TAXATION 1 – Income Taxation

General Principles of Taxation

1. 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 government.
C. Operates upon the whole citizenry.
D. There is generally no limit as to the amount that may be imposed.

2. The following are constitutional limitations, except

A. No imprisonment for non-payment of poll tax.
B. Non-impairment of the obligation of contracts.
C. Rule of uniformity and equity in taxation.
D. Exemption from income tax of charitable institutions, cemeteries, churches,
personage or convents appurtenant thereto, as well as all lands, buildings and
improvements actually, directly and exclusively used for religious, charitable and
educational purposes.

3. Which of the following statements is correct?

A. The President is authorized to increase or decrease national internal revenue tax rates.
B. One of the nature 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 in an indirect tax.

4. A tax must be imposed for public purpose. 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.

5. 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.

6. Special assessment is an enforced proportional contribution from owners of land especially

benefited by 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.

7. 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

8. As to scope of the legislative power to tax, which is not correct?

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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, Congress 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,
unless restricted by the constitution.
D. The sole arbiter of the purpose or which taxes shall be levied is Congress, provided the
purpose is public and the courts may not review the levy of the tax to determine whether or
not the purpose is public.

9. Which of the following is a nature of taxation?

A. The power is granted by legislative action.
B. It is essentially an administrative function.
C. It is generally payable in money.
D. Without it the state can continue to exist.

10. 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

11. 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. The property of an educational institution operated by a religious order is exempt from
property tax, but its income is subject to income tax.
C. The prohibition of delegation by the state of the power of taxation will still allow the BIR to
modify the rules in time for filing of returns and payment of taxes.
D. The power of taxation is shared by the legislative and executive departments of the
government.

12. Statement 1 – The point on which tax is originally imposed is impact of taxation.
Statement 2 – Eminent domain is inferior to 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 True
B. False True True False
C. True True False False
D. False False True True

13. A tax system where the revenues are supplied mostly by indirect taxes.
A. Schedular C. Progressive
B. Proportional D. Regressive

14. A tax system where the greater bulk of the tax revenues is derived by direct taxes.
A. Schedular C. Progressive
B. Proportional D. Regressive

15. This is an inherent limitation on the power of taxation.

A. Rule on uniformity and equity in taxation.
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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 the public purpose.

16. 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.

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

18. The power to acquire private property upon payment of just compensation for public purpose
A. Power of taxation C. Power of imminent domain
B. Police power D. Power of recall

19. The power to regulate liberty and property to promote the general welfare.
A. Power of taxation C. Power of imminent domain
B. Police power D. Power of recall

20. The power to demand proportionate contributions from persons and property to defray the
expenses of the government.
A. Power of taxation C. Power of imminent domain
B. Police power D. Power of recall