TAXATION – REVIEW QUESTIONS b.

The State can have the power of taxation

even if the Constitution does not expressly give
1. Under this basic principle of a sound tax it the power to tax.
system, the government should not incur a c. For the exercise of the power of taxation, the
deficit: state can tax anything at anytime.
a. Theoretical justice d. The provisions of taxation in the Philippine
b. Administrative feasibility Constitution are grants of power and not
c. Fiscal adequacy limitations on the taxing power.
d. Debt restricting
7. One of the following is not a manifestation of
2. Which one of the following is not lifeblood theory:
characteristic of the state's power to tax? a. Imposition of tax even in the absence of
a. It is inherent in sovereignty constitutional grant.
b. It is legislative in character b. No injunction to enjoin tax collection.
c. It is based on the ability to pay c. Right to select objects and subjects of
d. It is subject to constitutional and Inherent taxation.
limitations d. Equal protection of law

3. What basic principle of a sound tax system is 8. Which is the best answer? A tax reform at
met when congress evolves a progressive any given time underscores the fact that:
system of taxation as mandated in the a. Taxation is an inherent power of the state
constitution? b. Taxation is essentially a legislative power
a. fiscal adequacy c. Taxation is a power that is very broad
b. theoretical justice d. The State can and should adopt progressive
c. administrative feasibility taxation
d. balanced budget
9. The legislative body can impose a tax at any
4. Which of the following is not basic principle amount underscores the legal truism that
of a sound taxation system? taxation is:
a. It should be capable of being effectively a. Taxation is an inherent power of the state
enforced. b. Taxation is essentially a legislative power
b. It must be a progressive tax. c. Taxation is a power that is very broad
c. It must be sufficient to meet government d. The State can and should adopt progressive
expenditures and other public need. taxation
d. It should be exercised to promote public
welfare. 10. Upon taxation depends the government's
ability to serve the people for whose benefit
5. Statement 1: the power of taxation is taxes are collected, hence, taxes may be
inherent in sovereignty being essential to the Imposed even in the absence of constitutional
existence every government. Hence, even if not grants and collection of taxes cannot be
mentioned In the constitution the state can still stopped.
exercise the power. a. Government is a necessity theory
Statements 2: taxation is essentially a legislative b. Benefits to pay theory
function. Even in the absence of any c. Ability to pay theory
constitutional provision, taxation power falls to d. Lifeblood theory
congress as a part of the general power of law
making. 11. The power of taxation proceeds upon what
a. Both statements are false theory?
b. Both statements are true a. Government is necessity theory
c. On statement 1 Is false b. Benefits received theory
d. Only statement I is true c. Ability to pay theory
d. Severance test theory
6. Which of the following statements is not
correct? 12. The basis of taxation is the reciprocal duties
a. Taxes may be imposed to raise revenue or to of protection and support between the State
provide incentives to certain activities within and its Inhabitants.
the State. a. Government is a necessity theory
b. Benefits received theory b. Cities
c. Ability to pay theory c. Barangays
d. Lifeblood theory d. Barrios

13. First statement: In the exercise of the power 18. Which statement is wrong? A revenue bill
of taxation, the State can tax anything, at any a. Must originate from the House of
time, and at any amount. Representatives and on which same bill the
Second statement: Taxes may be imposed not Senate my propose amendments
only to raise revenues, but also to provide b. May originate from the Senate and on which
Incentives and disincentives to certain activities the same bill the House of Representatives
within the State. mnay propose amendments
a. Both statements are correct. c. May have a House version and Senate version
b. The first statement is correct, the second is approved separately.
Incorrect d. May be recommended by the President to
c. Both statements are incorrect. Congress.
d. The first statement is Incorrect, the second is
correct 19. Which statement gives the correct answer?
That a feasibility study need not look into the
14. As a basic principle of taxation, "taxes must taxes of different political subdivisions of
be based on the taxpayer's ability to pay" Is government which may be alternative sites of
called: the business became:
a. equality in taxation a. Provinces, cities and municipalities must have
b. ability to pay theory uniform taxes between and among themselves
c. theoretical justice b. The local taxes of a political subdivision
d. equity in taxation need not be uniform with the local taxes of
another political subdivision
15. One of the characteristics of our internal c. Businesses that are subject to national
revenue laws is that they are: business taxes are exempted from local
a. Political in nature. business taxes
b. Penal in nature. d. Local business taxes may be credited against
c. Generally prospective in operation although national business taxes
the tax statute may nevertheless operate
retrospectively, provided it is clearly the 20. A fundamental rule in taxation is that the
legislative Intent property of one country may not be taxed by
d. Criminal in nature. another country. This is known as:
a. International law
16. Which of the following statements is not b. International comity
correct? c. Reciprocity
a. An Inherent limitation of taxation may be d. International Inhibition
disregarded by the application of a
Constitutional limitation. 21. A tax must be imposed for a public purpose.
b. The property of an educational Institution Which of the following is not a public purpose?
operated by a religious order is exempted from a. National defense
property tax, but its Income is subject to b. Public education
income tax c. Improvement of sugar Industry
c. The prohibition of delegation by the State of d. Constructing a private resort
the power of taxation will still allow the
Bureau of Internal Revenue to modify the roles 22. there can be no tax unless there is law
on time for filing of returns and payment of imposing that tax is consistent with the doctrine
taxes or principle of:
d. The government of taxation is shared by the a. Uniform in taxation.
legislative and executive departments of the b. Due process of law.
government. c. Non-delegation of the power to tax.
d. The power of taxation is very broad and the
17. Which of the following has no power of only limitation is the sense of responsibility of
taxation? the members of the legislature to their
a. Provinces constituents.
23. Some franchise holders who are paying the deprivation of property of those who paid the
franchise tax are being required by an tax without due process.
amendatory law to pay the value-added tax, c. Yes. The purpose is not important as long as
while others remain subjected to franchise lax. the use of the tax can be property accounted
Which of the following provisions makes the for
law unconstitutional? d. No. The purpose shall either be public er
a. No law shall be passed Impairing the private. It cannot be both.
obligations of contract.
b. The rule on taxation shall be uniform. 28. One of the following is not a public purpose:
c. No person shall be deprived of property a. National defense
without due process of law. b. Building of churches common to all religions
d. None of the above. c. Improving sugar Industry
d. Retirement benefits of public officials
24. The City of Manila, claiming that it can
impose taxes under the Local Government Tax 29. A taxpayer who had gross receipts derived
Code, imposed a tax on banks (in addition to from business in the preceding year did not
the percentage tax on banks imposed in the declare it when he paid the poll tax. He paid
National Internal Revenue Code). The banks only basic tax and did not pay the additional
within the City of Manila objected for the poll tax based on gross receipts. Will he be
various reasons given below. Which would Imprisoned?
justify the objection of the banks? a. No, No person shall be Imprisoned for non-
a. The power of taxation cannot be delegated payment of poll tax.
b. Uniformity in taxation b. Yes. This is a case of tax evasion, Tax evasion
C. The rule of double taxation is now a criminal offense.
d. None of these c. No. Paying the basic poll tax is enough. The
additional poll tax is discretionary.
25. First statement: Our Constitution does not d. Yes, Non-payment of poll tax is punishable by
prohibit double taxation. Imprisonment.
Second statement: if double taxation occurs,
the taxpayer may seek relief under the 30. Which of the following may not raise money
uniformity rule or equal protection guarantee. for the government?
a. 1st statement is correct, 2nd statement is A. Power of taxation
wrong B. Police power
b. 1st statement is wrong, 2nd statement is C. Power of eminent domain
correct D. Privatization of government’s capital assets
c. Both statements are correct
d. Both statements are wrong 31. In this power of the state, the person who is
parting with his money or property is presumed
26. Which of the following is not an element of to receive a benefit:
double taxation? A. Taxation
a. Two taxes B. Police power
b. Same subject matter C. Eminent domain
c. Same amount D. Forfeiture power
d. Same year
32. Police power as distinguished from eminent
27. May the purpose of a tax be partly public domain:
and partly private without violating the A. Just compensation is received by the owner
limitation that a tax must be for public purpose? of the property
a. Yes. The purpose to be accomplished by B. May be exercised by private individual
taxation need not be exclusively public. C. Property is taken by the government for
Although private individuals are directly public purposes.
benefited (of giving aids to victims of flood), D. Superior to non-impairment clause of the
the tax will still be valid provided such benefit constitution
is only incidental.
b. No. The purpose to be accomplished by
taxation need to be exclusively public. To
benefit private individuals will be tantamount to
33. Which statement refers to police power as
distinguished from taxation?
A. It can only be imposed on specific properties
B. It involves the taking of property by the
government.
C. The amount imposed has no limit.
D. The amount imposed depends on whether
the activity is useful or not.

34. The following are the similarities of the

inherent power of taxation, eminent domain
and police power, except one:
A. They are necessary attributes of sovereignty
B. They affect all persons or the public
C. They interfere with private rights and
property
D. They are legislative in implementation

35. The proportional contribution by persons

and property levied by the lawmaking body of
the state by virtue of its sovereignty for the
support of the government and all public needs
is referred to as:
a. Taxes
b. Special assessment
c. License fee
d. Penalty

36. In case of deductions and exemptions on

income tax returns, doubts shall be resolved:
a. Liberally in favour of the taxpayer
b. Liberally in favour of the employer
c. Strictly against the government
d. Strictly against the taxpayer

37. One of the characteristics of tax is that it is

generally:
a. Based on contract
b. Payable in money
c. Assignable
d. Optional

38. Which of the following is not an example of

excise tax?
a. Transfer tax
b. Value-added tax
c. Real Property Tax
d. Income Tax

39. Which of the following distinguishes tax

from license fee?
a. A non-payment does not necessarily render
the business illegal
b. A regulatory measure ‘
c. Imposed in the exercise of police power
d. Limited to cover cost of regulation