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Taxation 101 - This is for all the students! Padayon!

variation (Our Lady of Fatima University)

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Taxation101

1. The principal purpose of taxation is

a. To encourage the growth of home industries through the proper use of tax exemption and tax incentives
b. To implement the police power of the state
c. The reduce excessive inequalities of wealth
d. To raise revenues for government 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 corporation and public entities
a. Power of taxation
b. Police power
c. Power of eminent domain
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 constitution 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 of 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. Power of taxation
b. Police power
c. Power of eminent domain
d. Power of love
9. 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 rangers
10. 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

11. The sources of revenue as a whole, should be sufficient to meet the demand of public expenditures
a. Fiscal adequacy
b. Equality or theoretical justice

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c. Administrative feasibility
d. Revenue generation
12. The tax laws must be capable of convenient, just and effective administration
a. Fiscal adequacy
b. Equality or theoretical justice
c. Administrative feasibility
d. Psychological compatibility
13. Statement 1 – The point on which a tax is originally imposed is impact of taxation
Statement 2 – Police power is superiors 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
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. Tall
b. Licensed fee
c. Taxes
d. Assessment
15. Persons or things belongings to the same class be taxed at the same rate
a. Simplicity in taxation
b. Reciprocity in taxation
c. Equality In taxation
d. Uniformity in taxation
16. 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 proportions in character
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 incentives
b. Tax exemption
c. Tax amnesty
d. Tax credit
19. As the 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 jurisdiction as to the persons, property or occupations to
be taxed
b. In the absence of 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

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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
b. Exemption
c. Avoidance
d. Evasion
22. The use of legal or permissible means to minimize or avoid taxes
a. Shifting
b. Exemption
c. Avoidance
d. Evasion
23. Synonymous to tax evasion
a. Tax dodging
b. Tax minimization
c. Tax exemption
d. Tax shield
24. Synonymous of 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 I favor of the government and strictly against the taxpayer
26. In case of doubt, tax exemptions are construed
a. Strictly against the government and 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
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
b. Property
c. Excise
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
b. Property
c. Excise
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
b. Property
c. Excise
d. Progressive
31. Tax which is demanded from the persons whom the law intends or desires to pay it
a. Direct
b. Indirect

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c. Excise
d. Income

32. Tax which is demanded from one person the expectation and intension 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 to assesed
a. Specific
b. Ad-valorem
c. Excise
d. Percentage
35. Tax based on a fixed percentage of the amount of property, income or other to be taxed
a. Proportional
b. Progressive
c. Regressive
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 exemption, tax amnesty 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

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 function effectively
a. Police power
b. Power of Eminent Domain
c. Power of Taxation
d. Power of Greystone
40. This power is superior to the non-impairment clause is broader in application because it is the power to make
and implement the laws
a. Power of Taxation
b. Power of Recall
c. Power of Eminent Domain

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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 only
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 fall 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
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
b. Penal in nature
c. Political in nature
d. Generally, prospective in application
50. Which of the following in not an example of exercise 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

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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 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
b. Theoretical justice/Equitability
c. Administrative feasibility
d. Inherent in sovereignty
56. One of the characteristics of a tax is that:
a. It is generally based on contact;
b. is generally payable in It 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 provide
58. Which of the following statements is wrong? A revenue bill:
a. Must originate from the House of Representative and on which same bill the senate may propose
amendments;
b. May originate from the Senate and on which same bill the House of Representative 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 the 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
61. Which of the following may not raise money for the government?
a. Power of taxation
b. Police power
c. Power of eminent domain
d. License fees

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62. No person shall be imprisoned for non-payment for this:

a. Excise tax b. VAT c. Income tax d. Poll tax
63. This is a demand of ownership
a. License fee b. Tax c. Toll D. Custom 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 in 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. ¾ 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
b. Constitutional limitation
c. International limitation
d. Territorial limitation
68. The Department of Finance (Executive) 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
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 change 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 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

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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 on 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
75. 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
III. Police power is superior to the non-impairment clause of the constitution.
IV 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
76. I. No person shall be imprisoned for debt or non-payment of tax
II Tax laws are civil and penal in nature because there are criminal penalties when they are violated
III. Taxes may be collected in an unlimited amount
IV 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
77. I. Tax is imposed on persons, property, and property rights
II Special assessment is imposed on persons, property and property rights
III. Tax collection is legislative act
IV Imposition of tax is an administrative act
a. One statement is true
b. Two statements are true
c. Three statements are true
d. All statements are true
78. I. There can only be a tax if there is a law imposing the tax
II The power to tax may include the power to destroy
a. True, true
b. True, false
c. False, true
d. False, false

79. I. Due process of law in taxation under the constitution is a grant of power
II Provisions in the Philippine constitution on taxation are grants of power
III There may be double taxation in the Philippines
IV Taxation may be used to implement the police power of the state
a. One statement is true
b. Two statements are true
c. Three statements are true
d. All statements are true
80. I. License fee is a charge imposed under police power
II Special assessment is levied on land only
III. Tax is imposed regardless of public improvements.

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IV Special assessment is imposed regardless of public improvements

a. One statement is true
b. Two statements are true
c. Three statements are true
d. All the statements are true
81. I. One of the essential characteristics of a tax is it is unlimited in amount.F
II. A tax is generally unlimited because it is based on the needs of the state .T
a. True, true
b. True, false
c. False, true
d. False, false
82. A system of taxation where the amount of revenue from indirect taxes are more than the direct taxes is
a. Progressive
b. Regressive
c. Proportional
d. Schedular
83. 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
84. 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 lawmaker’s pork barrel
85. Which theory in taxation states that without taxes, 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. No money, no honey theory
86. 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
87. 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
88. An example of a tax where the concept of progressively finds application is the
a. Graduated income tax rates on individuals
b. Excise tax on petroleum products
c. Value-added tax on certain articles
d. Amusement tax on boxing exhibitions
89. 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
90. This is not an inherent limitation on the power of taxation
a. Double taxation, though not prohibited, is disfavored
b. Equality and uniformity in taxation

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c. Public purpose of taxation

d. Territoriality

Colegio De Sebastian
City of San Fernando, Pampanga

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