SEIN AVA ED eo TRUE OR FALSE - . b T 1. The three fundamental Powers of the state may be exercise only by the government ; ; T 2. Taxation is a process or means by which the sovereign, through its law-making body raises income to defray. the expenses of the ~{ . government. and public entities, A 4. Police Power regulates both liberty and Property. TT & Taxes are raised to cover the cost of governance. V40. The amount imposed in the exercise of police whether the activity is useful or not “T 11. The distinction of a tax from permit or license fe Which there is generally no limit on the amount that may be imposed, TF 12. Debt, as distinguished from tax, may be paid in kind, F 43. Under the equal protection clause of the constitution, all persons Subject to legislation shall be treated alike under dissimilar fitcumstances and conditions, both in’ the Privileges conferred and liabilities imposed. 14. Tax laws are civil and penal in nature because tt Provided in the case of violation, ¥ 15. Special assessment is a tax. ¥ 16. Special assess here are penalties Person may refuse to pay on the round that hi F oo, Dene from the tax, 20. In the exercise of the power of taxation, the State 43ja dt «444 + Chapter Exercises - Principles 21. In cases of deductions and exemptions, doubts shall be resolved Lewy of local goverment taxes should be exercise only by the Ta taxing power of prownees muneipalties and cles precede from Heaton iy wegeenive when their rate goes up depending on the resources of the person affected. : 2 2; 3B 2 R 25.No law granting any tax exemption shall be passed without the concurrence of 2/3 of all members of Congress. | 28. There is no constitutional prohibition against double taxation in the Philippines. It is something not favored, but nevertheless permissible. . “Global system of income taxation” means separate graduated rates are imposed on different types of income. . One of the schemes of shifting the incidence of tax burden is by transferring the sales tax of a manufacturer to the distributor, then in turn to the wholesaler, to the retailer and finally to the consumer. 29. Transformation is a method by upon whom the tax is imposed such expense through lower quality of his product 30. 1h case of ambiguily, tax laws shall be interpreted liberally in favor of the government. which the manufacturer or producer Pays the tax and strives to recover production cost without sacrificing the MULTIPLE CHOICE Definition, Purpose, Theory and Basis 1, Which ofthe following statements is incorrect? a. Taxes are the revenues raised in the exerci li Power of the State. Sree of the police b. One of the special characteristi is is i aa pe istics of tax is it is Unlimited in c. The three fundamental Powers Of the State are | i State and may be exercised we @ Inherent in the constitutional grant. wwthout the need of any 4. Allof the above 2. The Si tate, having soverei citizens even without authorizing it. ‘statement? a. Itis so becaus and enforce jurisdiction, - fs i ign Speamenorce contributions (tax) upon it Which or see ch Provision in the Constitution ‘ollowing wit, justify the foregoing © the State has the ¢ ’s the supreme Obedience to its will from the people ommend in itChapter Exercises - Principles b. Any provision in the Constitution regarding taxation does not Create rights for the sovereignty to have the power to tax but it merely constitutes limitations upon the supremacy of tax power. c. Both “a” and"b” d. Neither “a® nor “b” 3. Statement 7: The distinction of a tax from permit or license fee is that a lax is imposed for regulation, Statement 2: Non-payment of tax does not necessarily render a business illegal. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect 4. The primary purpose of taxation is to raise revenue for the support of the government. However, taxation is often employed as a devise for regulation by means of which, certain effects or conditions envisioned by the government may be achieved such as: a. Taxation may be used to provide incentive to greater production through grant of tax exemptions. b, Taxation can strengthen weak enterprises by creating conditions conducive to their growth through grant of tax exemptions c. Taxes may be increased in periods of prosperity to curb spending power and halt inflation or lowered in periods of slump to expand business and ward off depression. d. Allofthe above 5. Which of the following statements is correct? a. The purpose of taxation may also be “compensatory*, meaning, it may be used to make up for the benefit received. b. Taxes may be imposed for the equitable distribution of wealth and income in society. c. Both ‘a’ and “b” d. Neither “a” nor “b* 6. 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 b. Lifeblood theory c, Sumptuary theory d. Symbiotic doctrine 45elope Exe — Mine pe fotowing statements ig ot uses 10 EXPER ity evermant 0 efet tne exaction of 28 nybe 9, The acu ef ees Ano Pay i is the reason why the government 10 Sate SU Ee fest cans deed fom one woe : See atm wy tens ust Foe Suwret 2 ete cr enlcontre fo Ge pretacton eae a une aeme © Oo Seeman 2iscoret » Oo sermtsa care S Sip satrens ee rere! ao epea yah pt x ervey el Aer cnet se 9 time providing for the refund of taxes to those who have already paid 7 Sree Ta event 7 eiiceererssattaton tee en py a c. Vald because t was Congress assed the law and it dd ‘net improperty celegate the power to tax. 2 eee ce moedl ‘Congress may grant amnesty. taxes are Chapter Execves — Piniples 12. Congress passed a new law imposing taxes on income eamed out of Particular activly that was not previously taxed. The law, however, {axed incomes already eamed within the fiscal year when the law took effect. 5 the law vad? ‘3, No, because the laws are intended to be prospective, not retroactive, ». No, the law is arbitrary in that it taxes income that has already been spent. Yes. since the tax laws are the ifebiood ofthe government. Yes. tax laws are an exception; they ean be given retroactive effect. c a 13, Due to an uncertainty whether or not a new tax law is applicable 10 printing companies, ABC Printers submited a legal query to the BIR (on that issue. The BIR issued a ruling that piling companies are not covered by the new law. Relying on this ruling. ABC Printers did not Pay the said tax. Subsequently however, the BIR reversed the ruling {and issued a new one stating thatthe tax eavers printing companies. Could tne BIR assess ABC Printers for back taxes corresponding to the years befere the new ruling? 2 Yes, because taxation is the rule and exemption is the exception b. Yes, because taxes are the lifeblood of the government No. the BIR's not allowed to reverse its ruling 4. No, reversal of a ming shall not be gen a retroactive ‘appicaton it will be prejudicial tothe taxpayer se the folowing data forthe next two: ‘The Consttution requires that all revenue bils shall originate “exclusively” from the House of Representatives. Assume that in 2014, Congressman, LUro proposed an expansion of the coverage of the value added tax to be known a8 e-vat law The proposed bill was approved by the House of Representatives later that year. However, the EVAT version of te Senate became the EVAT law. 14, Which of the folowing statements wil justiy the enacted EVAT law? |. The Censbtuton simply means that the initiative for filing revenue, tan or tax bils must come from the House of Representatives on the theory that. elected as they are from the districts, the Members Of the House can be expected to be more. sensitive to the local needs an problems Hit is not the law but the revenue bill which is required by the Constitution to “originate exclusively” in the House of Representatives because a ill originating in the House, may a7hapten Exercises ~ Pct, ‘senate that the resuit yanges I LA be pproducod, riers nena adaeg er al iy be ° Sineither Enor tt b. only le a substitute e-vat by bal eo ime Hue. THE pos oe sa tan se il would be to deny the he a8 ‘ath amendments” But 280 ip me ere saw eh tia meso ee houses of Congress 6, ae Honea Ser Lo insst that a revenue 8 Tagitatve process cunina substanay be the $2 Senate's power noo Een rn Ste oe B iaite Coral inate in the House. ting fn the Senne ose rt prohibited under the Constitution, so Besronteoncgrgogn oo Sees rath c.1, Mang tl 46. Being legisatve in nature, te power fo tax may not be delegated, except " 2, Tollocal governments or polical subsvisions When alowed by the Consitiion 1 When delegation relates merely o administrative implementation | that may cal for some degree of discretionary powers under a set of sufcient standards expressed by law or implied from the policy ‘and purpose ofthe Act 4, Allofthe choices and Aspect of Taxation ‘7. Statement 1: The aspects of taxation ‘exeoutve branches of the goverment ‘Siatement 2: Taxes should be prospective and should not be gen fetroacive effect because they are burdens, ‘2. Only talement tis corect shared by the legislative and 8 ChapleeExecses~ Punelpes Only statemont 2 Is correct © Both statements are correct <4. Both statements are incorrect 10. The power of taxation js basicaly legislative in character, Which of the following Isa legisiatve function? AB c o + Fikwith corainly the amount Yes No Yes Yes of tox + Identity who should collect Yes Yes No Yes the tax + Determine who should be Yes Yes Yes No. subject to tax 19,AS 10 scope of legislative power to tax, which of the following is correct? ‘3, Tho power to tax is supreme, plenary, comprehensive and without any limit because the existence of the government is a nocossity ‘The discretion of Congress in imposing taxos extends to the ‘mode, method and kind of tax, even ithe constitution provides cotienvise, Congress has the right to levy a tax of any kind at any amount asi sees fi, even in he absance of any constitutional, provision. ‘The Sole arbiter of the purpose for which taxes shall be levied 's Congress, provided the purpose is public and the courts ‘may not review the levy ofthe lax to determine whether or not the purpose is public 20. The following are the aspects of taxation | Levy or imposition of the tax on persons, property or excises I~ Collection of taxes already levied Ii Sufficiency of governments sources to salisly its expenditure a. | Hand It . Land tl only . Vand tl only 6. Hand Ml only 21. Which of the following is incorrect? Legislative Administrative 4. Selecting the kind of tax ‘Yes No Fixing amount of tax Yes No -. Prescribing rules of Yes No laxation 49za. whi ohh lo 9, Fring oft tte 1. Valuation of beet Catenion ft a se tohe wer 3, Statement 7 innerent ‘Somat The a ere from 2 constiuonal a 2 eae sfatement2i8 (Ue 6. Statements 1 and are Ue rts Seton ifs bi 24. The folowing are tne harass except oP srongest ofall inerent powers of he State i. tnvelves power estoy ‘Botha andtt 6. Neier’ nore Zu teimlismnetins maybe ec evetie i The yatetrann ett oal government ony © The teal ectre andthe lepelatie branch of goverment unit Neither the local execuve nor the legislative branch of the local govemment can exercise the power. 26. Whete dees taving power ofthe provinces, municipalities and ees | precede fom? ‘2. Consitutonal grant . Legisiaive enactment Presidential decree or Executve act 4. Locallegislaion 2. Statement: Eminent domain m Statement 2: Barras, tarans cone ota sect te Sate exst independent of hy | owe tine local government Units precede rojatberen tts Imo Bo haptesExis = Pcp v6 No a. Statements 1 &2 10 false A ®. Statement tis tru but statement 2s false Legilatve Administrative @. Slaloment sale but statement 2 ue Yes Yes 4. Statements tnd 2 oe vue yes 2. Yes ve Nature, Characteristics and Construction of Tas No bas 28. The following are the nature of taxation, a. Inherent and sovere . Essentially a legisiatve function © Subject to inherent ane constitutional limitation 4. Subject tothe approval ofthe people except 29, ‘The power (0 tox involves power to destroy” meens: ‘8. The power to tax is viewed as the power to destroy in the Sense that a lawful tax cannot be defeated just because its pxercise would be destructive or would bring about insolvency 02 taxpayer. ‘The principle implies that an imposition of lawful regulatory taxes would be destructive to the taxpayers and business. establishments because the government can compel payment ‘of lax and forfeture of property through the exercise of police power, ©. Both“a" and “bt Neither “a” nor“b* of he State's power to tax 30. There can be no tax unless there is a law imposing the tax is ‘consistent with the doctrine of a. Uniformity i taxation Due process of law ©. Non-delegation ofthe power of tax J. Allotihe above the local. | | 31, “The tax should be based on taxpayer's ability to pay". In relation to this, which of the folowing is not correct? ‘No person shall be imprisoned for non-payment of tax A graduated tax table isin consonance with this stalement ‘AS a teary of taxation, this is called “ability to pay theory” ‘AS a base principle of taxation, this is called "theoretical 32, Rule of "No estoppel against the government” means: '. Rule of law that in the perdormance of functions, the state cannot be estopped by the agenis and affcers. 'ay raise money for the government. governmental Teglect of its ‘s 51ehapter BOS~ny yo mistakos oF orrory at starp0 OT Soforeoment of ky ty To govern appleaten oqo corroct application its ages ot boek the ° ition, ao Nanares jtod in the Constital asaens sores oe ot NM of way pease Sato possi affected, _statomont 2 Taxation |S POAT ren of ho person " uaiaee jan depending «Soe eee ann é ‘Statements 1 ond 2 are ue nada st omlgn cat 1. Penalin nature operation although the 1ax statute ‘6 Goneraty prospective in pect Prespennay POMEDG IIS Clay say nove fetogsatve intent 3. Simin ate Jig digs te tomers fee 5. ye nt een rondo De ushnoss ga ‘toguttoy nese 2: Ingen ese ol oie power 4. Utes cv eat oregon 36. The least source of tax laws «, Statutes », Presidential decrees «, Revenue regulations 4, Tax treaties or conventions 37. Slatement 1: A revenue regulation must not be contrary to the ‘Provision ofthe law tattimplament ‘Sialement 2: A revenue rgulalion cannot expand the provision ofthe ‘aw that i iiplements by imposing 2 penalty when the law thal authorizes the revenue regulation does net impose a penal. ', Slatements 1 and2 are false , Siatement is true but statement 2is false ©. Slatoment tis false but statement 2 is tue 2 Chapter Exentves~ Pelalples d. Statoments 1 and 2 are true 0. tn ovory caso of doubt, tax statutes aro construed ‘8, Strictly against the government and tha taxpayor bb, Libor in favor of tho government and the taxpayer ©. Strictly gainst tho govermmant and Nboraly in favor of the taxpayer 0, Uborally in favor of tho government and siriely against the tax payor 139. In ovory caso of daub, tax oxomptions aro construed ‘8, Strictly against tho government and the taxpayer 1b, Liberally in favor ofthe government and the taxpayer Strictly against tho governmont and liberally tn favor of the taxpayor LUberally in favor of the government and sitiely against the taxpayer 4 40, Which of the following statements Is correct? |. lax cannot be imposed without clear and express words for that purpose, |. The provisions of a taxing act are not to be extanded by implication, the law is repealed, taxes assessed before repeal of the law may no longer be collected WV. Tax law is ex post facte In application a. Vand tl oniy ©. Allof to above b. land V only 4. None of the above 41, Whit ta h of the following factors are detorminants to the “Situs of ion? ‘Nature, kind, oF classification ofthe tax being imposed, ‘Subject matter of the tax (person, property, rights or activity) Ail, Citizenship ofthe taxpayer WV. Residence of the taxpayer V. Place of the excise, privilege, business or occupation Vi. Source ofthe income subject to tax 1. Vand Il only Ill, 1V and VI only bi. lV, Vand Vi only 6. 1.1 MAY, Vand Vi 42. Tax of a fit amount imposed among all persons residing within a ‘Speciied teritory without regards to their property or occupation they may be engage 1, Personal, poll or capitation tax ©. Excise tax, 53=—__ hayes Eee gg Regressive po met ra oF 8 PPO of os eet cise cyte enne Ne oC opr, eo so tn eet of PONY en tax tse 00 8 Regressive eet Regres coors os pet! owns scan of, 80 Ser anomie eran? aa en eee 2 Shem erenves ine - jax system Te ciples of sound ta ster “ Teh a! aang eectvely enforced Fryer gaat nestonona Wy, Itshould ta ex 1 Landon Ward V only “47, The sources of revenue shouldbe suflelent to moet the demands a public expenditures. Tis refers to 1 Equaiy or theoveticalusew 1b Fascal adequacy Admstatve feasity &. Rugof apperionmant «. I. lland Il only & Allolthe above 48, Tho tax shouldbe imposed proportionate to the taxpayer ably to pay ‘Equality cr theoreteal justice b. Fiscal adequacy © Administrative eastilty Rule of apporbonment Chapter Exercves~ Srinciples Equality oF theoretical justice Fiscal adequacy ‘Administrative feasibility Rule of apportionment pore tutional Lint SB Sotoment 7 Inherent ifaons aro the natural restictions to safeguard and ensure that the power of taxation shall be exercised by the government only for the betterment of the people whose interest should be served, enhanced and protected. Statement 2: ‘Constitutional limitations are provisions of ‘the fundamental law of the land that restnct the supreme, plenary, unlimited and comprehensive exercised by the State of its inherent power lo tax Siatemonts 1 and 2 are false Statement tis true but statement 2 is false Statement 1is false but statement 2is true Statements 1 and 2 are tru 51, “Equalty in taxation” moans: |. Progressive system of taxation shall be applied, MTho tax taws and their application must be fair, just. Feasonable and proportionate to one's ability to pay. M.The tax laws shall give emphasis on direct rather than indirect taxes or on the abilty-to-pay principle of taxation, a. Tonly . tllonly b. Mlonly Ilana i 52. Which of the following statements correctly described “Equal protection’ clause of the Constitution regarding the government's power to tax? |. All persons subject to legislation shall be treated alike under dssimilarcitcumstances and conditions, bolh in the privileges. conferred and liabilities imposed. The purpose isto protect persons belonging to the same class ‘against intentional and arbitrary discrimination, MW. There is denial ‘of equal protection of laws if there Is discrimination in the implementation of tax laws. a. Land tl only . Hand Ill oniy b. Land it only i tand ttarte Sl funciona tenis nee leg erational comity | 10 raion 8 SU - se ol ‘p, Exercise aw © Dap paw ; Equal ‘of taxation. ‘ iaionen D2 FONEE Te eqtable eset tn sal D8 UNC raracts shal be enacted bicaioness, personages OF convenis crurstand non-prfis Cemeteries ang Tangs and improvements actualy, ds, BES ay reglous oF chara seam taxation ee fo the property of foreig, Te. tx governments = ‘a ch is being looked upon by law Se cen nn Decaee oles ve, exertion (fom tax fs constned a the taxpayer, except in certain situation like: SE a aren ca «nna Ee ety ; Ramee sa capa note 1 ewe enn st pales ry to « mcateatrmemeetl d. Lapplies to all past, present and future tax obligations. 5. Satoment 1: Tax eximptin applies only to government ents ‘hal exercise propa funcions é ‘Statement 2: Al goverment eniles regardless of their functor® ‘ae ered om taxes because I would be impractical for (ht goverment tobe ating self 2. Stalamens and 2 are fae . Stalemont 1 iste but statement 2s false & Slabner is etal someon 2 ci Statenenis andar ue ‘sive | 51. Statement 1: An attems Chap Exes ~ Srndles 58. Which of the following statements correctly described the tax ‘exemption of the government? The State cannot be taxed without its consent, otherwise, such Is derogation to its sovereignty. NN. Tax exemption applies only to government entities through which the government immediately and directly exercises its governmental functions ike the Deparment of Justice, Department of Foreign Affairs, Philippine National Police, and the lke, IM Government agencies performing governmental functions are exempt fom tax unless expressly taxed, while those performing proprietary functions are subject to tax unless oxpressly exempted a. only ©. Monty b. tlonly tang Mt Tox Avoidance/ Double Tax 59. Which of the following is to be regarded as tax minimization through legal means? ‘2. Not deciaring all taxable income Padding of expenses for deduction from income © Opting to transfer the property through sale rather than through donation where tax ablity would be higher d. Allofihe above 60. Which ofthe following is eorect? Tax avoidance, oF tae mininizaton, trough logel means, is ‘Not punishable by law. oh ie ms. 3 Deliberate reduction of taxable income that has been received isan example oftox vedarce, Evasion of the fax takes place only when there are no proceeds on he pat ofthe government &. Allorne ove Pt to minimize one’s tax constitute fraud, ‘axpayer may diminish his lability by any means, which the law. permis, Statement 2: To avis gal bul to evade ii of taxpayer to decrease the amount of what ofise westa taxes, altogether avai them, by meane utich whet no ‘aes, ato by the law permits, cannot 3. Sialements 1 and 2 are fale ». Statement 1 fs ue but statement 2s false legal. The legal rights 7Chapter Exercises ~ Principtes c. Statement 1 is false but statement 2 is true d. Statements 4 and 2 are true 62. Which of the following is an element of double taxation? 1, Same kind of tax Il. Same subject matter Ill. Same taxable period IV. Same taxing authority a. and Il only c. Allof the above b. |, land Ill only d. None of the above 63. 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. b. Does not violate substantive due process. c. Violates the right to equal protection. d. Does not violate the right to equal protection. 64, Statement 1: There can be double taxation where the state merely imposes tax on every separate and distinct business in which a person is engaged. Statement 2: There is no objectionable double taxation if the tenements in the city are subjects to real estate tax while the business of leasing said property are also subject to real dealer's tax. ‘a. Statements 1 & 2 are false b. Statement 1 is true but statement 2 is false c. Statement 1 is false but statement 2 is true d. Statements 1 and 2 are true 65, Ligaya Educational Foundation, Inc., a stock educational institution organized for profit, decided to lease for commercial use a 1,500 sq. m. portion of its school. The school actually, directly, and exclusively used the rents for the maintenance of its schoo! buildings, including payment of janitorial services. Is the leased portion subject to real property tax? a. Yes, since Ligaya is a stock and for profit educational institution. b. No, since the school actually, directly, and exclusively used the rents for educational purposes. c. No, but it may be subject to income taxation on the rents it receives. d. Yes, since the leased portion is not actually, directly, and exclusively used for educational purposes. 68