Jaypaul Ocampo Acidera, CPA 2016

CPA Review School of the Philippines

Manila

GENERAL PRINCIPLES OF TAXATION Dela Cruz/De Vera/Lopez/Llamado

D 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

C 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

D 3. Taxation as distinguished from police power and power of eminent domain

a. Property is taken to promote the general welfare
b. Maybe exercised only by the goverment
c. Operates upon the whole citizenry
d. There is generally no limit as to the amount that may be imposed

C 4. Which of the inherent powers maybe exercised even by public service corporations and public
entities
a. Power of taxation
b. Police power
C . Power of eminent domain
d. A and C

C 5. Which of the following statements is correct?

a. The president is authorized to increase national internal revenue tax rates
b. One of the natures of taxation is the reciprocal duties of protection and support between the
state and subjects thereof
C. Every sovereign government has the inherent power to tax
d. Income tax is an indirect tax

D 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

C 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

D . •
8. They exist independent of the constitution being fundamental powers of the state, except
a. Power of taxation
b. Police power
c. Power of eminent domain
d. People power

Tax 80-01
C 9. The power to acquire private property upon payment of just compensation for public purpose
a. Power of taxation
b. Police power
C. Power of eminent domain
d. Power of recall

A 10. The power to regulate liberty and property to promote the general welfare
a. Police power
b. Power of taxation
C. Power of eminent domain
d. Super power

A 11. The power to demand proportionate contributions from persons and property) to defray the
expenses of the government
a. Power of taxation
b. Police power
C . Power of eminent domain
d. National power

D 12. Basic Principles of a sound tax system, except

a. Fiscal adequacy
b. Equality or theoretical justice
C . Administrative feasibility
d. Intellectual sensitivity

B 13. The tax imposed should be proportionate to the taxpayer's ability to pay
a. Fiscal adequacy
b. Equality or theoretical justice
c. Administrative feasibility
d. Economic consistency

A 14. The sources of revenue as a whole, should be sufficient to meet the demands of public
expenditures
a. Fiscal adequacy
b. Equality or theoretical justice
C . Administrative feasibility
d. Revenue generation

C 15. The tax laws must be capable of convenient, just and effective administration
a. Fiscal adequacy
b. Equality or theoretical justice
c. Administrative feasibility
d. Internal acceptability

D 16. Our National Internal Revenue Laws are

a. Political in nature
b. Penal in nature
C. Criminal in nature
d. Civil in nature

C 17. Subject to inherent and constitutional limitations, the power of taxation is regarded as supreme,
plenary, unlimited and comprehensive
a. Basis of taxation
b. Situs of taxation
c. Scope taxation J. O. A.
d. Theory of taxation

Tax 80-01
 3

C 18. Statement I. — 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
a. True False • False False
b. True True False True
C. True True False False
d. False True False False

B 19. The levying or imposition of tax, and the collection of the tax are processes which constitute the
taxation system
a. Basis of taxation
b. Aspects of taxation
C. Nature of taxation
d. Theory of taxation

C 20. The process or means by which the sovereign, through its law-making body raises income to
defray the expenses of the government
a. Toll
b. License fee
c. Taxation
d. Assessment

C 21. 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
b. License fee
C. Taxes
d. Assessment

D 22. Persons or things belonging to the same class shall be taxed at the same rate
a. Simplicity in taxation
b. Reciprocity in taxation
C. Equality in taxation
d. Uniformity in taxation

C 23. The tax should be proportional to the relative value of the property to be taxed
a. Simplicity in taxation
b. Reciprocity in taxation
C. Equality in taxation
d. Uniformity in taxation

D 24. The following are the nature of taxation, except

a. Inherent in sovereignty
b. Essentially legislative in character
C. Subject to inherent and constitutional limitations
d. Subject to approval by the people

B 25. It literally means "place of taxation"; the country that has the power and jurisdiction to levy and
collect the tax.
a. Basis of taxation
b. Situs of taxation
C. Scope of taxation
d. Theory of taxation J. O. A.

Tax 80-01
 4

D 26. The existence of the government is a necessity and that the state has the right to compel all
individuals and property within its limits to contribute
a. Basis of taxation
b. Situs of taxation
C. Scope of taxation
d. Theory of taxation

A 27. The reciprocal duties of support and protection between the people and the government
a. Basis of taxation
b. Situs of taxation
C. Scope of taxation
d. Theory of taxation
•
D 28. A tax must be imposed for public purposes. Which of the following is not a public purpose
a. National defense
b. Public education
C. Improvement of the sugar and coconut industries
d. Improvement of a subdivision road

A 29. Which is not an essential characteristic of a tax?

a. It is unlimited as to amount
b. It is payable in money
C. It is proportionate in character
d. It is an enforced contribution

B 30. 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

B 31. It is the privilege of not being imposed a financial obligation to which others are subject
a. Tax incentive
b. Tax exemption
C. Tax amnesty
d. Tax credit

D 32. 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 CIR, provided the purpose
is public but the courts may review the levy of the tax to determine whether or not the
purpose is public,

A 33. 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 J. O. A.
d. Without it the state can continue to exist

Tax 80-01
D 34. Which of the following is not a determinant of the place of taxation?
a. Source of the income
b. Citizenship of the taxpayer
c. Residence of the taxpayer
d. Amount of tax to be imposed

A 35. An escape from taxation where the tax burden is transferred by the one on whom the tax is
imposed or assessed to another
a. Shifting
b. Exemption
C . Transformation
d. Capitalization

C 36. An escape from taxation where the producer or manufacturer pays the tax and endeavors to
recoup such payment by improving his process of production thereby turning out his units of
products at a lower cost
a. Shifting
b. Exemption
C. Transformation
cl. Capitalization

D 37. An escape from taxation where there is a reduction in the price of the taxed object equal to the
capitalized value of future taxes which the taxpayer expects to be called upon to pay
a. Shifting
b. Exemption
C. Transformation
d. Capitalization

D 38. The use of illegal or fraudulent means to avoid or defeat the payment of tax
a. Shifting
b. Exemption
C. Avoidance
d. Evasion

C 39. The use of legal or permissible means to minimize or avoid taxes

a. Shifting
b. Exemption
C . Avoidance
d. Evasion

A 40. Synonymous to tax evasion

a. Tax dodging
b. Tax minimization
c. Tax exemption
d. Tax invasion

B 41. Synonymous to tax avoidance

a. Tax dodging
b. Tax minimization
c. Tax exemption
d. Tax evasion

C 42. In every 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 J. O. A.
C. Strictly against the government and liberally in favor of the taxpayer
d. Liberally in favor of the government and strictly against the taxpayer
ss
Tax 80411
D 43. In every 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

B 44. In case of conflict between the Tax Code and the Philippine Accounting Standar s (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

A 45. Tax of a fixed amount imposed upon all persons residing within a specified te itory without
regard to their property or occupation they may be engaged in
a. Personal, poll or capitation
b. Property
c. Excise
d. Regressive

B 46. 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
b. Property
C. Excise
d. Regressive

C 47. Tax imposed upon the performance of an act, the enjoyment of privilege or the engaging in an
occupation.
a. Personal, poll or capitation
b. Property
C. Excise
d. Regressive

A 48. Tax which is demanded from the person whom the law intends or desires to pay it,
a. Direct
b. Indirect
c, Excise
d. Percentage

B 49. 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

A 50. 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

B 51. Tax of a fixed proportion of the amount or value of the property with respect to which the tax is
J. O. A.
assessed
a. Specific c. Excise
b. Ad-valorem d. Percentage
Tax 80-01
 7

A 52. 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

C 53. Tax where the rate decreases as the tax base increases
a. Proportional
b. Progressive
C. Regressive
d. Indirect

B 54. Tax where the rate increases as the tax base increases
a. Proportional
b. Progressive
C. Regressive
d. Indirect

D 55. 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.

C 56. The strongest of all inherent powers of the state because without it, the goverment can neither
survive nor dispense any of its other powers and functions effectively.
a. Police Power
b. Power of Eminent Domain
C. Power of Taxation
d. Power of Recall

D 57. This power is superior to the non-impairment clause and is broader in application because it is a
power to make and implement the laws.
a. Power of Taxation
b. Power of Recall
C. Power of Eminent Domain
d. Police Power

D 58. 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 only be imposed prospectively.
d. Tax laws are either political or penal in nature.

C 59. 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. J. O. A.
d. No law granting any tax exemption shall be passed without the concurrence of a majority of all
the members of Congress.

Tax 80-01
C 60. 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.

C 61. 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.

A 62. A tax wherein both the incidence 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. Value added tax
c. Indirect tax
d. Percentage tax

D 63. 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.

C 64. 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

D 65. The power to impose taxes is exercised by

a. The President
b. The Supreme Court
c. Bureau of Internal Revenue
d. Congress

D 66. One of the characteristics of internal revenue laws is that they are:
a. Criminal in nature;
b. Penal in nature;
C . Political in nature;
d. Generally prospective in application.

C 67. Which of the following is not an example of excise tax:

a. Transfer tax;
b. Sales tax;
c. Real property tax;
d. Income tax.

B 68. 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; J. O. A.
d. Are legislative in character.

Tax 80-01
 9

C 69. Which of the following is not a scheme of shifting the incidence of taxation?
a. The manufacturer transfers the tax to the consumer by adding the tax to the selling price of
the goods sold;
b. The purchaser asks for a discount or refuses to buy at regular prices unless it is reduced by
the amount equal to the tax he will pay;
C. Changing the terms of the sale like FOB shipping point in the Philippines to FOB
destination abroad, so that the title passes abroad instead of in the Philippines;
d. The manufacturer transfers the sales tax to the distributor, then in turn to the wholesaler, in
turn to the retailer and finally to the consumer.

D 70. 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.

D 71. 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

D 72. Value-added tax is an example of:

a. Graduated tax;
b. Progressive tax;
C. Regressive tax;
d. Proportional tax.

B 73. 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 •
b. Theoretical justice
C. Administrative feasibility
d. Inherent in sovereignty

B 74. The most superior and least limitable among the fundamental powers of the state:
a. Power of recall
b. Police power
c. Power of taxation
d. Power of eminent domain

B 75. 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.

A 76. 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
J. O. A.

Tax 80 01
-
B 77, 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.

D 78. Which of the following has no power to impose taxes?

a. Provinces
b. Cities
C. Barangays
d. Barrios

D 79. 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 is to raise revenues

C 80. Under this basic principle of a sound tax system, the Government should not incur a deficit:
a. Theoretical justice
b. Administrative feasibility
C. Fiscal Adequacy
d. Uniformity in taxation

C 81. Which of the following may not raise money for the government?
a. Power of taxation
b. Police power
C. Eminent domain
ci. License fees

D 82. No person shall be imprisoned for non-payment of this:

a. Excise tax
b. Value added tax
C. Income tax
d. Poll tax

C 83. This is a demand of ownership:

a. License fee
b. Tax
c, Toll
d. Customs duties

A 84. Income tax is generally regarded as

a. an excise tax
b. a tax on persons
C. a property tax
d. tax on profits

D 85. 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 J. O. A.
C. That the tax law was declared as unconstitutional
d. That there is no benefit derived from the tax

Tax 80-01
A 86. A law granting tax exemption requires the concurrence of
a. Majority vote of members of Congress
b. 2/3 vote of members of Congress
C. 1/4 vote of members of Congress
d. unanimous vote of members of Congress

B 87. No person shall be imprisoned for debt or non-payment of poll tax. This is a (an)
a. Inherent limitation
b. Constitutional limitation
C. International limitation
d. Territorial limitation

B 88. 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

D 89. 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

C 90. Congress can impose a tax at any amount and at anytime 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

B 91. The amount required is dictated by the needs of the government in:
a. License fee
b. Tax
C . Toll
d. Debts

D 92. A charge imposed on land for special benefits derived resulting from public improvements
a. Tax
b. Toll
C. License
d. Special assessment

D 93. Which of the following are National Internal Revenue Taxes?

I. Income tax
II. Estate tax
III. Donor's tax
IV. Value Added tax
V. Other Percentage Tax
VI. Excise tax
VII. Documentary stamp tax
a. I, II, III, IV J. O. A.
b. I, II, III, IV, V
C. I, II, III, IV, V, VI
d. I; II, III, IV, V, VI, VII
Tax 80-01
 12

A 94. 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
a. True, true
b. True, false
C. False, true
d. False, false

A 95. The three fundamental powers of the state are

I. Methods by which the state interfere with private rights
II. Exercised primarily by the legislature
a. True, true
b. True, false •

C. False, true
d. • False, false

A 96 I Police power regulates both liberty and property while the power of eminent domain and
the power of taxation affect only property rights
IL 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.
a. True, true
b. True, false
C. False, true
d. False, false

A 97. I. The property taken in police power is destroyed while the property taken under the power
of eminent domain and power of taxation are not destroyed.
II. In power of taxation, the compensation received is the protection afforded to the citizens; in '
police power the compensation received is the altruistic feeling that somehow you
contributed to the promotion of the general welfare; in power of eminent domain, the
compensation received is the just compensation paid for the property taken.
a. True, true
b. True, false
C. False, true
d. False, false

A 98. I. The point on which a tax is originally imposed is impact of taxation.

II. The point on which a tax burden finally rests or settles down is incidence of taxation
a. True, true
b. True, false
C. False, true
d. False, false

B 99. I. Police power is superior to the non-impairment clause of the constitution

II. Power of taxation is superior to the non-impairment clause of the constitution
a. True, true
b. True, false
c. False, true J. O. A.
d. False, false

Tax 80-01 •
 13

D 100. 1. No person shall be imprisoned for debt or non-payment of tax.

IL Tax laws are civil and penal in nature because there are penalties provided in case
of violation.
a. True true
,

b. True, false
c. False, true
d. False, false

B 101. 1. Tax may be collected in an unlimited amount.

II. License fee may be collected in an unlimited amount
a. True, true
b. True, false
C. False, true
d. False, false

B 102. I. Tax is imposed to raise revenue

H. License fee is imposed to raise revenue
a. True, true
b. True, false
C. False, true
d. False, false

B 103. 1. Tax is a demand of sovereignty

II. Toll is a demand of sovereignty
a. True, true
b. True, false
C. False, true
d. False, false

B 104. I. Tax is imposed on persons, property and property rights.

Lt. Special assessment is imposed on persons, property and property rights
a. True, true
b. True, false
C. False, true
d. False, false

D 105. I. Collection of tax is a legislative act

II. Imposition of tax is an administrative act
a. True, true
b. True, false
c. False, true
d. False, false

B 106. I. A state has the power to tax even if not granted by the constitution
II. A state cannot exercise police power if not granted by the constitution
a. True, true
b. True, false
C. False, true
d. False, false

A 107. I. There can only be a tax if there is a law imposing the tax.
IL The power to tax may include the power to destroy J. O. A.
a. True, true c. False, true
True, false d. False, false
Tax 80-01
 14

D 108. I. Due process of law in taxation under the constitution is a grant of power
IL Provisions in the Philippine constitutioh on taxation are grants of power
a. True, true
b. True, false
C. False, true
d. False, false
•
A 109. I. In the Philippines, there may be double taxation.
II. Taxation may be used to imp*ment the police power of the state
a. True, true
b. True, false
C. False, true
d. False, false

A 110. 1. License fee is a charge imposed under police power.

II. Special assessment is levied on lands only.
a. True, true
b. True, false
C. False, true
d. False, false

B 111. I. Tax is imposed regardless of public improvement.

II. Special assessment is imposed regardless of public improvements
a. True, true
b. True, false
C. False, true
d. False, false

C 112. 1. Tax avoidance is the use by the taxpayer of legal or fraudulent means to avoill or
defeat taxes.
II. Tax evasion is the use by the taxpayer of illegal or fraudulent means to avoid or
defeat taxes.
a. True, true
b. True, false
C. False, true
d. False, false

C 113. I. One of the essential characteristics of a tax is it is unlimited in amount

II. A tax is generally unlimited because it is based on the needs of the state
a. True, true
b. True, false
c. False, true
d. False, false

A 114. I. The power of taxation is inherent in sovereignty being essential to the existence of every
government. Hence, even if not mentioned in the Constitution the state can still exercise
the power and is essentially a legislative function.
II. Even in the absence of any constitutional provision, taxation power falls to Congress as
part of the general power of law-making.
a. • True, true
b. True, false
C. False, true J. O. A.
d. False, false

Tax 80-01
 15

B 115. 1. The President has the power to veto a revenue bill even if such bill was already approved
by Congress.
IL The President is superior to Congress as he/she can veto any bill even if already approved
by Congress.
a. True, true
b. True, false
C. False, true
d. False, false

B 116. A system of taxation where the amount of revenue from indirect taxes are more than the direct
taxes is
a. Progressive system
b. Regressive system •

C. Proportional system
d. Schedular system

D 117. Congress passed a law which granted tax amnesty to those who have not paid their income
taxes in 2010 but did not provide for the refund to those who paid. Is the law valid?
a. No, this will encourage taxpayers not to pay their taxes
b. Yes, Congress has the sole discretion of determining whom to tax
C. No, the grant of amnesty is the sole prerogative of the President
d. Yes, Congress provided for a valid classification.

D 118. Congress passed a law imposing taxes on income earned out of a particular activity that was
not previously taxed. The law, however, taxed incomes already earned within the fiscal year
when the law took effect. Is the law valid?
a. No, because laws are intended to be prospective, not retroactive.
b. No, the law is arbitrary in that it taxes income that has already been spent. ,
C. Yes, since tax laws are the lifeblood of the nation.
d. Yes, tax laws are an exception; they can be given retroactive effect.

A 119. Money collected from taxation shall not be paid to any religious dignitary EXCEPT when
a. The religious dignitary is assigned to the Philippine Army.
b. It is paid by a local government unit.
C. The payment is passed in audit by the COA.
d. it is part of a lawmaker's pork barrel.

B 120. Which theory in taxation states that without taxes, a government would be paralyzed for lack of
power to activate and operate it, resulting in its destruction?
a. Power to destroy theory
b. Lifeblood theory
C. Sumptuary theory
d. Power of love theory

C 121. Double taxation in its general sense means taxing the same subject twice during the same
taxing period. In this sense, double taxation
a. Violates substantive due process
b. Does not violate substantive due process
c. Violates the right to equal protection
d. Does not violate the right o equal protection J. O. A.

Tax 80-01
 16

D 122. The actual effort exerted by the government to effect the exaction of what is due from the
taxpayer is known as
a. Assessment
b. Levy
C. Payment
d. Collection •

B 123. Although the power of taxation is basically legislative in character, it is NOT the function of
Congress to
a. Fix with certainty the amount of taxes
b. Collect the tax levied under the law
c. Identify who should collect the tax
d. Determine who should be subject to the tax

A 124. An example of a tax where the concept of progressivity finds application is the
a. Income tax on individuals •

b. Excise tax on petroleum products

C. Value-added tax on certain articles
d. Amusement tax on boxing exhibitions

D 125. The power to tax is the power to destroy. Is this always so?
a. No. The Executive Branch may decide not to enforce a tax law which it believes to be
confiscatory.
b. Yes. The tax collectors should enforce a tax law even if it results to the destruction of the
property rights of the taxpayer. •

C. Yes. The tax laws should always be enforced because without taxes the very existence of the
State is endangered.
d. No. The Supreme Court may nullify a tax law, hence, property rights are not affected.

THE END

J. O. A.

Tax 80-01