TAXATION EXAMINATION

1. They exist independent of the Constitution being fundamental

powers of the State, except:

a. Taxation
b. Eminent Domain
c. Police Power
d. People Power 

2. The process or means by which the sovereign, through its law-making body raises income to
defray the necessary expenses of the government:

a. Toll
b. License Fee
c. Taxation
d. Assessment 

3. Which of the following inherent powers of the government is inferior to the non-impairment
clause of the constitution?

a. Taxation
b. Police Power
c. Eminent Domain
d. A and C 

4. The religious congregation was organized as a corporation sole. It owns a 5,000 sq. m. Lot,
registered in the name of the rector and rented out for use as a school site of an educational
institution organized for profit. The sect used the rentals for the support and unkeep of its priests.
Choose the most appropriate ruling about real property tax (RPT) exemption of the 5,000 sq. m. Lot.

a. Exempt from the payment of RBT because it is actually, directly and exclusively used for religious
purposes.
b. Not exempt from the payment of RPT because it is the proceeds, and not the property, that is
actually, directly and exclusively used for religious purposes.
c. Not exempt from the payment of RPT because the user is organized for profit.
d. Exempt from the payment of RPT because it is actually, directly and exclusively used for
educational purposes. 
5. The power to acquire private property upon payment of just
compensation for public purpose:

a. Taxation
b. Police Power
c. Eminent Domain
d. Power of recall 

6. Which of the following may not raise money for

the government?

a. Power of Taxation
b. Police Power
c. Power of Eminent Domain
d. Privatization of government’s capital assets 

7. The power to regulate liberty and property to promote the

general welfare:

a. Taxation
b. Police Power
c. Eminent Domain
d. Power of recall 

8. The power to demand proportionate contributions from persons and property to defray the
necessary expenses of the government:

a. Taxation
b. Police Power
c. Eminent Domain
d. Power of recall 
9. Which statement is wrong?

a. The power of taxation is an inherent power of the

State;
b. The power of taxation cannot be delegated as a rule;
c. License Fees may discriminate against not-useful
activities;
d. Eminent domain can be made to apply to all properties
within the State. 

10. The power to tax is the power to destroy. Is this always so?

a. Yes. The tax collectors should enforce a tax law even if it results to the destruction of the
property rights of a taxpayer.
b. Yes. The tax laws should always be enforced because, without taxes, they very existence
of the State is endangered.
c. No. The Supreme Court may nullify a tax law. Hence, property rights are not affected.
d. No. The Executive Branch may decide not to enforce a tax law which it believes to be
confiscatory. 

11. Police power as distinguished from eminent

domain.

a. Just compensation is received by the owner

of the property.
b. May be exercised by private individuals.
c. Superior to non-impairment clause of the
institution. 
d. Property is taken by the government for
public purposes. 

12. The following are common to the inherent power of taxation, power of eminent domain and police
power, except for which of the following?

a. They are necessary attributes of sovereignty.

b. They interfere with public rights and property.
c. They affect all persons or the public.
d. They are legislative in implementation. 
13. The principal purpose of taxation is:

a. To encourage the growth of home industries through the proper

use of tax incentives
b. To implement the police power of the state
c. To reduce excessive inequalities of wealth
d. To raise revenue for the governmental needs 

14. Which of the following is not a secondary purpose

of taxation?

a. To serve as key instrument of social control

b. To effect a more equitable distribution of wealth
among people
c. To achieve social and economic stability
d. To raise revenue to defray the necessary expenses
of the government 

15. Which of the following is not a characteristic of the

State’s power to tax?

a. It is inherent in sovereignty.
b. It is legislative in character.
c. It is based on the ability to pay.
d. It is subject to constitutional and inherent limitations. 

16. Statement 1: 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. 

Statement 2: Taxation is essentially a legislative function. Even in the absence of any constitutional
provision, taxation power falls to Congress as part of the general power of lawmaking.

a. Both statements are false

b. Only statement 1 is false
c. Both statements are true
d. Only statement 1 is true 
17. The power of taxation proceeds upon what
theory?

a. Government is a necessity theory

b. Ability to pay
c. Benefits received theory
d. Severance Test 

18. That taxation is based on the principle of reciprocal duties of protection and support between
the State and its inhabitants.

a. Government is a necessity theory

b. Ability to pay
c. Benefits received theory
d. Severance Test 

19. It is an enforced contribution levied by the State by virtue of the sovereignty on persons and
property within its jurisdiction for the support of the government and all public needs.

a. Tax
b. Toll
c. Special Assessment
d. License 

20. One of the following is not a characteristic or an

element of tax:

a. It is levied by the legislature

b. It is proportionate in character
c. It is payable in money or in kind
d. It is an enforced contribution 
21. One of the characteristics of
tax is that:

a. It is generally based on
contract
b. It is generally assignable
c. It is generally payable in
money
d. Answer not given 

22. All of the following, except one, are basic principles of a

sound tax system:

a. Fiscal Adequacy
b. Theoretical Justice
c. Administrative Feasibility
d. Inherent in Sovereignty 

23. Under this basic principle of a sound tax system, the government
should not incur a deficit:

a. Theoretical justice
b. Fiscal Adequacy
c. Administrative Feasibility
d. None of the above 

24. The basic principle of a sound tax system, where, “Taxes must be based on the
taxpayer’s ability to pay” is called:

a. Equality in Taxation
b. Theoretical Justice
c. Ability to pay Theory
d. Equity in Taxation 
25. These are part and parcel of the power of taxation and originate from the
very nature of taxation. 

a. Inherent Limitations
b. Constitutional Limitations
c. Canons of Taxation
d. None of the choices 

26. The following constitute double taxation

except one:

a. Both taxes are imposed in the same

amount
b. Both taxes are levied for the same
purpose
c. Both taxes are imposed by the same
taxing authority
d. Both taxes are imposed upon the same
person 

27. A tax must be imposed for a public purpose. Which of the following is
not a public purpose?

a. National Defense
b. Public Education
c. Improvement of Sugar Industry
d. None of the choices 

28. A fundamental rule in taxation is that “the property of one country may not be taxed by another
country”. This is known as:

a. International Law
b. Reciprocity
c. International Comity
d. International Inhibition 
29. Being legislative in nature, the power to tax may not be delegated, except:

a. To local governments or political subdivisions

b. When allowed by the Constitution
c. When delegation relates merely to administrative implementation that may call for some degree of
discretionary powers under a set of sufficient standards expressed by law or implied from the policy
and purpose of the Act
d. All of the choices 

30. “Government agencies performing governmental functions are exempt from tax unless expressly
taxed while those performing propriety functions are subject to tax unless expressly exempted” refers
to:

a. The tax imposed should be for public purpose

b. There should be no improper delegation of the taxing power
c. The power to tax is limited to the territorial jurisdiction of the taxing government
d. Exemption of government entities from taxation 

31. This stems from the principle that we pay taxes for the protection and services provided by the
taxing authority which could not be provided outside the territorial boundaries of the taxing state.

a. The tax imposed should be for public purpose

b. There should be no improper delegation of the taxing power
c. The power to tax is limited to the territorial jurisdiction of the taxing government
d. Exemption of government entities from taxation 

32. These are restrictions imposed by the

Constitution.

a. Inherent Limitations
b. Basic principles of sound tax system
c. Constitutional Limitations
d. None of the choices 
33. No law granting any tax exemption
shall be passed without the concurrence
of
a. Majority of all member of the Congress
b. 3⁄4 vote of all members of the
Congress
c. 2/3 vote of all members of the
Congress
d. Unanimous vote of all members of the
Congress 

34. Compliance with procedural requirements must be followed strictly to avoid collision course
between the state’s power to tax and the individual’s recognized rights.
a. Due process of law
b. Non-infringement of religious freedom
c. Equality in Taxation
d. Non-impairment of obligations and contracts 

35. No person shall be imprisoned for non-

payment of this

a. Property Tax
b. Poll Tax
c. Excise Tax
d. Income Tax 

36. Which statement is WRONG? A revenue bill:

a. Must originate from the House of Representatives and on the 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.
d. May be recommended by the President to Congress. 
37. This requires that all subjects or objects of taxation, similarly situated are to be treated alike or put
on equal footing both in privileges and liabilities.

a. Due process
b. Uniformity
c. Progressive Taxation
d. None of the Choices 

38. The basis or test of exemption of real properties owned by religious, or charitable entities
from real property taxes is:

a. Use of the real property

b. Ownership of the real property
c. Location of the real property
d. Ownership or location real property at the option of the government 

39. Which of the following statements is not correct?

a. Taxes may be imposed to raise revenue or 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 anytime.
d. The power of taxation in the Philippine Constitution are grants of power and not
limitations on taxing powers. 

40. A taxpayer gives the following reasons for refusing to pay a tax. Which of his reasons is not
acceptable for legally refusing to pay the tax?
a. That he has been deprived of due process of law.
b. That there is lack of territorial jurisdiction
c. That the prescriptive period for the tax has elapsed
d. That he will derive no benefit from the tax 

41. Which of the following has no power

of taxation?

a. Provinces
b. Cities
c. Barangays
d. Barrios 
42. One of the characteristics of our internal revenue laws is that they are:

a. Political in nature
b. Penal in nature
c. Generally prospective in operation although the tax statute may nevertheless operate
retrospectively, provided it is clearly the legislative intent.
d. Criminal in nature 

43. In case of conflict between tax laws and generally accepted

accounting principle (GAAP):

a. Both tax laws and GAAP shall be enforced

b. GAAP shall prevail over tax laws
c. Tax laws shall prevail over GAAP
d. The issue shall be resolved by the court 

44. All of the following, except one, are

sources of tax laws:

a. Legislations, tax treaties and tax

ordinances
b. Judicial decisions
c. Opinion of Authors
d. Administrative rules and regulations 

45. Which is the is not an example of Excise

Tax?

a. Transfer Tax
b. Real Property Tax
c. Sales Tax
d. Income Tax
46. One is not a Direct Tax

a. Immigration Tax
b. Income Tax
c. Transfer Tax
d. Value-added Tax 

47. A tax in
business is:

a. Direct Tax
b. Property Tax
c. Indirect Tax
d. None of the
choices 

48. Guiller is a mining operator. His mineral lands are not covered by any lease contract. The tax
Guiller has to pay based on the actual value of the gross output or mineral products extracted is

a. Mining Tax
b. Royalties
c. Rental
d. Ad Valorem Tax 

49. Tax levied for particular or specific purpose irrespective of whether revenue
is actually raised or not

a. Revenue Tax
b. Regulatory Tax
c. Specific Tax
d. Ad Valorem Tax 

50. Taxes imposed by a political subdivision of the state and is effective only within the
territorial boundaries thereof

a. National Tax
b. Local tax
c. Progressive Tax
d. Regressive Tax 
51. Under the TRAIN LAW, which of the following taxes is
not proportional?

a. Value-added Tax
b. Income Tax
c. Estate tax
d. Donor’s Tax 

52. Tax is distinguished from License Fee

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 

53. The distinction of a tax from permit or license fee is that

a tax is

a. Imposed for regulation

b. One which involves exercise of police power
c. One in which there is generally no limit on the amount
that may be imposed
d. Answer not given 

54. Which of the following terms describes this statement: “that the state has complete discretion on
the amount to be imposed after distinguishing between a useful and non-useful activity?

a. Tax
b. License fee
c. Toll
d. Customs Duty 
55. Which of the following is not a distinction or similarity of
license fee from tax?

a. Imposed for regulation

b. Involves exercise of police power
c. Non-payment makes the business illegal
d. Legal compensation or reward of an officer for services 

56. This is a demand of ownership

a. License Fee
b. Tax
c. Toll
d. Franchise 

57. Toll as distinguished from tax.

a. Demand of sovereignty
b. Imposed by government only
c. Amount is based on the cost of construction of public
improvement used
d. Paid for the support of the government 

58. Which statement is

wrong?

a. A tax is a demand of
sovereignty
b. A toll is a demand of
ownership
c. A special assessment is
a tax
d. Customs duty is a tax 
59. Which of the following is not a
characteristic of Debt?

a. Generally arises from contract

b. Payable only in money
c. Assignable
d. Imprisonment is not a sanction for non-
payment 

60. Debt as distinguished from tax.

a. Based on law
b. May be paid in kind
c. Does not draw interest except when
delinquent
d. Generally not subject to set-off or
compensation 

61. Which of the following is designed to regulate

conduct?

a. Tax
b. Toll
c. Penalty
d. Special Assessment 

62. “Schedular system of income taxation” means:

a. All types of income are added together to arrive at gross income.

b. Separate graduated rates are imposed on different types of income.
c. Capital gains are excluded in determining gross income.
d. Compensation income and business/professional income are added together in
arriving at gross income. 
63. When the refund of a tax supposedly due to the taxpayer has already been barred by prescription,
and the said taxpayer is assessed with a tax at present, the two taxes may be set-off with each other.
This doctrine is called:

a. Set-off Doctrine
b. Doctrine of Reciprocity
c. Tax sparring Doctrine
d. Equitable Recoupment 

64. Transfer of the tax burden by one whom the tax is

assessed to another.

a. Shifting
b. Capitalization
c. Transformation
d. Tax Exemption 

65. Which of the following is not a scheme of shifting the incidence of tax burden?

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 price unless it is reduced by an
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, to the
retailer and finally to the consumer. 

66. The method by which the manufacturer or producer upon whom the tax is imposed pays the tax
and strives to recover such expense through lower production cost without sacrificing the quality of
his product.

a. Shifting
b. Capitalization
c. Transformation
d. Tax exemption 
67. The reduction in the selling price of income producing property by an amount equal to the
capitalized value of future taxes that may be paid by the purchaser

a. Shifting
b. Capitalization
c. Transformation
d. Tax exemption 

68. In case of ambiguity, tax laws shall be

interpreted 

a. Strictly against the

taxpayer
b. Liberally in favor of the
taxpayer
c. Liberally in favor of the
government
d. None of the choices 

69. In cases of deductions and exemptions, doubts

shall be resolved

a. Strictly against the taxpayer

b. Strictly against the government
c. Liberally in favor of the taxpayer
d. None of the choices 

70. The use of illegal or fraudulent means to avoid or defeat

the payment of tax.

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