MCQs - TAX - General Principles PDF

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General Principles of Taxation The principal purpose of taxation is a. To encourage the growth of home industries through the proper use of tax exemptions and tax incentives b. To implement the police power of the state c. The reduce excessive inequalities of wealth d. To raise revenues for governme...

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TAXATION General Principles of Taxation 1. The principal purpose of taxation is a. To encourage the growth of home industries through the proper use of tax exemptions and tax incentives b. To implement the police power of the state c. The reduce excessive inequalities of wealth d. To raise revenues for governmental needs 2. The aspects of taxation are a. Legislative in character b. Executive in character c. Shared by the legislative and executive departments d. Judicial in character 3. Taxation as distinguished from police power and power of eminent domain a. Property is taken to promote the general welfare b. May be exercised only by the government c. Operates upon the whole citizenry d. There is generally no limit as to the amount that may be imposed 4. Which of the inherent powers may be exercised even by public service corporations and public entities a. Power of taxation c. Power of eminent domain b. Police power d. A and C 5. Which of the following statements is correct? a. Income tax is an indirect tax. b. Our National Internal Revenue Laws are criminal in nature. c. The theory of taxation states that the power of taxation is supreme, plenary, unlimited, and comprehensive. d. Taxation is subject to inherent and constitutional limitations. 6. This is an inherent limitation on the power of taxation a. Rule on uniformity and equity in taxation b. Due process of law and equal protection of the laws c. Non-impairment of the jurisdiction of the Supreme Court in tax cases d. Tax must be for public purpose 7. This is a constitutional limitation on the power of taxation a. Tax laws must be applied within the territorial jurisdiction of the state b. Exemption of government agencies and instrumentalities from taxation c. No appropriation of public money for religious purposes d. Power to tax cannot be delegated to private persons or entities 8. The power to acquire private property upon payment of just compensation for public purpose a. a. Power of taxation c. Power of eminent domain b. b. Police power d. Power of love 9. The power to regulate liberty and property to promote the general welfare a. Police power c. Power of eminent domain b. Power of taxation d. Super power rangers

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TAXATION General Principles of Taxation 10. The tax imposed should be proportionate to the taxpayer’s ability to pay a. Fiscal adequacy c. Administrative feasibility b. Equality or theoretical justice d. Economic consistency 11. The sources of revenue as a whole, should be sufficient to meet the demands of public expenditures a. Fiscal adequacy c. Administrative feasibility b. Equality or theoretical justice d. Revenue generation 13.

a. b. c. d.

Statement 1 — The point on which a tax is originally imposed is impact of taxation Statement 2 - Police power is superior to the non-impairment clause of the constitution Statement 3 -- As a rule, taxes are subject to set-off or compensation Statement 4 - As a rule, provisions on the validity of tax exemptions are resolved liberally in favor of the taxpayer Statement 1 Statement 2 Statement 3 Statement 4 True False False False True True False True True True False False False True False False

14. Enforced proportional contributions from persons and property levied by the state by virtue of its sovereignty for the support of the government and for all public needs a. Toll c. Taxes b. License fee d. Assessment 15. Persons or things belonging to the same class shall be taxed at the same rate a. Simplicity in taxation c. Equality in taxation b. Reciprocity in taxation d. Uniformity in taxation 16. Which is not an essential characteristic of a tax? a. It is unlimited as to amount c. It is proportionate in character b. It is payable in money d. It is an enforced contribution 17. Special assessment is an enforced proportional contribution from owners of land especially benefited by the public improvement. Which one of the following is not considered as one of its characteristics? a. It is levied on land b. It is based on the government’s need of money to support its legitimate objectives c. It is not a personal liability of the persons assessed d. It is based solely on the benefit derived by the owners of the land 18. It is the privilege of not being imposed a financial obligation to which others are subject a. Tax incentive c. Tax amnesty b. Tax exemption d. Tax credit

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TAXATION General Principles of Taxation 19. As to scope of the legislative power to tax, which is not correct? a. Where there are no constitutional restrictions, and provided the subjects are within the territorial jurisdiction of the state, Congress has unlimited discretion as to the persons, property or occupations to be taxed. b. In the absence of any constitutional prohibition, the House of Representatives has the right to levy a tax of any amount it sees fit. c. The discretion of Congress in imposing taxes extends to the mode, method or kind of tax, if not restricted by the constitution. d. The sole arbiter of the purpose for which taxes shall be levied is the Commissioner of Internal Revenue (CIR), provided the purpose is public. However, the courts may review the levy of the tax to determine whether or not the purpose is public. 20. Which of the following is a nature of taxation? a. The power is exercised by legislative action b. It is essentially an administrative function

c. It is generally payable in money. d. The state can exist without it.

21. The use of illegal or fraudulent means to avoid or defeat the payment of tax a. Shifting c. Avoidance b. Exemption d. Evasion 22. The use of legal or permissible means to minimize or avoid taxes a. Shifting c. Avoidance b. Exemption d. Evasion 23. Synonymous to tax evasion a. Tax dodging b. Tax minimization

c. Tax exemption d. Tax shield

24. Synonymous to tax avoidance a. Tax dodging b. Tax minimization

c. Tax exemption d. Tax evasion

25. In case of doubt, tax statutes are construed a. Strictly against the government and the taxpayer b. Liberally in favor of the government and the taxpayer c. Strictly against the government and liberally in favor of the taxpayer d. Liberally in favor of the government and strictly against the taxpayer 26. In case of doubt, tax exemptions are construed a. Strictly against the government and the taxpayer b. Liberally in favor of the government and the taxpayer c. Strictly against the government and liberally in favor of the taxpayer d. Liberally in favor of the government and strictly against the taxpayer 27. In case of conflict between the Tax Code and the Philippine Accounting Standards (PAS) a. PAS shall prevail over the Tax Code b. Tax Code shall prevail over PAS c. PAS and Tax Code shall be both disregarded d. The taxpayer may choose between the PAS or the Tax Code

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TAXATION General Principles of Taxation 28. Tax of a fixed amount imposed upon all persons residing within a specified territory without regard to their property, income, or occupation they may be engaged in a. Personal, poll or capitation c. Excise b. Property d. Regressive 29. Tax imposed on. personal or real property in proportion to its value or on some other reasonable method of apportionment a. Personal, poll or capitation c. Excise b. Property d. Regressive 30. Tax imposed upon the performance of an act, the enjoyment of privilege or the engaging in an occupation. a. Personal, poll or capitation c. Excise b. Property d. Progressive 31. Tax which is demanded from the person whom the law intends or desires to pay it a. Direct b. Indirect c. Excise d. Income 32. Tax which is demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another a. Direct b. Indirect c. Property d. Income 33. Tax which imposes a specific sum by the head or number or by some standard of weight or measurement and which requires no assessment other than a listing or classification of the objects to be taxed a. Specific b. Ad-valorem c. Excise d. Income 34. Tax of a fixed proportion of the amount or value of the property with respect to which the tax is assessed a. Specific c. Excise b. Ad-valorem d. Percentage 35. Tax based on a fixed percentage of the amount of property, income or other basis to be taxed a. Proportional c. Regressive b. Progressive d. Indirect 36. Tax where the rate decreases as the tax base increases a. Proportional b. Progressive c. Regressive

d. Indirect

37. Tax where the rate increases as the tax base increases a. Proportional b. Progressive c. Regressive

d. Indirect

38. Which of the following statements is not correct? a. Tax burdens shall neither be imposed nor presumed to be imposed beyond what the statute expressly and clearly states because tax statutes should be construed strictly against the government. b. Tax exemptions, tax amnesty, tax condonations and their equivalent provisions are not presumed and, when granted, are strictly construed against the taxpayer because such provisions are highly disfavored by the government. c. Exemptions from taxation are highly disfavored in law and he who claims tax exemption must be able to justify his claim or right. d. The Bureau of Internal Revenue has the duty and the exclusive power of enacting, implementing and interpreting tax laws.

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TAXATION General Principles of Taxation 39. The strongest of all inherent powers of the state because without it, the government can neither survive nor dispense any of its other powers and functions effectively. a. Police Power c. Power of Taxation b. Power of Eminent Domain d. Power of Greystone 40. This power is superior to the non—impairment clause and is broader in application because it is the power to make and implement the laws. a. Power of Taxation c. Power of Eminent Domain b. Power of Recall d. Police Power 41. Which of the following statements is not correct? a. An inherent limitation of taxation may be disregarded by the application of a constitutional limitation. b. Income tax liabilities shall be paid by the inhabitants even if foreign invaders occupy our country. c. Taxes may be imposed retroactively by law, but unless so expressed by such law, these taxes must be imposed prospectively. d. Tax laws are either political or penal in nature. 42. Which of the following is not a constitutional limitation on the Power of Taxation? a. No person shall be deprived of life, liberty or property without due process of law. b. No person shall be denied the equal protection of the law. c. No person shall be imprisoned for debt or non-payment of tax. d. No law granting any tax exemption shall be passed without the concurrence of a majority of all the members of Congress. 43. The distinction of a tax from permit or license fee is that a tax is: a. Imposed for regulation. b. One which involves an exercise of police power. c. One in which there is generally no limit on the amount that may be imposed. d. Limited to the cost of regulation. 44. Police power as distinguished from the power of eminent domain: a. Just compensation is received by the owner of the property. b. May be exercised by private individuals. c. May regulate both liberty and property d. Property is taken by the government for public purpose. 45. A tax wherein both the impact of or the liability for the payment of the tax as well as the burden of the tax falls on the same person. a. Direct tax b. VAT c. Indirect tax d. Percentage tax 46. Which one of the following is not a characteristic or element of a tax? a. It is an enforced contribution. b. It is legislative in character. c. It is based on the ability to pay. d. It is payable in money or in kind. 47. Tax as distinguished from license fees: a. Limited to cover cost of regulation. b. A regulatory measure. c. Non-payment does not necessarily render the business illegal d. Imposed in the exercise of police power

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TAXATION General Principles of Taxation 48. The power to impose taxes is exercised by the a. President b. Supreme Court

c. BIR

d. Congress

49. One of the characteristics of internal revenue laws is that they are: a. Criminal in nature c. Political in nature b. Penal in nature d. Generally, prospective in application 50. Which of the following is not an example of excise tax: a. Transfer tax b. Sales tax c. Real property tax

d. Income tax

51. The following are similarities of the inherent power of taxation, eminent domain, and police power, except one: a. Are necessary attributes of sovereignty b. Superior to the non-impairment clause of the constitution c. Compensation/benefit is received d. Are legislative in character 52. Which of the following statements is not correct? a. Taxes may be imposed to raise revenues or to provide disincentives to certain activities within the state b. The state can have the power of taxation even if the Constitution does not expressly give it the power to tax c. For the exercise of the power of taxation, the state can tax anything at any time d. The provisions of taxation in the Philippine Constitution are grants of power enabling the state to impose taxes. 53. License fee as distinguished from tax: a. Non-payment does not necessary render the business illegal; b. A revenue raising measure; c. Imposed in the exercise of taxing power d. Limited to cover cost of regulation 54. Value-added tax is an example of a: a. Graduated tax b. Progressive tax

c. Regressive tax

d. Proportional tax

55. Which tax principle is described in the statement “The more income earned by the taxpayer, the more tax he has to pay. a. Fiscal adequacy c. Administrative feasibility b. Theoretical justice/Equitability d. Inherent in sovereignty 56. One of the characteristics of a tax is that: a. It is generally based on contract. b. It is generally payable in money. c. It is generally assignable. d. It is generally subject to compensation. 57. The following are the characteristics of our internal revenue laws except: a. Political in nature b. Civil in nature c. Generally prospective in application d. May operate retrospectively if Congress so provides

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TAXATION General Principles of Taxation 58. Which of the following statements is wrong? A revenue bill: a. Must originate from the House of Representatives and on which same bill the Senate may propose amendments. b. May originate from the Senate and on which same bill the House of Representatives may propose amendments; c. May have a House version and a Senate version approved separately, and then consolidated, with both houses approving the consolidation version. d. May be recommended by the President to Congress. 59. Tax as distinguished from special assessment: a. not a personal liability of the person assessed b. based wholly on benefits c. exceptional as to time and place d. based on necessity and the purpose is to raise revenues 60. Under this basic principle of a sound tax system, the Government should not incur a deficit: a. Theoretical justice c. Fiscal adequacy b. Administrative feasibility d. Uniformity in taxation 61. Which of the following may not raise money for the government? a. Power of taxation c. Power of eminent domain b. Police power d. License fees 62. No person shall be imprisoned for non-payment of this: a. Excise tax b. VAT c. Income tax 63. This is a demand of ownership: a. License fee b. Tax

c. Toll

d. Poll tax

d. Customs duties

64. Income tax is generally regarded as a. an excise tax b. a tax on persons c. a property tax d. tax on profits 65. Which of the following is not acceptable for legally refusing to pay the tax? a. That the right of the state to collect the tax has prescribed b. That there is no jurisdiction to collect the tax c. That the tax law was declared as unconstitutional d. That there is no benefit derived from the tax 66. A law granting tax exemption requires the concurrence of a. Majority vote of all members of Congress b. 2/3 vote of members of Congress c. % vote of members of Congress d. unanimous vote of members of Congress 67. No person shall be imprisoned for debt or non-payment of a poll tax. This is a (an) a. Inherent limitation c. International limitation b. Constitutional limitation d. Territorial limitation

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TAXATION General Principles of Taxation 68. The Department of Finance thru its officers entered into a contract with foreign investors, granting them exemption from all forms of taxes to encourage investments in the Philippines. The contract is a. Void, unless the President ratifies b. Void, because the power to grant tax exemption is vested in Congress c. Valid, if the President has authorized the officers to enter into such contract d. Valid, because the purpose is to promote public welfare 69. Tax as distinguished from debt a. no imprisonment for non-payment b. may be paid in kind

c. based on contract d. based on law

70. Congress can impose a tax at any amount and at any time shows that a. Taxation is an inherent power of the estate b. Taxation is essentially a legislative power c. Taxation is a very broad power of the state d. Taxation is based on taxpayers’ ability to pay 71. A charge imposed on land for special benefits derived resulting from public improvements a. Tax b. Toll c. License d. Special assessment 72. Which of the following are National Internal 'Revenue Taxes? I. Income tax III. Donor’s tax V. OPT VII. DST II. Estate tax IV. VAT VI. Excise tax a. I, II, III, IV b. I, II, III, IV, V c. I, II, III, IV, V, VI d. I, II, III, IV, V, VI, VII 73. The three fundamental powers of the state are I. Inherent in the state and may be exercised by the state without need of any constitutional grant. II. Not only necessary but indispensable. III. Methods by which the state interferes with private rights. IV. Exercised primarily by the legislature. a. All true c. Half true, half false b. All false d. None of the above 74. I.

Police power regulates both liberty and property while the power of eminent domain and the power of taxation affect only property rights. II. Police power and the power of taxation may be exercised only by the government while the power of eminent domain may be exercised by some private entities. III. The property taken in police power is destroyed while the property taken under the power of eminent domain and power of taxation is not destroyed. IV. In the power of taxation, the compensation received is the protection of the state afforded to its citizens; in police power, a higher standard of living is enjoyed by the citizens; and in the power of eminent domain, a citizen receives just compensation for the property taken from him. a. All true b. All false c. Half true d. None of the above

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TAXATION General Principles of Taxation 75. I. II. III. IV.

76. I. II. III. IV.

77. I. II. III. IV.

78. I. II.

79. I. II. III. IV.

80. I. II. III. IV.

81. I. II.

The point on which a tax is originally imposed is impact of taxation. The point on which a tax burden finally rests or settles down is incidence of taxation. Police power is superior to the non-impairment clause of the constitution. Power of taxation is not superior to the non-impairment clause of the constitution a. All true b. All false c. Half true d. None of the above

No person shall be imprisoned for debt or non-payment of tax. Tax laws are civil and penal in nature because there are criminal penalties when they are violated. Taxes may be collected in an unlimited amount. License fees may be collected in an unlimited amount. a. One statement is true b. Two statements are true. c. Three statements are true d. All statements are true.

Tax is imposed on persons, property, and property rights. Special assessment is imposed on persons, property and property rights. Tax collection is a legislative act. Imposition of tax is an administrative act. a. One statem...