2.

It is an enforced contribution levied by the state by virtue of the sovereignty on persons and
property within its jurisdiction for the support of the government and all public needs.

(1 Puntos)

Special assessment

Toll

License

Tax

3.

One of the characteristics of tax is that it is generally:

(1 Puntos)

payable in money.

assignable.

optional.

based on contract.

4.

All of the following, except one, is an essential characteristic of a tax. Which is the exception?

(1 Puntos)

It is generally payable in money

It is an enforced contribution

It is proportionate in character

It is based on the ability to pay

5.

Which of the following is not a direct tax?

(1 Puntos)

Transfer tax

Immigration tax

Income tax

Value-Added Tax

6.

Which of the following is not an example of a direct tax?

(1 Puntos)

Income tax

Transfer tax

Community tax

Business tax

7.

The basic community tax of P5.00 of an individual is:

(1 Puntos)

a property tax.

a direct tax.

an ad valorem tax.

a national tax.

8.

Tax of fixed proportion to the value of the property with respect to which the tax is assessed
and requires the intervention of assessors or appraisers to estimate the value of such property
before the amount due from each taxpayer can be determined is known as:

(1 Puntos)

specific.

special or regulatory.

ad valorem.

fiscal.

9.

One of the following is not governed by National Internal Revenue Code.

(1 Puntos)

Customs duty

Donor's tax

Income tax

Estate Tax

10.

Which of the following is not an example of excise tax?

(1 Puntos)

Value-Added Tax

Real property tax

Income tax

Transfer tax

11.

As to rate, value-added tax is an example of:

(1 Puntos)

gradated tax.

regressive tax.

proportional tax.

progressive tax.

12.

As to rate, Income Tax on individual is an example of

(1 Puntos)

gradated tax.

progressive tax.

regressive tax.

proportional tax.

13.

A kind of tax where rate increases as the tax base increases.

(1 Puntos)

Regressive tax

Digressive tax

Proportional tax

Progressive tax

14.

The following are kinds of taxes as to graduation. Which one is not?

(1 Puntos)

Progressive

Digressive

Regressive

Uniform

15.

Which of the following terms describes the statement, "that the state has complete discretion
on the amount to be imposed, after distinguishing between a useful and non-useful activity?"

(1 Puntos)

Customs duty

License fee

Tax

Toll

16.

The distinction of a tax from permit or license is that a tax is:

(1 Puntos)

one which involves an exercise of police power.

imposed for regulation.

imposed through the provisions of the Constitution.

one in which there is generally no limit on the amount that may be imposed.

17.

Which of the following is generally based on contract?

(1 Puntos)

Debt

Toll

Penalty

Tax

18.

Which of the following is not a legal way of not paying tax?

(1 Puntos)

Tax exemption

None of the choices

Tax avoidance

Tax evasion

19.

Which of the following is not a scheme of shifting the incidence of taxation?

(1 Puntos)

The purchaser asks for a discount or refuses to buy at regular prices unless it is reduced by the
amount equal to the tax he will pay

Changing the terms of the sale like FOB shipping point in the Philippines to FOB destination
abroad, so that the title passes abroad instead in the Philippines

The manufacturer transfers the sales tax to the distributor, then in turn to the wholesaler, to the
retailer and finally to the consumer

The manufacturer transfers the tax to the consumer by adding the tax to the selling price of the
goods sold

20.

One of the characteristics of internal revenue tax is that they are:

(1 Puntos)

political in nature.

generally prospective in application.

penal in nature.

criminal in nature.

21.

The least source of our tax laws.

(1 Puntos)

BIR rulings

Statutes

Court decisions

Constitution

22.

It is the act of laying a tax, i.e. the process or means by which the sovereign, through its
lawmaking body, raises income to defray the necessary expenses of government.

(1 Puntos)

Police power

None of the choices

Taxation

Power of eminent domain

23.

It is the power of the State or those to whom the power has been delegated to take private
property for public use upon paying the owners a just compensation to be ascertained
according to law.

(1 Puntos)

Taxation

None of the choices

Power of eminent domain

Police power

24.

It is the power of the State to enact such laws in relation to persons and property as may
promote public health, public morals, public safety and general welfare of the people.

(1 Puntos)

Taxation

Power of eminent domain

Police power

None of the choices

25.

Which statement refers to police power as distinguished from taxation?

(1 Puntos)

The amount imposed has no limit.

It can only be imposed on specific property or properties.

The amount imposed depends on whether the activity is useful or not.

It involves the taking of property by the government.

26.

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

(1 Puntos)

Power of taxation

Police power

Power of eminent domain

Privatization of government's capital assets

27.

In this power of the State, the person who is parting with his money or property is presumed to
receive a benefit.

(1 Puntos)

Eminent domain

Taxation

Police power

Forfeiture power

28.

Police power as distinguished from eminent domain.

(1 Puntos)

Just compensation is received by the owner of the property.

May be exercised by private individuals.

Superior to impairment clause of the Constitution.

Property is taken by the government for public purposes.

29.

The following are common to the inherent power of taxation, power of eminent domain and
police power, except for which of the following?

(1 Puntos)

They are legislative in implementation.

They affect all persons or the public.

They are necessary attributes of sovereignty.

They interfere with private rights and property.

30.

The basic principle of taxation, where, "Taxes must be based on the taxpayer's ability to pay"
is called:

(1 Puntos)

equality in taxation.

theoretical justice.

equity in taxation.

ability to pay theory.

31.

Under this basic principle of a sound tax system, the government should not incur a deficit.

(1 Puntos)

Debt restructuring

Fiscal adequacy

Administrative feasibility

Theoretical justice

32.

What basic principle of a sound tax system is met when Congress evolves a progressive
system of taxation as mandated in the Constitution?

(1 Puntos)

Fiscal adequacy

Theoretical justice *

Administrative feasibility

Balanced budget

33.

Real property taxes should not disregard increases in the value of real property occurring over
a long period of time. To do otherwise would violate the canon of a sound tax system referred
to as

(1 Puntos)

symbiotic relationship.

theoretical justice.

administrative feasibility.

fiscal adequacy.

34.

Which among the following concepts of taxation is the basis for the situs of income taxation?

(1 Puntos)

Compensatory purpose of taxation

Lifeblood doctrine of taxation

Sumptuary purpose of taxation

Symbiotic relation in taxation

35.

Which of the following is not a basic principle of a sound taxation system?

(1 Puntos)

It must be a progressive tax.

It should be capable of being effectively enforced

It must be sufficient to meet government expenditures and other public needs.

It should be exercised to promote public welfare.

36.

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.

Taxation is essentially a legislative function. Even in the absence of any constitutional provision,
taxation power falls on Congress as part of the general power of lawmaking.

(1 Puntos)

False, True

True, True

True, False

False, False

37.

Which of the following statements is not correct?

(1 Puntos)

The State can have the power of taxation even if the Constitution does not expressly give it the
power to tax.

For the exercise of the power of taxation, the state can tax anything at any time.

Taxes may be imposed to raise revenue or to provide incentives or disincentives for certain
activities within the State.

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

38.

Which is the best answer? A tax reform at any given time underscores the fact that:

(1 Puntos)

taxation is a power that is very broad.

the State can and should adopt progressive taxation.

taxation is an inherent power of the state.

taxation is essentially a legislative power.

39.

The government's ability to serve the people depends on taxation. Since taxes are collected,
for their benefit, taxes may be imposed even in the absence of constitutional grants and
collection of taxes cannot be stopped.

(1 Puntos)

Ability to pay

Benefits received theory

Lifeblood theory

Government is a necessity theory

40.

One of the following is not a manifestation of lifeblood theory.

(1 Puntos)

No injunction to enjoin tax collection

Imposition of tax even in the absence of constitutional grant

Equal protection of law

Right to select objects and subjects of taxation

41.

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?

(1 Puntos)

Sumptuary theory

Symbiotic doctrine

Lifeblood theory

Power to destroy theory

42.

When a BIR decision affirming an assessment is appealed to the CTA, the BIR's power to
garnish the taxpayer's bank deposits

(1 Puntos)

is not suspended because only final decisions of the BIR are subject to appeal.

is suspended to await the finality of such decision.

is suspended given that the CTA can reverse BIR decisions when prejudicial to the taxpayer.

is not suspended since the continued existence of government depends on tax revenues.

43.

The power of taxation proceeds upon what theory?

(1 Puntos)

Severance test

Benefits received theory

Ability to pay

Government is a necessity theory

44.

That taxation is based on the principle of reciprocal duties of protection and support between
the State and its inhabitants.

(1 Puntos)

Ability to pay

Benefits received theory

Government is a necessity theory

Lifeblood theory

45.

In the exercise of the power of taxation, the State can tax anything, at any time, and at any
amount.

Taxes may be imposed not only to raise revenue, but also to provide incentives and
disincentives to certain activities within the State.

(1 Puntos)

True, True*

False, False

True, False

False, True

46.

Among the nature of taxation is that it is an inherent power being an attribute of sovereignty.
Which among the following is not among its manifestation as such inherent power?

(1 Puntos)

Taxes may be imposed even without a constitutional grant.

There should be no improper delegation of the power to tax.

The State has the right to select the subjects and objects of taxation.

Courts cannot issue an injunction to enjoin the collection of taxes.*

47.

Symbiotic relation is the reason why the government could impose taxes on the income of the
resident citizens derived from sources outside the Philippines.

Jurisdiction is the reason why citizens must provide support to the State so the latter could
continue to give protection.

(1 Puntos)

Both statements are incorrect

Only the second statement is correct

Both statements are correct

Only the first statement is correct*

48.

The City of Masbate passed an ordinance imposing a license fee on all motor vehicles entering
the city between the hours of 9:00a.m. and 5:00p.m. Owners of motor vehicles assailed the
validity of the law. Is the law valid?

(1 Puntos)

No, because it discriminates against those who are not able to pay the license fee, particularly,
the low-salaried employees, and is, therefore, class legislation.

Yes, because it was issued as a source of revenue.

Yes, because it is a legitimate exercise of police power.

No, because it is not imposed by any other municipality.

49.

Which of the following is not one of the canons of a sound tax system?

(1 Puntos)

Convenience

Equality

Certainty

Quantifiability

50.

The President of the Philippines and the Prime Minister of Japan entered into an executive
agreement in respect of a loan facility to the Philippines from Japan whereby it was stipulated
that interest on loans granted by private Japanese financial institutions in the Philippines shall
not be subject to Philippine income tax laws. What basic characteristic of taxation has been
violated by this agreement?

(1 Puntos)

Legislative in character

Administrative feasibility

Theoretical justice

Inherent limitation

51.

Limitations on the power of taxation

The proceeds of the tax must be used for the support of the State or for some recognized
objects of government or directly promote the welfare of the community.

(1 Puntos)

Exemption of government entities from taxation.

There should be no improper delegation of the taxing power.

The power to tax is limited to the territorial jurisdiction of the taxing government.

The tax imposed should be for public purpose.*

52.

A tax must be imposed for public purpose. Which of the following is not a public purpose?

(1 Puntos)

Public education

National defense

Improvement of sugar industry

Renovation of President Duterte’s family home

53.

One of the following is not a public purpose.

(1 Puntos)

Building of churches common to all religions

Retirement benefits of public officials

Improving sugar industry

National defense

54.

Is it possible for the tax to be used partly for public and partly private without violating the
limitation that a tax must be for public purpose?

(1 Puntos)

No. The purpose shall either be public or private. It cannot be both.

No. The purpose to be accomplished by taxation need to be exclusively public. To benefit

private individuals will be tantamount to deprivation of property of those who paid the tax
without due process.*

Yes. The purpose is not important as long as the use of the tax can be property accounted for.

Yes. The purpose to be accomplished by taxation need not be exclusively public. Although
private individuals are directly benefited (e.g. giving aid to flood victims), the tax will still be
valid provided such benefit is only incidental.

55.

An annual tax of P1,000 was imposed upon all residents of the Philippines, who are above 21
years of age, with a gross income of P250,000, whether or not they send their children to
public schools, for the purpose of raising funds in order to improve public school buildings. The
tax is:

(1 Puntos)

for public purpose.

contradicts the inherent limitations.

violative of the equal protection clause of the Constitution.

confiscatory.

56.

A tax does not meet the public purpose limitation if it:

(1 Puntos)

is for the welfare of the nation or greater portion of the population.

Is designed to support the services of government for some of its recognized objects.

Affects the areas as a community rather than as a individuals.

Is for the benefit principally of limited subjects or objects.*

57.

The principle of separation of powers ordains that each of the three branches of the
government has exclusive cognizance of and is supreme in matters falling within its own
constitutionally allocated sphere.

(1 Puntos)

There should be no improper delegation of the taxing power.

Exemption of government entities from taxation.

The power to tax is limited to the territorial jurisdiction of the taxing government.

The tax imposed should be for public purpose.

58.

That there should be no improper delegation of the legislative authority to tax is:

(1 Puntos)

an inherent limitation of on the power of taxation.

a constitutional limitation on the power of taxation.

both a constitutional and inherent limitation on the power of taxation.

a principle of a sound tax system.

59.

Being legislative in nature, the power to tax may not be delegated, except:

(1 Puntos)

when delegation relates merely to administrative implementation that may call for some degree
of discretionary powers under a set of sufficient standards expressed by law or implied from
the policy and purpose of the Act.

when allowed by the Constitution.

to local government (to be exercised by the local legislative bodies thereof) or political
subdivisions.

all of the choices.

60.

This stems from the principle that we pay taxes for the protection and services provided by the
taxing authority which could not be provided outside the territorial boundaries of the taxing
state.

(1 Puntos)

Exemption of government entities from taxation.

There should be no improper delegation of the taxing power.

The tax imposed should be for public purpose.

The power to tax is limited to the territorial jurisdiction of the taxing government.*

61.

The place or authority that has the right to impose and collect taxes.

(1 Puntos)

Scope of taxation

None of the choices

Sources of taxable income

Situs of taxation*

62.

Government agencies performing governmental functions are exempt from tax unless
expressly taxed while those performing proprietary functions are subject to tax unless
expressly exempted.

(1 Puntos)

There should be no improper delegation of the taxing power.

The power to tax is limited to the territorial jurisdiction of the taxing government.

The tax imposed should be for public purpose.

Exemption of government entities from taxation.*

63.

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

(1 Puntos)

International law.

international inhibition.

reciprocity.

international comity.

64.

The Philippine Constitution has expressly adopted the generally accepted principles of
international law as part of the land. Which inherent limitation of taxation is being adhered to?

(1 Puntos)

Public purpose

Non-delegation of power of taxation

International comity*

Territorial jurisdiction

65.

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

(1 Puntos)

The rule of double taxation

Uniformity in taxation

The power of taxation cannot be delegated

None of the choices

66.

A taxpayer who had gross income in the preceding year did not declare it when he paid the poll
tax. He paid only the basic tax and did not pay the additional poll tax based on gross income.
Will he be imprisoned?

(1 Puntos)

No. Paying the basic poll tax is enough. Additional poll tax is discretionary.

No. No person shall be imprisoned for non-payment of poll tax.*

Yes. This is a case of tax evasion. Tax evasion is now a criminal offense.

Yes. Non-payment of poll is punishable by imprisonment.

67.

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

(1 Puntos)

Income tax

Excise tax

Poll tax

Property tax

68.

This requires that all subjects or objects of taxation, similarly situated are to be treated alike or
put on equal footing both in privileges and liabilities.

(1 Puntos)

Uniformity*

Progressive taxation

Due process

None of the choices

69.

Which of the following statements is not correct?

(1 Puntos)

An inherent limitation of taxation may be disregarded by the application of a Constitutional

limitation.

The property of an educational institution operated by a religious order is exempted from

property tax, but its income is subject to income tax.

The power of taxation is shared by the legislative and executive departments of government.

The prohibition of delegation by the state of the power of • taxation will still allow the Bureau of
Internal Revenue to modify the rules regarding time for filing returns and payment of taxes.

70.

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

(1 Puntos)

criminal in nature.

generally prospective in operation although the tax statute may nevertheless operate
retrospectively, provided it is clearly the legislative intent.

political in nature.

penal in nature.

71.

A taxpayer gives the following reasons for refusing to pay a tax. Which of his reasons is not
acceptable for legally refusing to pay the tax?

(1 Puntos)

That there is lack of territorial jurisdiction.

That he has been deprived of due process of law.

That the prescriptive period for the tax has elapsed.

That he will derive no benefit from the tax.

72.

Which of the following is within the power of the Commissioner to obtain information, to
summon, examine and take testimony of persons?

(1 Puntos)

To take such testimony of the persons concerned, under oath, as may be relevant or material
to such inquiry

All of the choices

To cause revenue officers to canvass from time to time of any revenue district or region and
require after and conceming all persons therein who may be liable to pay any intemal revenue
tax, and all persons owning or having the care, management or possession of any object with
respect to which a tax is imposed

To obtain on a regular basis from any person other than the person whose internal revenue tax
liability is subject to audit or investigation

73.

Which of the following powers of the Commissioner of Internal Revenue may not be
delegated?

(1 Puntos)

The power to compromise or abate any tax liability

All of the choices

The power to assign or reassign internal revenue officers to establishments where articles
subject to excise tax are produced or kept

The power to issue rulings of first impression or to reverse, revoke or modify any existing ruling
of the BIR

74.

Which of the following is not under the special power of the Commissioner to make
assessments and prescribe additional requirements for tax administration and enforcement?

(1 Puntos)

To make assessment

To obtain information, examine, summon and take testimony

To require prior accreditation and registration of persons who may represent taxpayer with the
BIR

To prescribe fair market value of real property

75.

Congress passed a sin tax law that increased the tax rates on cigarettes by 1,000%. The law
was thought to be sufficient to drive many cigarette companies out of business, and was
questioned in court by a cigarette company that would go out of business because it would not
be able to pay the increased tax. The cigarette company is __________

(1 Puntos)

wrong because the law recognizes that the power to tax is the power to destroy

correct because Congress, in this case, exceeded its power to tax

wrong because taxes are the lifeblood of the government

correct because no government can deprive a person of his livelihood

76.

XYZ Corporation manufactures glass panels and is almost at the point of insolvency. It has no
more cash and all it has are unsold glass panels. It received an assessment from the BIR for
deficiency income taxes. It wants to pay but due to lack of cash, it seeks permission to pay in
kind with glass panels. Should the BIR grant the requested permission?

(1 Puntos)

It should grant permission; otherwise, XYZ Corporation would not be able to pay.

It should grant permission to make payment convenient to taxpayers.

It should not grant permission because a tax is generally a pecuniary burden.

It should not grant permission because the government does not have the storage facilities for
glass panels.

77.

Mr. A was preparing his income tax return and had some doubt on whether a commission he
earned should be declared for the current year or for the succeeding year. He sought the
opinion of his lawyer who advised him to report the commission in the succeeding year. He
heeded his lawyer's advice and reported the commission in the succeeding year. The lawyer's
advice turned out to be wrong; in Mr. A's petition against the BIR assessment, the court ruled
against Mr. A. Is Mr. A guilty of fraud?

(1 Puntos)

Mr. A's lawyer should pay the tax for giving the wrong advice.

Mr. A is guilty for failing to consult his accountant.

Mr. A is not guilty of fraud as he simply followed the advice of his lawyer.

Mr. A is guilty of fraud; he deliberately did not report the commission in the current year when
he should have done so.

78.

Which statement is WRONG?

(1 Puntos)

The power of tax is subject to certain constitutional limitations

The power of taxation may be exercised by the government, its political subdivisions, and
public utilities;

Generally, there is no limit on the amount of tax that may be imposed;

The money contributed as tax becomes part of the public funds;

79.

The actual effort exerted by the government to effect the exaction of what is due from the
taxpayer is known as

(1 Puntos)

levy.

payment.

collection.

assessment.

80.

Although the power of taxation is basically legislative in character, it is NOT the function of
Congress to

(1 Puntos)

identify who should collect the tax.

determine who should be subject to the tax.

fix with certainty the amount of taxes.

collect the tax levied under the law.

81.

The power to tax is the power to destroy. Is this always so?

(1 Puntos)

No. The Executive Branch may decide not to enforce a tax law which it believes to be
confiscatory.

Yes. The tax collectors should enforce a tax law even if it results to the destruction of the
property rights of a taxpayer.

No. The Supreme Court may nullify a tax law, hence, property rights are not affected.

Yes. Tax laws should always be enforced because without taxes the very existence of the State
is endangered.