TAXATION – PRINCIPLES Flashcards

I. Taxation is one of the inherent powers of the State to demand enforced contributions for public purposes.

II. Taxation is described as a destructive power which interferes with the personal and property rights of the people and takes from them a portion of their property for the support of the government.

I. Imprisonment is a sanction for nonpayment of tax, except poll tax.

II. A person cannot be imprisoned for nonpayment of debt (except when it arises from a crime).

I. Taxation is Subject to constitutional limitations, including the prohibition against impairment of the obligation of contracts.

II. Police power is relatively free from constitutional limitations and is superior to the impairment of contract provisions.

I. A special assessment is not based wholly on benefits (not necessity).

II. A province, city, or municipality, or the National Government, may impose a special levy on lands especially benefited by public works or improvements financed by it.

One of the characteristics of internal revenue taxes is that they are:

a. Criminal in nature

b. Penal in nature

c. Political in nature

d. Generally prospective in application

Which of the following is not an exception to the general rule of nondelegability of taxing power?

a. The President’s authority to fix tariff rates, import and export quotas, tonnage and wharfage dues

b. Local government units to create its own source of revenues by levying taxes

c. Revenue bills originating from the Senate

d. Delegation to administrative agencies for implementation of tax law

I. The power to tax is an attribute of sovereignty.

II. The power to tax is a power emanating from necessity because it imposes a necessary burden to preserve the State's sovereignty.

I. A penalty refers to any sanction imposed as a punishment for a violation of law or acts deemed injurious.

II. A penalty is primarily intended to raise revenue.

I. License or permit fee is a sum of money for the use of something, generally applied to the consideration which is paid for the use of a road, bridge or the like, of a public nature.

II. Toll is a charge imposed under the police power for purposes of regulation.

I. A special assessment is not a personal liability of the person assessed, i.e., his liability is limited only to the land involved.

II. A charge imposed only on property owners benefited is a special assessment rather than a tax notwithstanding that the statute calls it a tax.

I. Under the Tax Code, as amended, the BIR may not avail of certain remedies to ensure the collection of taxes.

II. Taxes, being the lifeblood of the government, should be collected with unnecessary hindrance, every precaution must be taken to unduly suppress it.

I. The rule of taxation shall be uniform and equitable.

II. Congress shall evolve a progressive system of taxation.

I. Taxation cannot protect local industries against foreign competition by imposing additional taxes on imported goods, or encourage foreign trade by providing tax incentives on imported goods.

II. Taxation can be a bargaining tool by setting tariff rates first at a relatively high level before trade negotiations are entered into with another country.

I. In taxation, the property (generally in the form of money) is taken for the support of the government.

II. In eminent domain, the purpose is to facilitate the taking of private property for public use.

I. Taxes may be levied to improve the efficiency of local police forces in the maintenance of peace and order through grant of subsidy.

II. Taxes may be levied to push for the government’s health measure, just like what happened in the landmark legislation on sin taxes in 2012.

I. The power to impose taxes is one so unlimited in force and so searching in extent, that the courts scarcely venture to declare that it is subject to any restrictions whatever, except such as rest in the discretion of the authority which exercises it.

II. The power to tax is a legislative power but is also granted to local governments, subject to such guidelines and limitations as law may be provided by law

I. Amount paid for the payment of a toll depends upon the cost of construction or maintenance of the public improvement used.

II. Payment of a toll is a demand of sovereignty.

I. Taxation cannot reduce inequalities in wealth and incomes, as for instance, the estate, donor's and income taxes, their payers being the recipients of unearned wealth or mostly in the higher income brackets.

II. Taxation cannot encourage economic growth through the grant of incentives or exemptions, which encourage investment and thereby stimulate economic activity.

I. Generally, there is no limit on the amount of tax that may be imposed.

II. In police power, the amount imposed should just be commensurate to cover the cost of regulation, issuance of a license or surveillance.

I. The primary purpose of the power to tax is to generate funds for the State to finance the needs of the citizenry and to advance the common wealth.

II. If the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then the exaction may not be properly called a tax.

I. Taxation cannot promote the general welfare of the people as an implement of police power.

II. Taxation cannot strengthen anemic enterprises or provide incentives to greater production through grant of tax exemptions or the creation of conditions conducive to their growth.

I. Taxes are Imposed only by public authority.

II. Debts can be imposed by private individuals

Which of the following is not a Constitutional limitation of taxation?

a. Due process of the law

b. International comity

c. Non-impairment of contracts

d. Uniformity and equity in taxation

I. The power to tax is imposed by the State by virtue of its sovereignty.

II. The power to tax is levied for the support of the government.

I. The power of eminent domain operates upon: a community; or class of individuals.

II. The power of eminent domain operates on: an individual as the owner of a particular property.

I. Regulatory fees are exacted primarily to regulate certain businesses or occupations.

II. License fees should not unreasonably exceed the expenses of issuing the license and of supervision.

I. Revenues derived from taxes can be used for purely private purposes or for the exclusive benefit of private persons.

II. Taxes are imposed on articles which are traded internationally relative to duties payable on goods imported or exported.

I. In police power, the use of the property is “regulated” for the purpose of promoting the general welfare.

II. In police power, the property (generally in the form of money) is taken for the support of the government.

I. The power of taxation may be exercised by: the government; its political subdivisions; or may be granted to public service companies or public utilities.

II. The police power may be exercised by: the government; its political subdivisions; or may be granted to public service companies or public utilities.

I. Violation of tax laws may give rise to the imposition of penalties.

II. Taxes are designed to regulate conduct.

I. The public gets the Protection and benefits he receives once the State exercises the power of taxation.

II. The benefit is the receipt of the market value of the property taken once the State exercises the power of eminent domain.

I. A special assessment is levied only on land.

II. A special assessment is imposed due to an increase in value of land benefited by public improvement.

I. Debt is generally based on a contract, express or implied.

II. Debt is assignable and can be a subject of set-off or compensation.

Statement 1: The constitutional exemption on income taxes, property taxes, and customs duties is allowed on non-stock, non-profit educational institutions only.

Statement 2: A building being leased by its owner to a private educational institution for used as classrooms is not exempt from property tax.

Statement 3: Income of a non-stock, non-profit educational institution run by the Archdiocese is exempt from tax provided that the income, directly and exclusively used for educational purposes.

I. Failure to pay a tax does not necessarily make the act or business illegal.

II. Failure to pay a license fee makes the act or business illegal.

I. The power to tax is not peculiarly and exclusively legislative and can be exercised by the executive or judicial branch of the government.

II. The levy of a tax may be made by a local legislative body subject to such limitations as may be provided by law.

Fixing the rate of tax is an aspect of:

a. Tax administration

b. Tax legislation

c. Tax collection

d. None of the choices

I. Taxes are governed by the special prescriptive periods provided for in the Tax Code, as amended.

II. Debts are governed by the ordinary periods of prescription.

I. No amount is imposed in the exercise of the power of eminent domain but rather the owner is paid the market value of the property taken.

II. The power of eminent domain is inferior to the impairment prohibition; government cannot expropriate private property, which under a contract had previously bound itself to purchase from the other contracting parties.

I. In taxation, the money contributed becomes part of the public funds.

II. In police power, there is no transfer of title.

The City Council passed an ordinance imposing an occupation tax on air conditioning technicians. Conde is the only person with such in the city. He challenged the validity of the ordinance as being discriminatory since he is the only one adversely affected.

a. The contention of Conde is tenable

b. The ordinance is unconstitutional because Conde is denied of his right to equal protection of the law

c. The contention of Conde is not justified because the rule on uniformity is not violated considering that the ordinance would also be imposed on all air conditioning technicians who may come within the jurisdiction of the city

d. The issue of validity or invalidity of the ordinance should be set aside

I. Taxation is a process or means by which the sovereign, through its law-making body, raises income to defray the necessary expenses of government.

II. Taxation is a method of apportioning the cost of government among those who in some measures are privileged to enjoy its benefits and must not, therefore, bear its burdens.

Which of the following statements is true?

a. Without an express grant from the Constitution, the National Government will not have the power to tax

b. Without an express grant from the Constitution, local government units will not have the power to tax

c. National taxes and custom duties are administered by the BIR while local taxes are administered by LGUs

d. None of the choices

I. In the exercise of the power of eminent domain, there is a restraint on the injurious use of the property.

II. in the exercise of police power, there is a transfer of the right to property.

I. The power to tax operates upon: a community; or class of individuals.

II. Police power operates upon: a community; or class of individuals.

I. Taxes may be levied to promote science and invention.

II. Taxes may be levied to finance educational activities.

I. The power of eminent domain may be exercised by: the government; its political subdivisions; or may be granted to public service companies or public utilities.

II. The power of taxation may be exercised only by: the government; or its political subdivisions.

I. The power to tax is said to be the strongest of all the powers of government as it is unlimited, plenary, comprehensive and supreme.

II. The power of taxation is not subject to constitutional and inherent limitations.

The following are basic principles of a sound tax system, except:

a. It should be capable of being effectively enforced

b. It must be progressive

c. Sources of revenue must be sufficient to meet government expenditures and other public needs

d. It should be exercised to promote public welfare

A tax law is not violative of the due process clause when it is

a. Arbitrary

b. Discriminatory

c. Excessive

d. Proportionate

Statement 1: Governmental units performing purely governmental functions are exempt from the income tax.

Statement 2: Government agencies and GOCCs performing proprietary functions are taxable unless exempt by the law.

Which of the following is not a requisite for an income to be taxable?

a. There must be a gain or profit whether in cash or its equivalent

b. The gain must be realized or received

c. The gain must be duly reported in the tax returns as prescribed by rules and regulations

d. The gain must not be excluded by law or international treaty from taxation

Which of the following is not considered in situs of income taxation?

a. Citizenship

b. Residence

c. Amount of income

d. Source of income

I. A tax may be imposed by the government or private individuals or entities.

II. A penalty may be imposed by the government or private individuals or entities.

In case of conflict between tax laws and generally accepted accounting principles (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

I. The imposition of taxes is generally based on contracts, express or implied.

II. Taxes are assignable and may be paid in kind.

I. An exemption from taxation does not include exemption from special assessment.

II. The power to tax carries with it the power to levy a special assessment.

I. The imposition of a tax does not draw interest except only when delinquent.

II. The non-payment of a debt draws interest when it is so stipulated or where there is default.

I. A tax is a debt in the ordinary sense of the word.

II. A tax can be a subject of set off or compensation

Those who have more income should pay more income tax, while minimum wage earners should be exempt. This is:

a. Uniformity of taxation

b. Equality of taxation

c. Due process of law

d. Non-delegation of legislative power

I. Taxation is supreme insofar as the selection of the subject of taxation is concerned.

II. Taxation is supreme as it is superior to the other inherent powers of the State.

I. Tax is comprehensive as it covers persons, businesses, activities, professions, rights, and privileges.

II. A tax ceases to be valid if it regulates, discourages, or even definitely deters the activities taxed.

I. Taxation is often employed as a device for regulation by means of which certain effects or conditions envisioned by governments may be achieved.

II. Taxes may be levied with a regulatory purpose to provide means for the rehabilitation and stabilization of a threatened industry which is affected with public interest as to be within the police power of the state.