real or personal, in proportion either to its value or in

accordance with some other reasonable method of apportionment.

c. Excise Tax or Privilege Tax – Are taxes imposed on the taxpayer’s exercise or right or privilege to perform an act

such as the practice of a profession or engage in an occupation. Example: Income tax, Value-Added tax, Percentage
tax

2. As to scope or Authority

a. National Tax – Are taxes imposed by the national government. Example: Income tax, Customs Duties,

Documentary Stamp tax, Value-Added tax, Excise tax

b. Municipal or Local – Are taxes imposed by municipal corporations or local governments. Example: Real Estate

tax, Community tax, Barangay clearance

3. As to Purpose

a. General Tax, Fiscal or Revenue – Are taxes imposed for general purpose, the proceeds of which go to the
National funds. Example: Income tax and Value-Added tax

b. Special Tax – Refers to that imposed for special purposes, the proceeds of which go to certain special funds.

Example: Travel tax and Immigration tax

4. As to the Subject of the Tax Liability

a. Direct Tax – Are taxes imposed upon persons directly bound to pay the tax, which cannot be passed on or shifted

to other persons for payment. Example: Income tax and Community tax

b. Indirect Tax – Are taxes imposed upon persons liable to pay said taxes but which are permitted by law to be

shifted or passed on to other persons for payment. Example: Value-Added tax

5. As to Determination of Amount
a. Specific Tax – Are taxes imposed upon properties and rights whose amount is determined based on weight or

volume capacity or any physical unit of measurement.

Example: Excise tax on wines and liquors

b. Ad Valorem Tax – Ad Valorem is a latin term for “according to value”. Are taxes imposed upon properties and

rights whose amount is determined based on sales price or other specified values of the properties. Example: VAT

and Property Tax

6. As to Graduation or Rate
a. Proportional – Are taxes based on fixed percentage of the amount of the property, income or other basis to be

taxed. Example: Real estate tax, Value-Added tax, other Percentage Tax

b. Progressive or Graduated – Tax rate of which increases as the tax base increases or as the tax bracket increases.

Example: Gift Tax, Estate Tax, Income Tax

c. Regressive Tax – Tax rate of which decreases as the tax base increases or as the tax bracket increases. In the

Philippines, we do not have regressive taxes.

Some important Doctrines in Taxation
1. Double Taxation
2. Escape of Taxation

3. Situs of Taxation

Double Taxation

1. Direct Double Taxation. This happens when:

a. the same subject is taxed twice when it should be taxed only once; and

b. both taxes are imposed on the same purpose by the same taxing authority within the same jurisdiction or taxing
district, for the same taxable period, for the same kind or character of a tax.
If this is done, then the imposition of tax becomes legally objectionable for being oppressive and inequitable.

2. Indirect Double Taxation. This type is allowed and is not unconstitutional. An example of this occurs when a business

tax is imposed by the municipal government prior to the issuance of business license to a taxpayer for engaging in

advertising business. His income from his advertising business shall later be imposed income tax by the national
government.

Escapes of Taxation

Taxpayers escape the payment of taxes through legal and illegal means which can be:
1. Tax Avoidance – This is the legal means of escaping the payment of taxes. This happens when the taxpayer minimizes

his tax liability by taking advantage of legally available tax planning opportunities which is known as tax

minimization.

2. Tax Evasion – This is the illegal process of not complying with applicable provisions of the law. This occurs when the
taxpayer resort to unlawful means to lessen or to get away with his tax liability.

Situs of Taxation

The Situs of taxation is the place of taxation. The rule is that the state may rightfully levy and collect the tax where the

subject being taxed has a situs under its jurisdiction. The situs of taxation is determined by a number of factors:
1. Subject Matter or what is being taxed. He may be a person, property, an act or activity.

2. Nature or which tax to impose. It may be an income tax, an import duty or a real property tax.

3. Citizenship of the taxpayer

4. Residence of the taxpayer

The Tax Collection System

The BIR adopts the File and Pay System. The methods of collection utilized by the BIR are classified into two major

categories:
1. Collection by voluntary compliance. Refers to the act of tendering the payment of a self-assessed tax or is referred
to as “voluntary payment”. This method of collection reflects the “Self-assessment system” under Republic Act 8424.

Under the Self-assessment system, the taxpayer calculates the tax by himself or through an accountant, fills-up his

tax return, files it with the proper tax office, and pays the tax due thereon upon filing.

2. Collection by enforcement. This is conducted through the identification of sectors or business or industries, and/or
 segments of economic activities where the degree of compliance is low, and a subsequent audit or investigation of

enterprises and companies that are part of these selected industries.

The Bureau of Internal Revenue (BIR)

The Bureau of Internal Revenue (BIR) functions under the supervision and control of the Department of Finance (DOF).

The mission of the BIR is “to collect taxes efficiently and effectively, for and at the least cost to the government, through

impartial and consistent enforcement of internal revenue laws, and convenient and honest service to taxpayers.”
The BIR is tasked to help the government meet its target annual budget by way of tax collection.

The duties of the BIR include:

1. assessment and collection of all National taxes, fees and charges;

2. enforcement of Tax laws for forfeitures, penalties, and fines;

3. execution of judgments by the Court of Tax Appeals and other courts; and

4. implementation of the National Internal Revenue Code (NIRC) of the Philippines

All matters pertaining to Philippine Income taxation are under the administration of the BIR headed by the Commissioner

and 4 Deputy Commissioners (Assistants). For administrative purposes, the BIR is under the executive supervision and
control of the Department of Finance.

In addition the bureau through the commissioner of BIR, has the functions of:

1. accounting for all revenues collected;

2. exercising all legal requirements that are appropriate;

3. preventing and prosecuting tax evasions and other illegal activities;

4. exercising supervision and control over its constituents; and

5. performing other functions as may be provided by law.

The Tax Payer Identification Number (TIN)

The TIN is the reference index number issued and assigned by the BIR to each and every person registered in its database.

Once this number is assigned to a particular taxpayer, it is non-transferable. Only one TIN shall be assigned to the

taxpayer. The TIN comprises of a 9 to 13 digit numeric code where the first 9 digits is the TIN proper and the last 4 digits

is branch code (in case of business entities). The following entities and persons are required to secure the TIN:
1. All persons subject to national internal revenue taxes;

2. Persons required to withhold taxes on account of their income payments made to taxable individuals or entities;

3. Person required under the Tax Code to make, render or file a return, statement or other document with the BIR for his

proper identification;
4. Persons applying for a Mayor’s permit;

5. Persons applying for a business license with the Department of Trade and Industry (DTI);

6. Other documents specified in the regulations.

Exercise No. 1

Instruction: Write TRUE if the statement is correct and FALSE if the statement is incorrect.

1. The Philippines as a sovereign state cannot exist without the aid of taxation, because taxation is inherent in
sovereignty.

2. Taxation can only be exercised for the purpose of providing funds or property to its citizens, and not for social and

economic objectives.

3. Taxes are paid only by those who are directly benefiting from the government.
4. The power to tax is not absolute and has limitations in the exercise thereof.

5. Taxes are in some ways dependent upon the will or consent of the person taxed.

6. The power of taxation can be exercised without a previous constitutional authority.

7. A person cannot object to or resist from the payment of taxes solely because he did not receive any personal
benefit arising out from the tax.

8. Taxes are not enforced contributions by the government, they are voluntary contributions of citizens.

9. Mr. Boboy Molley owns an Illegal drug Factory in Banday California, Philippines, He is required to pay tax on his

income.
10. Taxation is a power that can be exercised by the legislature any way it pleases.

Exercise No. 2

Instruction: Write TRUE if the statement is correct and FALSE if the statement is incorrect.
1. Upon the exercise of Eminent Domain, the government can receive just compensation from the owner of the

private property taken by them for Public Purpose.

2. Generally, the power to tax can be delegated to another person or government body in the discharge of their

function.

3. Indirect Double Taxation is not unconstitutional.

4. Progressive Taxation is practiced here in the Philippines.

5. Tax evasion is an example of a tax minimization practice.

6. The levying of tax is essentially an administrative function.

7. A Tax law which requires a religious group engaged in the sale of bibles and other religious articles to pay taxes on
their sales of the merchandise is invalid.

8. Tuition Fees of non-stock and profit oriented educational institution are tax exempt.

9. Indirect Double Taxation is allowed by the Philippine constitution.

10. Tax avoidance is illegal because the taxpayer avoids from paying the tax.
11. Ms. Thalita is working in Saudi Arabia. She earns 30 Million annually for being an OFW. Her income is taxable in the

Philippines.

12. The income of non-stock, non-profit educational institution is exempted from income tax.

13. All laws granting tax exemptions must be approved by a two-thirds (2/3) vote of all the members of the congress.
14. The properties of the Philippine embassy in the US can be taxed with Real Property Tax since it is within their

jurisdiction.

15. Some government agencies may be taxed when expressly stated in a tax law.
 Exercise No. 3
Instruction: Write the letter that corresponds to the right answer.
1. Which of the following statements best describes the power of taxation? The power to tax:

a. Is subject to the President’s authority c. Is subject to constitutional and inherent limitations

b. Can be exercise by the BIR Officials d. All of the above

2. The law permits that this type of tax can be shifted or passed on to other persons for payment.
a. Excise Tax c. Percentage Tax

b. Value-Added Tax d. All of the above

3. There is _______________ when the tax operates with the same force and effect on its subject wherever found.

a. Equal Protection of Laws c. Uniformity of Taxation

b. Due Process d. All of the Above

4. The following institutions are exempt in the payment of real estate tax, which is not one of these?

a. Religious Institutions c. Charitable Institution e. None of the above

b. Non-Government Organization d. Non-Profit Institution

5. Choose the best answer. A fundamental rule in taxation is that the property of one country may not be taxed by
another country. This is known as:

a. International Law c. International Comity

b. Reciprocity d. All of the Above

6. No law granting any tax exemption shall passed without the concurrence of:

a. Majority of all the member of the House c. Majority of all the members present

b. Majority of all the members of the Senate d. Majority of all the members of Congress

7. The government entered into a contract with Moon Telecommunications agreeing that Moon will provide free use
of its telecommunication lines to the government. In return, the company will be exempted from paying income

tax. Can the Congress later on pass a law that all telecommunication companies will be required to pay income tax

regardless of any existing agreement?

a. No, because there is no Due Process

b. No, because of the non-impairment of obligation of contracts clause

c. No, because Moon is a government agency

d. None of the above

8. The delegation of the legislative power to tax which is also known as the “power of subordinate legislation.”
a. Delegation to Administrative Bodies c. Delegation to Local Governments

b. Delegation to the President d. All of the above

9. A tax which is collected for special purpose?

a. Value-Added Tax c. Travel Tax

b. Income Tax d. Documentary Stamp Tax

10. Which of the following may not raise money for the government?

a. Power of Taxation c. Police Power

b. Eminent Domain d. None of the above

11. This means the “ability to pay” principle:

a. Equality or Theoretical Justice c. Administrative Feasibility

b. Fiscal Adequacy d. All of the Above

12. The following are constitutional limitations on the power of taxation, except one:

a. Public Purpose c. Power of the president to veto items in a revenue bill

b. Equal protection of law d. No imprisonment for non-payment of poll tax

13. A canon of taxation which means that tax laws must be clear and concise, capable of proper enforcement, and not
burdensome, convenient as to manner and time of payment.

a. Fiscal Adequacy c. Ability-to-pay principle

b. Administrative Feasibility d. Theoretical Justice

14. Value added tax is an example of:

a. Graduated Tax c. Regressive Tax

b. Progressive Tax d. Proportional Tax

15. 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

16. Which of the following may not raise money for the government?

a. Power of Taxation c. Police Power

b. Eminent Domain d. None of the above

17. One of the characteristic of tax is that

a. It is generally assignable c. It is generally payable in money

b. It is generally based on contract d. None of the above

18. Situs of taxation is the place of taxation. Which of the statements is not true about situs?
a. Subject matter is a must to determine situs
b. Situs of persons is the residence of the taxpayer

c. Citizenship, in determining the situs, is not a factor to consider

d. None of the above

19. It is a tax of 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.

a. Specific c. Special or regulatory

b. Ad valorem d. None of the above

20. Which of following statements is incorrect

a. For the exercise of the power of taxation, the state can tax anything at anytime

b. The provision of taxation in the Philippine Constitution are grants of power and not limitations on taxing powers

c. Taxes may be imposed to raise revenues or to provide disincentives to certain activities within the state
d. The state can have the power of taxation even if the Constitution does not expressly give it to the power to tax