TAXATION ATTY.

MACMOD, CPA
Basic Principles of Taxation
LECTURE NOTES

BASIC PRINCIPLES OF MODERN TAXATION H. Sources of tax laws:

A. Define Taxation 1. Statutory Laws (Principal source) ex. RA. 8424
1. As a state power: Taxation refers to the 2. Revenue Regulations (detailed explanation of tax
inherent power of a sovereign state acting laws)
through its legislature to impose a proportionate 3. Administrative rulings and opinions (ex. BIR
burden upon persons, property rights or rulings)
transaction to raise revenue to support 4. Judicial Decisions on tax cases (court of tax
government expenditure and as a tool for general appeals/supreme court)
and economic welfare. 5. Treaties of Executive Agreements (source of tax
2. As a process: Taxation refers to the act of exemption)
imposing a tax by a sovereign state to raise 6. Local Tax Laws (care of LGUs)
revenue for government expenses. 7. 1987 constitution (purpose is to limit the power of
taxation) – supreme law of the land
B. What are the PURPOSES of taxation?
1. Primary purposes: to raise funds for the I. Construction and application of tax laws
expenses of the government (also called 1. Tax laws are liberally interpreted in favor of the
Revenue tax payer (if the tax law is not clear that your are
Purpose) taxable, you cannot be taxed because taxes are
2. Secondary purpose: as a tool for general social civil obligations)
and economic welfare (also called
Regulatory/sumptuary/Compensatory purpose) 2. But if tax paer is claiming for exemption or
deduction and law is not clear, interpret against
C. Give the NATURE or CHARACTERISTICS of the the tax payer (reason: life blood theory)
taxing power
1. It is inherent power of a sovereign state – being
J. What are the three inherent powers of the
inherent in sovereignty, the state has the power
state?
to tax even if not expressly granted by the
1. Taxation
constitution.
2. Police Power
2. It is legislative in character – taxation in
3. Power of Eminent Domain
generally exercised by the lawmaking body of a
state.
J-1. Give the similarities and distinctions of
3. It is subject to inherent and constitutional
Taxation, Police Power and Power of Eminent
limitations.
Domain.
Three inherent powers of a state:
D. What is SCOPE of the power of taxation?
1. Power of Taxation – refer to letter A
In the absence of inherent and constitutional
2. Power of Eminent Domain – it refers to the
limitations, the power to tax is comprehensive &
inherent power of a sovereign state to take
unlimited. As a rule, the state thru the congress can
private property for public use upon payment of a
tax any thing at any time and at any amount. (CUPS
just compensation.
– Comprehensive, Unlimited, Plenary, Supreme)
3. Police Power – it refers to the inherent power of a
1. Subject matter of the tax.
sovereign state to enact laws to promote public
2. Situs of taxation.
health, public safety, public morals and the
3. Purpose of the tax.
common good.
4. Amount or rate of tax
5. Method of collection / Importance of Taxation
SIMILARITIES:
1. They are indispensable to government existence.
E. Where does the power of taxation proceed
2. They can exist independent of the constitution.
from?
3. They are the means by which the state interferes
It proceeds from the necessity of the existence of the
with private rights and properties.
government, and since it exists for the People, it can
4. They are generally exercised by the legislature.
compel them to pay taxes.
5. They contemplate an equivalent compensation or
benefit.
F. What is the basis of taxation?
The reciprocal obligation of protection and support
K. What are the forms of avoiding a tax (tax escape)?
between the state and its citizens. In Return for the
1.Tax avoidance - lawful
protection provided by the state, the people pay
2.Tax evasion – unlawful
taxes. Benefit-Protection Theory.
Example: deliberate
- understatement of income
G. Power of judicial REVIEW/ROLE OF COURTS IN
- overstatement of expense
TAX CASES (CTA & SC)
Courts cannot inquire into the wisdom of a taxing act.
Forms of Tax Evasion Schemes
Courts can only review the legality of the tax based
a. Indirect Taxation (shifting)
on the constitutional as well as inherent limitations
b. Tax exemption (+ tax holidays)
and other applicable laws.
c. Tax amnesty (new law from congress)
d. Other forms (such as maximizing allowable
deductions)

The only thing that stands between a man and what he wants from life is often merely the Will to try it and the
FAITH to believe that it is possible. R. Devos
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e. Tax laws should be applied within the
territorial jurisdiction of the state.
DISTINCTIONS: f. Double taxation should be avoided.
2. Constitutional limitations – those that limit
Taxation Eminent Police the power of taxation as embodied in the
Domain Power constitution.
a. Due process of law in taxation and equal
1. As to Imposed upon Imposed Imposed
protection of the laws.
subject persons, upon private upon
b. Rule on uniformity and equity in taxation.
property, real persons,
c. No imprisonment for non-payment of poll tax.
rights or properties property,
(personal tax/residence tax/community
transaction rights or
tax/capitation tax)
transaction
d. Non-impairment of the obligation of
2. As to To raise To acquire For
contracts.
purpose revenue for private regulation
e. No appropriation of public money for religious
government property for and
purposes.
expenses public control
f. Exemption of religious, charitable,
use
educational entities, non-profit cemeteries
3. As to Generally Limited to Limited to
and churches from property taxation.
limitation unlimited the fair the cost of
g. Exemption from taxation of non-stock, non-
value of the license fee
profit educational institutions and donations
expenses and other
for educational purposes.
of regulation property
h. Concurrence by a majority of the members of
control
Congress for passage of a law granting tax
4. As to Taxpayers Private Enforcemen exemption.
act pays taxes property is t of laws for i. The power of the President to veto a revenue
involved taken for public or tariff bill.
public use welfare and j. Non-impairment of the jurisdiction of
common Supreme Court in tax cases.
good 3. Contractual limitations – these are restrictions on
5. As to Protection & Person Protection & the taxing power imposed by previously existing
benefits other receives a other contracts entered into by the government with
received benefits from just benefits another party who may be another state or its own
by the the compensatio from the citizens.
people government n government
N. Give the steps/stages involved under taxation
system.
6. As to Inferior Superior Superior 1st : Imposition of taxes
relationship
to non– 2nd : Collection of taxes
impairment a. Assessment
clause of b. Actual tax collection
the c. Enforcement of tax laws/criminal prosecution
constitution for wilful violation of tax laws
3rd: Payment of taxes
L. Enumerate and briefly define the
principles/characteristics of a SOUND TAX O. Define TAXES
SYSTEM (FAT-C) Taxes are enforced proportional contributions levied
1. Fiscal Adequancy - means the sources of revenue by the state for the support of the government
must be sufficient to meet government expenditures
and other public needs.
2. Administrative Feasibility and Compliance - P. What are the essential characteristics,
means tax laws and regulations must be capable of requisites, or elements of a tax?
being effectively enforced with the least a) It is an enforced contribution.
inconvenience to the taxpayer b) It is generally payable in money.
3. Theoretical Justice/Equality in Taxation - means c) It is proportionate in character.
that a sound tax system must be based on the d) It is levied on persons, property, or the exercise
taxpayers’ ability to pay of a right or privilege.
4. Consistency with Economic Goals - The theory e) It is levied by the State which has jurisdiction
under the canons of taxation which emphasizes on over the subject or object of taxation.
the economic aspect of taxation. f) It is levied by the law-making body of the State.
g) It is levied for public purpose or purposes.
M. What are the limitations on the power of
taxation?
1. Inherent limitations – those that restrict the Q. CLASSIFICATION of taxes
power of taxation even though not provided in 1. What are the kinds of taxes as to subject matter?
the constitution. a. Personal, poll or capitation tax – tax imposed
a. Taxes must be for public purpose. on persons residing within a specific territory.
b. Exemption of government agencies and Example: Basic Community Tax
instrumentalities from taxation. b. Property tax – tax imposed on property,
c. Power to tax cannot be delegated to private whether real or personal.
persons or entities. Example: Real estate tax
d. Tax laws do not apply to properties of foreign c. Excise tax – tax imposed on the exercise of a
government. right or privilege. Also called “Privilege tax”

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Example: Income tax, estate tax, donor’s
tax, etc.,
2. What are the kinds of taxes as to who bears the
burden?
a. Direct tax – tax imposed upon a person who is
directly bound to pay it; tax which the taxpayer
cannot shift to another.
Example: Income tax, estate tax, donor’s tax
b. Indirect tax – tax which forms part of the
purchase price; tax which the taxpayer can shift
to another.
Example: Excise tax on certain goods, other
percentage taxes, value added tax
3. What are the kinds of taxes as to determination
of amount?
a. Specific tax – tax based on weight, number or
some other standards of weight
measurement.
Example: Excise tax on distilled spirits,
wines, cinematographic films
b. Advalorem tax – tax imposed based on the
value of the taxable item.
Example: Real estate tax
4. What are the kinds of taxes as to purpose?
a. General tax – tax imposed for general
purposes of the government.
Example: Income tax, value added tax
b. Specific tax – tax imposed for a special
purpose or purposes.
R. Tax distinguished from OTHER CHARGES and FEES
1. Differentiate tax from toll
TAX
a. Demand of sovereignty
b. Generally amount is unlimited
c. For the support of the government
d. May be imposed by the State only
2. Differentiate tax from special assessment
TAX
a. Imposed on persons, property rights
or transactions
b. For the support of the government
c. Regular exaction
3. Differentiate tax from license fee
TAX
a. Imposed to raise revenue
b. Collected under the power of gov’t
c. Generally amount is unlimited
d. Imposed on persons, property,
rights or transaction
e. Non-payment does not make the
4. Differentiate tax from penalty
TAX
a. Imposed to raise revenue
b. May be imposed by the
State only
5. Differentiate tax from custom’s duty
TAX
a. Imposed upon persons, property,
rights or transactions
b. It comprehends more than the
term custom’s duty
6. Differentiate tax from debt
TAX
a. Based on law
b. Not assignable
c. Payable in money
d. Not subject to set-off
e. Non-payment may result to
imprisonment
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Example: Protective tariff and customs
duties, Special Educational Fund (SEF) Tax,
Special Assessments
5. What are the kinds of taxes as to
jurisdiction/scope or authority imposing
tax?
a. National tax –tax imposed on a national and
for the national government.
Example: National Internal Revenue
taxes
b. Local tax – tax imposed on a local level for
the support of local governments.
6. What are the kinds of taxes as to graduation
or rate?
or a. Proportional tax – the tax rate of which is
fixed or constant.
Example: Corporate Income Tax, value
added tax
b. Progressive tax – the tax rate increases as
the taxable amount or tax bracket increases.
Example: Individual income tax, estate
tax, donor’s tax
c. Regressive tax – the tax rate decreases as
the taxable amount or tax bracket increases.
We have no regressive tax in the Philippines.
TOLL
Demand of proprietorship
Amount is limited to the cost and
maintenance of public improvement.
For the use of another’s property
May be imposed by private individuals or entities
SPECIAL ASSESSMENT
Levied only on lands
Contribution to the cost of public improvement
Exceptional as to time and place
LICENSE FEE
For regulation and control
Collected under the police power
Limited to the necessary expenses or regulation and control
Imposed on the exercise of a right or privilege
Non –payment makes the business illegal business illegal
PENALTY
Imposed to regulate conduct
May be imposed by the private entity
CUSTOM’S DUTY
Imposed on imported or
exported goods
It is also a tax
DEBT
Based on Contract
Assignable
Payable in kind or in money
Subject to set-off
No imprisonment (except when
debt arises from crime)
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f. Bears interest only if Interest depend upon the
delinquent stipulation of the parties.
7. Differentiate tax from tithe
TAX TITHE
a. Based on law Based on religious obligation
b. Rates vary fixed at 10% of one’s earning
z

S. Tax Administration
It is a system involving assessment, collection and
enforcement of taxes, including the execution of
judgment in all tax cases decided in favor of the BIR by
the courts.

T. Powers and duties of the BIR

1. Assessment and collection of all national internal revenue
taxes, fees and chargers
2. Enforcement of all forfeitures, penalties and fines
connected therewith
3. Execution of judgement in all cases decided in its favor by
CTA and ordinary courts
4. Give effect to and administer the supervisory and police
power conferred to it by the NIRC or other laws.

U. Official of the BIR

The BIR shall have a chief to be known as Commissioner
of internal revenue and four assistant chiefs to be known
as Deputy Commissioners.

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True or False: In each of the following, write:
A. If only the first statement is correct.
B. If only the second statement is correct.
C. If both statements are correct.
D. If both statements are incorrect.

21. a. A person may refuse to pay a tax on the ground that h

receives no personal benefit from it.
b. Any citizen has a legal right to question illegal expenditure
of public funds.
22. a. One of the essential characteristics of a tax is it is unlimite
in amount..
b. A tax is generally unlimited because it is based on th
needs of the state.
23. a. A License Fee is a charge imposed under the power of th
taxation.
b. Special assessment is regular exaction.
24. a. Imposition of taxes is the first step in stages of taxation.
b. Collection of taxes is a legislative act.
25. a. A state has the power to tax even if not granted by th
Constitution.
I. GENERAL PRINCIPLES / EXERCISES b. A state cannot exercise police power if not granted by th
A. Identification Constitution.
National Taxation System 1. The overall administrative 26.and
a. There can only be a tax if there is a law imposing the tax.
judicial machinery in the determination and b. Non delegation rule is absolute.
collection of taxes. 27. a. A tax is based on law while debt is based on contract.
Internal Revenue Laws 2. The laws which enumerate b. A tax is also a custom’s duty.
the national taxes and its collection
28. a.or A person cannot be imprisoned for non-payment of a tax.
enforcement. b. A tax may be passed violating uniformity of taxation.
Progressive Taxation System 3. A system where the 29. tax
a. The RDO is known as the alter ego of the BI
increases as the income of the taxpayer increases. Commissioner.
Revenue 4. Any income derived by the b. The BIR Commissioner is directly under the President
government whether from tax or other sources. Office.
Inherent Limitations 5. Limitations on the power30. a.of Provisions in the Philippine Constitution on Taxation ar
taxation not found in the constitution. grants of power.
International Committee 6. Under this specific
b. Due process of law in taxation in the Constitution is a gran
limitation, properties of foreign government are of power.
exempted from taxation. 31. a. An excise tax is also called privilege tax.
Lifeblood Theory 7. The theory that justifies theb. A tax which is neither personal or property is an excise tax
necessity of taxation. 32. a. The power or jurisdiction of court of tax appeals over ta
Protection and Support Theory 8. The theory that emphasizes cases cannot be impaired.
the relationship between state and its inhabitants.b. Equal protection clause is a direct limitation on the powe
Consistency with economic goals 9. The theory under of taxation.
the canons of taxation which emphasizes on 33. the
a. Taxation without representation is tyranny.
economic aspect of taxation. b. In the exercise of taxation, the state can tax anything a
Canons of Taxation 10. It also meansanytime and at any amount.
characteristics of a sound taxation system. 34. a. Taxation and power of Eminent Domain may be exercise
Equality in taxation/Equity in taxation 11. It means taxes
simultaneously.
should be based on the taxpayer’s ability to pay b. Taxation and Police Power may be exercise
and benefits received. simultaneously.
Uniformity of taxation12. It means taxable items of the same 35.class
a. All of our tax laws are statutory laws.
should be taxed at the same rate. b. The non-impairment clause is a statutory law on taxation.
Internal Revenue 13. Refers to the taxes imposed 36. by the
a. Non-payment of tax makes the business illegal.
legislature other than duties on imports and b. The non-payment of license fee makes the business illegal.
exports. 37. a. Margin fee is a tax.
Tax Code/RA 8424 14. It refers to the National Internal b. Custom’s duty is a tax.
Revenue Code. 38. a. Territoriality is one of the constitutional limitations on th
Gross Income Taxation Rule 15. A taxation system wherein power of taxation.
a taxpayer is not entitled to claim any deduction. b. International comity is an inherent limitation in taxation.
Non-delegation rule 16. A principle which prohibits 39. the
a. Taxes may be used for sectarian purposes also if allowe
delegation of a taxing power which has already by an ordinance.
been delegated. b. The President can refuse to implement a tax law if
Indirect taxation (shifting) 17. A form of tax escape appears
by to be unconstitutional.
transferring the burden of taxation to another.
Tax evasion 18. A form of tax escape through40. illegal
a. There can be double taxation in the Philippines.
means. b. Inherent limitations prevail over constitutional ones.
Tax avoidance 19. A form of tax escape through 41. a. A progressive system of taxation means a tax structur
permissible or legal means. where the tax base decreases as the tax rate increases.
Global taxation system 20. A taxation system wherein b. all Tax exemption is a grant of immunity to a particula
income of a taxpayer are added together less taxpayer from tax where others are obliged to pay.
related deductions and subject to only one or42. single
a. Tax avoidance is a form of tax escape that is illegal.
rate. b. Tax evasion is not punishable.
43. a. Taxation includes the power to destroy always.

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b. Taxation can modify an existing contract. 58. All of the following are exceptions to the territoriality doctrin
44. a. A tax may be subjected to set-off or compensation. which is not?
b. A tax ordinarily includes interest. a. In case of taxation of resident or citizens of the Philippines
45. a. A tax bill normally embraces more than one subject. b. If provided under a treaty obligation.
b. Tax bills may come from either Senate or Lower Housec.if In case of International Comity.
certified by the President. d. In case of International organizations.

C. Multiple Choice: In each of the following, choose the best

59. Taxation is equitable in all of the following, EXCEPT:
answer. a. Its burden falls on those better to pay.
46. All are characteristics of the power of taxation, EXCEPT: b. It is based on ability to pay.
a. It is an inherent power. c. It is based on benefits received.
b. It is a legislative in character. d. It is based on uniformity rule.
c. It is civil in character.
d. It is subject to inherent and constitutional limitations.60. The only tax where non-payment of which will not result t

47. Our tax laws are: imprisonment:

a. Political in nature c. Penal in nature. a. Excise tax c. Personal tax
b. Civil in nature d. Social in nature. b. Donor’s tax d. Property tax

48. Also known as tax administration 61. All are privilage tax under the Tax Codeexcept:
a. Collection of taxes c. Payment of taxes a. Income tax
b. Levying of taxes. d. Incidence of taxation b. Donor’s tax
c. Excise tax on certain goods
49. Taxation is an inherent power because:
d. Estate tax
a. It is the life blood of the government.
b. Protection and benefit theory.
62. One of the following can be BOTH a progressive tax and
c. It co-exists with the existence of the state.
proportional tax:
d. It is exercised for the general welfare of the people.
a. Donor’s tax
50. All are essential characteristics of a tax, EXCEPT: b. Basic Income tax on individuals
a. It is an enforced contribution. c. Both a and b
b. It is generally unlimited in amount. d. Estate tax
c. It is generally payable in money.
d. It is a proportionate burden. 63. A tax which is BOTH under taxation and Police Power:
a. Compensatory Tax c. National Tax
51. A tax is invalid in the following cases, EXCEPT: b. Regulatory Tax d. General Tax
a. Theory of taxation and its purpose are disregarded.
b. Basis of taxation is not recognized. 64. A demand of Proprietorship:
c. Inherent and constitutional limitations are not observed. a. Tax c. Toll
d. It results to double taxation. b. Special Assessment d. License Fee

52. All are secondary purposes of taxation, EXCEPT: 65. Levied only on lands:
a. Sumptuary purpose c. Compensatory purpose a. Tax c. Toll
b. Regulatory purpose d. Revenue purpose b. Special Assessment d. License Fee

53. In the absence of inherent and constitutional limitation,

66. the
A proportional tax:
power of tax is: a. Individual income tax c. Donor’s tax
a. Comprehensive, unlimited and plenary b. Corporate income tax d. Estate tax
b. Unlimited and plenary
c. Broad and penal 67. Imposed to regulate conduct as a sanction:
d. Unlimited and political a. Tax c. Penalty
b. Toll d. License fee
54. All are similarities of taxation, police power, and power of
eminent domain, EXCEPT: 68. All are excise taxes as to subject matter except:
a. All are necessary attributes of the Constitution a. Real estate tax
b. All exist independently of the Constitution b. Income tax
c. All contemplate and equivalent benefit c. Excise tax on wine
d. All are superior to the non-impairment clause of the d. Excise tax on cinematographic films
Constitution 69. One of the following is NOT a source of our tax laws:
a. Administrative rulings and opinions
55. Below are characteristics of a sound taxation system, EXCEPT:b. Judicial decisions
a. Administrative feasibility and compliance c. 1987 Constitution
b. Fiscal Adequacy d. Expert Opinion on Taxation
c. Theoretical Justice or equality
d. Uniformity of taxation 70. The government may not do all except one:
a. Tax itself
56. It refers to a fraudulent act of minimizing taxes. b. Delegate its power to tax to private agencies
a. Tax avoidance c. Tax minimization c. Impose tax arbitrarily
b. Tax evasion d. Multiple taxation d. Disregard uniformity in taxation

71. A form of tax escape through which one is given tax immunit
57. One of the following is NOT an inherent limitation: wherein others are subjected to tax:
a. Taxes must be for public purposes a. Shifting c. Tax exemption
b. Equality in Taxation b. Tax immunity d. Tax avoidance
c. Territoriality rule
d. Rule on double taxation

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72. A form of tax escape by a manufacturer or producer who c. For the exercise of the power of taxation, the
improves his proceeds of production thereby minimizing his state can tax anything at any time;
unit production cost: d. The provisions of taxation in the Philippines
a. Tax avoidance c. Transformation Constitution are grants of power and not
b. Capitalization d. Shifting limitations on taxing powers.

73. A waiver by the government’s right to collect tax: 83. Tax as distinguished from license fee:
a. Tax exemption c. Tax avoidance a. Non-payment does not necessary render the
b. Tax amnesty d. Tax evasion business illegal;
b. A regulatory measure;
74. A tax imposed based on the number: c. Imposed in the exercise of police power;
a. Income Tax c. Advalorem Tax d. Limited to cover cost of regulation.
b. Specific Tax d. Custom’s Duties
84. Value-added tax is an example of:
75. The theory which most justifies the necessity of taxation: a. Graduated tax;
a. Protection and benefits theory b. Progressive tax;
b. Revenue purposes theory c. Regressive tax;
c. Lifeblood theory d. Proportional tax.
d. Ability to pay theory
85.Which statement refers to police power as distinguished from
76. One of the characteristics of internal revenue laws is that they
taxation?
are: a. It can only be imposed on specific property or
a. Criminal in nature properties;
b. Penal in nature b. The amount imposed depends on whether the
c. Political in nature activity is useful or not;
d. Generally prospective in application c. It involves the taking of property by the
government;
77. Which of the following is not example of excise tax: d. The amount imposed has no limit.
a. Transfer tax c. Real property tax
b. Sales tax d. Income tax 86. 1st Statement – Tax exemptions are strictly construed again
the government.
78. The following are similarities of the inherent power of 2nd Statement – When the tax law is not clear and there
taxation, eminent domain, and police power, except doubt whether he is taxable or not, the doubt shall be settle
one: against the government.
a. Are necessary attributes of sovereignty a. Only the first statement is correct.
b. Interfere with private rights and property b. Only the second statement is correct.
c. Superior to the non-impairment clause c. Both statements are correct.
d. Are legislative in character. d. Both statements are incorrect.

87. 1st Statement – The income from bank deposit of a Tax-exemp

79. The power of taxation is inherent in sovereignty being essential
to the existence of every government. Hence, even if not Catholic Church is taxable.
mentioned in the Constitution the state can sill exercise the 2nd Statement – Donations for educational purposes are ta
power. It is essentially a legislative function. Even in the exempt under the NIRC.
absence of any constitutional provision, taxation power fails a. to True; False c. True; True
Congress as part of the general power of law-making. b. False; True d. False; False
a. False; False c. True; True
b. False; True d. True; False 88. 1st Statement – Tax imposed outside the situs of Taxation
voidable.
80. Which of the following is not a scheme of shifting the incidence2nd Statement – International Comity is an exception to th
of taxation? territoriality doctrine.
a. The manufacturer transfer the tax to the consumer a. by True; False c. True; True
adding the tax to the selling price of the goods sold; b. False; True d. False; False
b. The tax forms part of the purchase price;
c. 89. Imposed
Changing the terms of the sale like FOB shipping point in based on the control & superiority of one country ove
another:
the Philippines to FOB destination abroad, so that the title
passes abroad instead of in the Philippines. a. TITHE
d. b. TAX
The manufacturer transfer the sales tax to the distributor,
c. TRIBUTE
then in turn to the wholesaler, in turn to the retailer and
finally to the consumer. d. TOLL

90. Imposed based on religious obligation:

81. In case of conflict between the tax code and generally accepted
accounting principles (GAAP): a. TITHE c. TRIBUTE
a. Both tax codes and GAAP shall be enforced; b. TAX d. TOLL
b. GAAP shall prevail over tax code;
c. Tax code shall prevail over GAAP; 91. Taxes are:
d. The issue shall be resolved by the courts. a. Retroactive
b. Prospective
82. Which of the following statements is not correct? c. Generally proportional
a. Taxes may be imposed to raise revenues or to d. Personal to the taxpayer
regulate certain activities within the state;
b. The state can have the power of taxation even if 92. 1st Statement Government owned and controlled corporatio
the Constitution does not expressly give it the are exempt from tax.
power to tax;

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2nd Statement Tax liabilities of a corporation will also extend
98. Our tax laws are both:
to the stockholders as a rule. a. Progressive and prospective
a. True, True c. False, True b. Civil and prospective
b. False, False d. True, False c. Penal and regulatory
d. Personal and regulatory
93. All are objectives of taxation except:
a. Revenue purpose 99. All are indirect constitutional limitations except:
b. Regulation a. Non imprisonment for non-payment of poll tax
c. Increase of social inequity b. Due process clause
d. Encourage economic growth c. Equal protection clause
d. Religions freedom
94. 1st Statement Courts can review or inquire into the wisdom or
100. inAll are sources of Public Revenues except:
advisability of a tax law under the Power of Judicial Review
Taxation a. Grants and Foreign aids
nd
2 Statement Our constitution does not contain any provision b. Administrative revenues
c. Commercial revenues
granting tax exemption to the provision granting tax exemption
to the government. d. Taxes and tithes
a. True, True c. False, True
b. False, False d. True, False 101. 1st statement- Taxation as a rule is unlimited, plenar
comprehensive but not supreme.
nd
95. 1st Statement To be exempt from taxation under the2 statement- Taxation has a dual nature, legislative
Constitution land & buildings must be exclusively and actually character & subject to limitations.
a.
used for religious, educational or charitable purpose, even if True, True c. False, True
not directly. b. False, False d. True, False
2nd Statement Exemptions of non-profit schools are only st
limited to revenue and assets derived from strictly 102.school1 statement- As a rule, the non-observance of the canons o
operations. taxation will make the tax imposition invalid.
a. True, True c. False, True 2nd statement- According to US Supreme Court Justic
b. False, False d. True, False Malcolm, Police Power is the strongest of all the powers
the government.
st
96. 1 Statement A taxpayer’s tax exempt status justifies thea. True, True c. False, True
non-keeping of books of accounts & other accounting records. b. False, False d. True, False
2nd Statement Fiscal tax and regulatory tax are the same.
a. True, True c. False, True 103. 1st statement- A revenue regulation without approval
b. False, False d. True, False Congress does not have the force and effect of law.
2nd statement- Tax avoidance & Tax shifting are two of th
st
97. 1 Statement Our Civil Code prevails over the Tax Code. most common methods of tax escape.
2 Statement Tax regulations promulgated by the Secretary ofa. True, True
nd c. False, True
Finance need not be published in a newspaper of general b. False, False d. True, False
circulation.
a. True, True c. False, True
b. False, False d. True, False

“ If you think you can find the passion and ready to take a chance.
If you really believe you can make it….
Then the Power is in your hands.”

Moment of Truth
By: Survivor

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