INCOME TAXATION 2019 EDITION – TABAG AND GARCIA
CHAPTER 1 – FUNFAMENTAL PRINCIPLES
TRUE OR FALSE (PAGE 42-43)
1. The three fundamental powers of
... [Show More] the state may be exercise only by the government. F
2. Taxation is a process or means by which the sovereign, through its law making body raises
income to defray the expenses of the government. T
3. Eminent domain may be exercise even by public service corporations and public entities. T
4. Police power regulated both liberty and property. T
5. Taxes are raised to cover the cost of governance. T
6. Toll is one of the taxes collected by the government. F
7. License fees are imposed in the exercise of police power. T
8. License fee is imposed to raise revenue. F
9. Tax is generally unlimited because it is based on the needs of the state. T
10. The amount imposed in the exercise of police power depends n whether the activity is useful or
not. T
11. The distinction of a tax from permit or license fee is that a tax is one in which there is generally
no limit on the amount that may be imposed. T
12. Debt, as distinguished from tax, may be paid in kind. T
13. Under the equal protection clause of the constitution, all persons subject to legislation. F
14. Tax laws are civil and penal in nature because there are penalties provided in the case of
violation. F
15. Special assessment is a tax. F
16. Special assessment is imposed on persons, property and property rights. F
17. The Philippine government may subject the land where embassies of foreign governments. F
18. A revenue bill may originate from the senate and on which same bill the House of
representatives. F
19. A person may refuse to pay on the ground that he will not receive a benefit from the tax. F
20. In the exercise of the power of taxation, the state can tax anything at any time. T
21. In cases of deductions and exemptions, doubts shall be resolved literally in favor of the
government. T
22. Levying of local government taxes should be exercise only by the legislative branch of the local
government. T
23. The taxing power of provinces, municipalities and cities precede from a constitutional grant. T
24. Taxation is regressive when their rate goes up. F
25. No law granting any tax exemption shall be passed without the concurrence of 2/3. F
26. There is no constitutional prohibition against double taxation. T
27. “Global system of income taxation” means separate graduated rates are imposed on different
types of income. F
28. One of the schemes of shifting the incidence of tax burden is by transferring the sales tax. T
29. Transformation is a method by which the manufacturer or producer. T
30. In case of ambiguity, tax laws shall be interpreted liberally in favor of the government. F
Multiple Choice. CHAPTER 1
1. Which of the following statements is incorrect? Taxes are the revenues raised in the exercise of
the police power of the state. Page 43
2. The state, having sovereignty can enforce contributions (tax) upon its citizens even without a
specific provision in the constitution authorizing it. Which of the following will justify the
foregoing statement?
INCOME TAXATION 2019 EDITION – TABAG AND GARCIA
3. Statement 1: The distinction of a tax from permit or license fee is that a tax is imposed for
regulation. Page 44
Statement 2: Non-payment of tax does not necessarily render a business legal.
4. The primary purpose of taxation is to raise revenue for the support of the government. However,
taxation is often employed as a devise for regulation by means of which, certain effects or
conditions envisioned by the government may be achieved such as:
5. Which of the following statements is correct? The purpose of taxation may also be
“compensatory” meaning, it may be used to make up for the benefit received.
6. 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? Page 45
7. On theoretical basis of taxation, which of the following statements is true? State needs taxation
to exist, while people must support taxation because they need the presence of the state.
8. Incidence of taxation means Payment of tax
9. The actual effort exerted by the government to effect the exaction of what is due from the
taxpayer is known as
10. Statement 1: Symbiotic relation is the reason why the government would impose taxes on the
income of resident citizens derived from sources outside the Philippines.
Statement 2: Jurisdiction is the reason why citizens must provide support to the state so the
latter could continue to give protection.
11. A law was passed by congress which granted tax amnesty to those who have not paid income
taxes for a certain year and at the same time providing for the refund of taxed to those who have
already paid them. The law is
12. Congress passed a new law imposing taxes on income earned out of 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? Page 46
13. Due to an uncertainty whether or not a new tax law is applicable to printing companies, ABC
printers submitted a legal query to the BIR on that issue. The BIR issued a ruling that printing
companies are not covered by the new law. Relying on this rulling, ABC Printers did not pay the
said tax. Could the BIR assess ABC Printers for back taxes corresponding to the years before the
new ruling?
14. The constitution requires that all revenue bills shall not originate “exclusively” from the house of
representatives. Assume that in 2014, Congressman Uro proposed an expansion of the coverage
of the value added tax to be known as e-vat law.
Which of the following statements will justify the enacted EVAT law?
I. The constitution simply means that the initiative for filling revenue, tariff or tac bills must come
from the house of representative
15. Assuming senator Bobadilla filled in the senate a substitute e-vat bill “in anticipation” of its
receipt of the bill from the house. Which of the following statements will justify the filling of a
substitute bill by honorable senator Bobadilla? Page47
I. To insist that a revenue statue not only the bill which initiated the legislative process
culminating in the enactment of the law
16. Being legislative in nature, the power to tax may not be delegated, except:
17. Statement 1: The aspects of taxation are shared by the legislative and executive branches of the
government.
Statement 2: Taxes should be prospective and should not be given retroactive effect because
they are burdens. Page 48
18. The power of taxation is basically legislative in character. Which of the following is a legislative
function?
INCOME TAXATION 2019 EDITION – TABAG AND GARCIA
- Fix with certainty the amount of tax
- Identify who should collect the tac
- Determine who should be subject to tax
19. As to scope of legislative power to tax, which of the following is correct? Congress has the right
to levy a tax of any kind at any amount as it sees fit, even in the absence of any constitutional
provision.
20. The following are the aspects of taxation
I. Levy or imposition of the tax on persons, property or exercises
II. Collection of taxes already levied
III. Sufficiency of governments source to satisfy its expenditure
21. Which of the following is incorrect?
Assessment of tax liability page 49
22. Which of the following is correct?
Assessment of tax liability
23. Statement 1: Inherent powers of the state exist independent of the constitution.
Statement 2: The taxing power of the local government units precede from a constitutional
grant.
24. The following are the characteristics of the State’s power to tax except the strongest of all
inherent powers of the state
25. Levying of local government taxes may be exercised by
26. Where does taxing power of the provinces, municipalities and cities precede from?
27. Statement 1: Eminent domain may raise money for the government.
Statement 2: Barrios, barangays, municipalities/cities and provinces may collect taxes from its
inhabitants.
28. The following are the nature of taxation, except page 50
29. The power to tax involves power to destroy means
30. There can be no tax unless there is a law imposing the tax is consistent with the doctrine of
31. The tax should be based on taxpayer’s ability to pay. In relation to this, which of the following is
not correct? No person shall be imprisoned for non-payment of tax.
32. Rule of No estoppel against the government means page 51
33. Progressivity of taxation is also mandated in the constitution.
Statement 1: Our income tax system is one good example of such progressivity because it is built
on the principle of the taxpayer’s ability to pay.
Statement 2: Taxation is progressive when their rate goes up depending on the resources of the
person affected.
34. One of the characteristics of our internal revenue laws is that they are Generally prospective in
operation although the tax statue may nevertheless operate retrospectively provided it is clearly
the legislative intent
35. Which of the following distinguishes tax from license fee
36. The least source of tax laws
37. Statement 1: A revenue regulation must not be contrary to the provision of the law that it
implement
Statement 2: A revenue regulation cannot expand the provision of the law that it implements by
imposing a penalty when the law that authorizes the revenue regulation does not impose a
penalty. Page 52
38. In every case of doubt, tax statues are construed
Strictly against the government and liberally in favor of the taxpayer.
39. In every case of doubt, tax exemption are construed
INCOME TAXATION 2019 EDITION – TABAG AND GARCIA
Liberally in favor of the government and strictly against the taxpayer
40. Which of the following statements is correct?
I. A tax cannot be imposed without clear and express words for that purpose.
II. The provisions of a taxing act are not to be extended by implication.
III. If the law is repealed, taxes assessed before repeal of the law may no longer be collected.
IV. Tax law is ex post facto in application.
41. Which of the following factors are determinants to the “Situs” of taxation?
I. Nature, kind or classification of the tax being imposed
II. Subject matter of the tax
III. Citizenship of the taxpayer
IV. Residence of the taxpayer
V. Place of the excise, privilege, business or occupation
42. Tax of a fix amount imposed among all persons residing within a specified territory without
regards to their property or occupation they may engaged Page53
43. Tax of fixed proportion of the amount or value of the property with respect to which the tax
assessed
44. Tax base on a fix percentage of the amount of property, income or other basis to be taxed
45. Which of the following is a characteristic of taxation which distinguished it from police power
and eminent domain?
46. The following are basic principles of sound tax system
I. It should be capable of being effectively enforced
II. It must be progressive
III. Sources of revenue must be sufficient to meet government expenditures and other public
needs
IV. It should be exercised to promote public welfare
47. The sources of revenue should be sufficient to meet the demands of public expenditures. This
refers to
48. The tax should be imposed proportionate to the taxpayer ability to pay Page 54
49. The tax law must be capable of convenient just and effective administration
50. Statement 1: Inherent limitations are the natural restrictions to safeguard and ensure that the
power of taxation shall be exercised by the government only for the betterment of the people
whose interest should be served, enhanced and protected.
Statement 2: Constitutional limitations are provisions of the fundamental law of the land that
restricts the supreme, plenary, unlimited, and comprehensive exercised by the state of its
inherent power to tax.
51. Equality in taxation means
52. Which of the following statements correctly described “equal protection” clause of the
constitution regarding the government’s power to tax.
I. All persons subject to legislation shall be treated alike under dissimilar circumstances and
conditions, both in the privileges conferred and liabilities imposed.
II. The purpose is to protect persons belonging to the same class against intentional and arbitrary
discrimination.
53. Which of the following restrictions on the power of taxation recognizes that the country’s tax
laws shall not be applied to the property of foreign government? Page55
54. This is an inherent limitation on the power of taxation.
55. Exemption from tax is a privilege, which is being looked upon by law with disfavor because
everyone should be sharing the burden of taxation. On account of this view, exemption from tac
is construed strictly against the taxpayer, except in certain situation like: [Show Less]