ADAMSON UNIVERSITY

Manila

GENERAL PRINCIPLES OF TAXATION

1. They exist independent of the constitution being fundamental powers of the state, except
A. Power of taxation
B. Power of imminent domain
C. Police power
D. People power

2. What are the differences among the inherent powers of the state?

Differences Taxation Police Power Eminent Domain

(a) Exercising authority
(b) Purpose
(c) Compensation received
(d) Persons affected
(e) Amount imposed
(f) Relationship with the
constitution
(g) Impairment of contracts
between government and
persons

3. The process or means by which the sovereign, through its law-making body raises income to defray the
expenses of the government.
A. Toll C. License fee
B. Taxation D. Assessment

4. 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.

5. The actual effort exerted by the government to effect the exaction of what is due from the taxpayer
is known as:
A. assessment. C. payment.
B. levy. D. collection.

6. The principal purpose of taxation is

A. To encourage the growth of home industries through the proper use of tax exemption and tax incentive
B. To implement the police power of the state
C. To reduce excessive inequalities of wealth
D. To raise revenues for governmental needs

7. 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 and not limitations on the
state to impose tax.

8. 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 C. Situs of taxation
B. Scope of taxation D. Theory of taxation

9. The scope of taxation does not include

A. Comprehensive C. Planetary
B. Unlimited D. Supreme

10. Basic Principles of a sound tax system, except

A. Fiscal adequacy C. Equality or theoretical justice
B. Administrative feasibility D. Intellectual sensitivity

TAX 01 – General Principles of Taxation Page 1 of 3

11. The levying or imposition of tax and the assessment and collection of the tax are processes which constitute
the taxation system. These are referred to as
A. Basis of taxation C. Aspects of taxation
B. Nature of taxation D. Theory of taxation

12. Which statement is WRONG?

A. The power of taxation may be exercised by the government, its political subdivisions, and public utilities;
B. Generally, there is no limit on the amount of tax that may be imposed;
C. The money contributed as tax becomes part of the public funds;
D. The power of tax is subject to certain constitutional limitations.

13. The following are inherent limitations of taxation, except

A. Non-delegation of taxing power C. Exemption of government entities
B. Territorial in nature D. Progressive system of taxation

14. On January 5, 2012, a Deed of Absolute Sale was made and entered into between SMDC, as the seller, and
the State of Israel through the Embassy of the State of Israel in Manila, as the buyer, over several floors and
parking units of the SM Aura Center located in Fort Bonifacio Global City, Taguig City to serve as the
embassy's permanent address in the Philippines. The purchase of the Embassy of the State of Israel of real
property is exempt from tax pursuant to
A. Exemption of government entities
B. Situs of taxation
C. International comity
D. Equitable recoupment

15. Which among the following concepts of taxation is the basis for the situs of income taxation?
A. Lifeblood doctrine of taxation
B. Symbiotic relation in taxation
C. Compensatory purpose of taxation
D. Sumptuary purpose of taxation

16. Enumerate the constitutional limitations of taxation

a. Due process
b. Equal protection
c. Non-impairment of contracts
d. Must be uniform and equitable
e. Non-imprisonment for non-payment of poll tax
f. Congress shall evolve a progressive system of taxation
g. All appropriation, revenue or tariff bills shall originate exclusively
in the House of Representatives, but the Senate may propose or
concur with amendments
h. Freedom of religion
i. Freedom of press/expression
j. Charitable institutions, churches, and parsonages or convents
appurtenant thereto, mosques and non-profit cemeteries and all
lands, buildings and improvements ACTUALLY, DIRECTLY and
EXCLUSIVELY USED for charitable, religious and educational
purposes shall be exempt from taxation
k. Tax exemption of all revenues and assets of (a) non-stock, non-
profit educational institutions (b) used ACTUALLY, DIRECTLY
AND EXCLUSIVELY for educational purposes
l. Delegated authority of President to impose tariff rates, import
and export quotas, tonnage and wharfage dues
m. Law granting tax exemption (includes amnesties, condonations
and refunds) shall be passed with concurrence of Congress -
majority of all members voting separately
n. No use of public money or property for religious purposes
o. Power of Local Government to create their own sources and levy
taxes, fees, charges
p. Power of review of the Supreme Court
q. Veto power of the president

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17. In general, a proprietary educational institution that sells an idle land to fund the construction of new
classrooms is:
A. Exempt from the 6% capital gains tax
B. Mandated to pay the 30% regular corporate income tax on the gain from sale
C. Required to withhold the applicable expanded withholding tax rate on the transaction and remit the same
to the BIR.
D. Required to pay the 6% capital gains tax on the gross selling price or fair market value, whichever is
higher

18. In general, a non-stock, non-profit educational institution that sells an idle land to fund the construction of new
classrooms is:
A. Exempt from the 6% capital gains tax
B. Mandated to pay the 30% regular corporate income tax on the gain from sale
C. Required to withhold the applicable expanded withholding tax rate on the transaction and remit the same
to the BIR.
D. Required to pay the 6% capital gains tax on the gross selling price or fair market value, whichever is
higher

19. Persons or things belonging to the same class shall be taxed at the same rate.
A. Simplicity in taxation C. Reciprocity in taxation
B. Equity in taxation D. Uniformity in taxation

20. The tax should be proportional to the relative value of the property to be taxed.
A. Simplicity in taxation C. Reciprocity in taxation
B. Equity in taxation D. Uniformity in taxation

21. The power to tax is the power to destroy. Is this always so?
A. Yes. Tax laws should always be enforced because without taxes the very existence of the state is
endangered.
B. No, the Executive Branch may decide not to enforce a tax law which it believes to be confiscatory
C. Yes, the tax collectors should enforce a tax law even if it results to the destruction of the property rights of
a taxpayer
D. No. The supreme Court may nullify a tax law, hence, property rights are not affected

22. Which of the following is true?

A. Taxes must be imposed prospectively C. Both A and B
B. Taxes may be imposed retroactively by law D. Neither A nor B

23. 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. violates the right to equal protection
C. does not violate substantive due process
D. does not violate the right to equal protection

24. Mr. Alas sells shoes in Makati through a retail store. He pays the VAT on his gross sales to the BIR and the
municipal license tax based on the same gross sales to the City of Makati. He comes to you for advice
because he thinks he is being subjected to double taxation. What advice will you give him?
A. Yes, there is double taxation and it is oppressive.
B. The City of Makati does not have this power.
C. Yes, there is double taxation and this is illegal in the Philippines.
D. Double taxation is allowed where one tax is imposed by the national government and the other by the
local government.

***END OF QUESTIONS***

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