1. Is the power to tax inherent in local government units?

a. No. The power is only exercisable by the national government.

b. No. The power is merely delegated by the mandate of the Constitution.
c. Yes. Local government units are able to exercise the power of local taxation.
d. Yes. Local government units have unbridled discretion in setting rates and objects of local
taxation.

2. The power to impose tax by the local government can only be exercised through:
a. A valid ordinance as enacted by the Sanggunian.
b. A valid proclamation as issued by the local chief executive (mayors, barangay captains, etc.)
c. A valid publication as done by the local secretary in three consecutive weeks.
d. A valid circular as issued by the local treasurer.

3. The following are the limitations to the practice of local taxation:

I. Inherent limitations
II. Constitutional limitations
III. Statutory or congressional limitations

a. I and II only
b. I and III only
c. II and III only
d. I, II and III

4. With respect to local taxes, which agency or office primarily issues advisory tax rulings?
a. Bangko Sentral ng Pilipinas
b. Office of the Local Treasurer
c. Bureau of Local Government Finance
d. Bureau of Internal Revenue

5. The opinions of the Bureau of Local Government Finance are:

a. Conclusive
b. Mandatory
c. Directory
d. Final

6. Statement 1: As a general rule, local government units cannot impose income taxes.
Statement 2: As a general rule, local government units cannot impose estate taxes.
a. Only Statement 1 is true
b. Only Statement 2 is true
c. Both statements are true
d. Both statements are not true

7. Local government units can levy income taxes on:

a. Businesses engaged in general retail and merchandise
b. Insurance and pre-need companies
c. Non-resident foreign corporations
d. Banks and other financial institutions