TAX - CHAPTER 1 (THEORIES)

When the provisions of tax laws are silent as to the taxability of an item, which is true?

b. Exemption applies since vague tax laws are construed against the government.

The agreement among nations to lessen tax burden of their respective subjects is called

b. International comity

In exercising taxation, the government need not consider

b. Just compensation

The provisions in the Constitution regarding taxation are

b. Limitations to the power to tax

What is the theory of taxation?

b. Necessity

Statement 1: The benefit received theory presupposes that some taxpayers within the territorial jurisdiction of the Philippines will be exempted from paying tax so long as they do not receive benefits from the government. Statement 2: The ability to pay theory suggests that some taxpayers may be exempted from tax provided they do not have the ability to pay the same. Which statement is true?

b. Only statement 2

Which is principally limited by the requirement of due process?

b. Police power

Which of the powers of the State is the most superior? Which is regarded as the most important?

b. Police power; Taxation

The Japanese government invested P100,000,000 in a Philippine local bank and earned P10,000,000 interest. Which is correct?

b. The income is exempt due to international comity.

Select the correct statement.

b. The power to tax includes the power to destroy.

What is the primary purpose of taxation?

b. To raise revenue

When a legislative body taxes persons and property, rights and privileges under the same taxable category at the same rate, this is referred to as compliance with the constitutional limitation of:

b. Uniformity

Congress passed a law subjecting government-owned and controlled corporations (GOCCS) to income tax. Is the law valid?

b. Yes, because GOCCs are not government agencies and are essentially commercial in nature.

An educational institution operated by a religious organization was being required by a local government to pay real property tax. Is the assessment valid?

b. Yes, with respect to properties not actually devoted to educational purposes.

The inherent powers of the State are similar in the following respect, except:

c. All are not exercised by private entities.

Which is not a legislative act?

c. Assessment of the tax

Which is considered in the exercise of eminent domain?

c. Both a and b

Statement 1: In the selection of the objects of taxation, the courts have no power to inquire into the wisdom, objectivity, motive, expediency, or necessity of a tax law. Statement 2: An imposition can be both a tax and a regulation. Taxes may be levied to provide means for rehabilitation and stabilization of threatened industry. Which is correct?

c. Both statements

The following are limitations of taxation: A. Territoriality of taxation B. Exemption of the government C. Taxation is for public purpose. D. Non-impairment of contracts E. Non-delegation of the power to tax Which of these are classified as both constitutional and inherent limitations?

c. C and E

Which of the following is not exercised by the government? (Why?)

c. Eminent domain

Statement 1: Taxation is the rule; exemption is the exception. Statement 2: Taxation may be used to implement the police power of the state.

c. I and II are true

Which of the following violates Constitutional provisions?

c. Imposition of license for the sale of religious literature

Which of the following acts in taxation is administrative by nature?

c. Levy or distraint of taxpayers' property for tax delinquency

The Philippine Congress enacted a law requiring foreign banks to withhold taxes earned by Filipino residents in their country and to remit the same to the Philippine government. Is this a valid exercise of taxation power?

c. No, as this leads to encroachment of foreign sovereignty.

Ram is the only practicing lung transplant specialist in Baguio City. The City Government of Baguio passed a local ordinance subjecting the practice of lung transplant to 2% tax based on receipts. Ram objected claiming that other transplant specialists in other regions of the country are not subjected to tax. Is Ram's contention valid?

c. No, because the ordinance would cover all transplant specialist who would practice in Baguio City. The uniformity rule would not be violated.

In order to phase-out a huge deficit, the President of the Philippines passed a law offering all taxpayers with previous tax delinquency to pay a minimum tax in exchange for relief from tax assessment in the period of delinquency. Is this a valid exercise of taxation power?

c. No, because the power of taxation is non-delegated.

A. Taxes should not operate retrospectively. B. Tax is generally for public purpose. Which is true?

a. A only

Which is not legally tenable in refusing to pay tax?

a. Absence of benefit from the government

Which is not a legislative act?

a. Assessment of the tax

Tax exemption bills are approved by

a. Majority of all members of Congress

Which is not a Constitutional limitation?

a. No tax law shall be passed without the concurrence of a majority of all members of Congress.

Licensing of business or profession is an exercise of

a. Police power

The general power to enact laws to protect the well-being of the people is called

a. Police power

Which is mandatorily observed in implementing police power?

a. Public interest

The Constitutional exemption of religious or charitable institutions refers only to

a. Real property tax

What is the basis of taxation?

a. Reciprocal duties of support and protection

Select the incorrect statement.

a. Since there is compensation, eminent domain raises money for the government.

18. Which limitation of taxation is the concept of "situs of taxation" based?

a. Territoriality

With the country under incessant shortage of sugar, the Philippine Congress enacted a law providing tax exemptions and incentives to cane farmers without at the same time granting tax exemptions to rice farmers who produce the staple food of the Philippines. Is the new law valid?

a. Yes, since there is a valid classification of the taxpayers who would be exempted from tax.

The Constitutional exemption of non-stock, non-profit educational institutions refers to

c. Property tax and income tax

Statement 1: Congress can exercise the power of taxation even without Constitutional delegation of the power to tax. Statement 2: Only the legislature can exercise the power of taxation, eminent domain, and police power. Which statement is correct?

c. Statements 1 and 2

This refers to the privilege or immunity from a tax burden which others are subject to:

c. Tax holiday

Which of the following is not an inherent limitation of the power to tax?

c. Tax laws shall be uniform and equitable.

When exemption from a tax imposition is silent or not clearly stated, which is true?

c. Taxation applies since exemptions are construed against the taxpayer.

Select the correct statement.

c. Taxation power shall be exercised by Congress even without an express Constitutional grant.

Select the correct statement.

c. The police power of the State is superior to the non-impairment clause of the Constitution.

Which is the most incorrect statement regarding taxes?

c. There should be personal benefit enjoyed from the government before one is required to pay tax.

All of these are secondary purposes of taxation except

c. To raise revenue for the support of the government

That all taxable articles or properties of the same class shall be taxed at the same rate underscores

c. Uniformity in taxation.

Which of the following normally pays real property tax?

d. AM Property Holdings, a registered property development company

Which of the following powers is inherent or co-existent with the creation of government?

d. All of these

Which of the following is violative of the principle of non-delegation?

d. Allowing the Secretary of Finance and the BIR to issue regulation or rulings which go beyond the scope of a tax law

Which tax exemption is irrevocable?

d. Both A and B

Which of the following statements does not support the principle that tax is not subject to compensation or set-off?

d. Both tax and debt partake the nature of an obligation.

Which provision of the Constitution is double taxation believed to violate?

d. Either A or C

Statement 1: The Taxation power can be used to destroy if the law is valid. Statement 2: A tax law which destroys things, business, or enterprises for the purpose of raising revenue is an invalid tax law. Which is incorrect?

d. Neither statement

Concerned with increasing unemployment rates in the country, the President of the Philippines encouraged the Philippine Senate to pass a law granting special tax privileges to foreign investors who will establish businesses in the country. The Senate accordingly drafted the bill and passed to Congress for approval. Is this valid exercise of taxation power?

d. No. Tax bills shall originate from the House of Representatives.

Which of the following powers of the Commissioner of Internal Revenue cannot be delegated?

d. The power to reverse a ruling of ti e Bureau of Internal Revenue

Which of the following entities will least likely exercise the power of eminent domain?

d. Transportation operators

Which power of the State affects the least number of people?

b. Eminent domain

The following statements reflect the differences among the inherent powers except:

b. Eminent domain and police power do not require Constitutional grant, but taxation, being a formidable power, requires constitutional grant.

A. The power to tax includes the power to exempt B. The power to license includes the power to tax Which is true?

A. A only

The point in which tax is levied is also called

A. Impact of taxation

The power to enforce proportional contribution from the people for the support of the government is

A. Taxation

That courts cannot issue injunction against the government's effort to collect taxes is justified by

A. the lifeblood doctrine

This theory underscores that taxes are indispensable to the existence of the state.

B. Lifeblood Doctrine

A. Taxation is the rule, exception is the exemption.. B. Vague taxation laws are interpreted liberally in favor of the government. Which is false?

C. Both A and B

Which does not properly describe the scope of taxation?

C. Discretionary

International double taxation can be mitigated by any of the following except

D. Entering into treaties to form regional trade blockage against the rest of the world.

Which of the following inappropriately describes the nature of taxation?

D. Generally for Public Purpose

Which is not a public purpose?

D. None of these

Which is not an object of taxation?

D. Public Properties

Which of the following statements is incorrect?

D. Taxes should be collected only for public improvements.

Which is correct?

D. The President of the Philippines can change tariff or imposts without necessity of calling Congress to pass a law for that purpose.

The following are inherent limitations to the power of taxation except one. Choose the exception.

d. Non-appropriation for religious purpose

Which of the following is not a constitutional limitation of the power to tax?

d. Non-delegation of police power

Which of the following is not a constitutional limitation of the power to tax?

d. Non-delegation of the taxing power

Which statement is incorrect?

d. Only those who are able to pay tax can enjoy the privileges and protection of the government.

Select the incorrect statement.

d. Taxes should be collected only for public improvement.