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CPA Review School of The Philippines Manila General Principles of Taxation Dela Cruz/De Vera/Llamado
CPA Review School of The Philippines Manila General Principles of Taxation Dela Cruz/De Vera/Llamado
10. The actual effort exerted by the government to effect the exaction of what is due from the
taxpayer is known as
a. Assessment c. Payment
b. Levy d. Collection
11. 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
13. 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 only 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.
14. Taxation as distinguished from police power and power of eminent domain
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15. The power to acquire private property upon payment of just compensation for public purpose
a. Power of taxation c. Power of eminent domain
b. Police power d. Power of love
16. Which of the inherent powers may be exercised even by public service corporations and public
entities
a. Power of taxation c. Power of eminent domain
b. Police power d. A and C
17. Which of the following may not raise money for the government?
a. Power of taxation c. Power of eminent domain
b. Police power d. License fees
18. The power to regulate liberty and property to promote the general welfare
a. Police power c. Power of eminent domain
b. Power of taxation d. Super power rangers
19. 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 functions effectively.
a. Police Power c. Power of Taxation
b. Power of Eminent Domain d. Power of Greystone
21. 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
c. Compensation/benefit is received;
d. Are legislative in character.
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c. For the exercise of the power of 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.
23. The tax imposed should be proportionate to the taxpayer’s ability to pay
a. Fiscal adequacy c. Administrative feasibility
b. Equality or theoretical justice d. Economic consistency
24. The sources of revenue as a whole, should be sufficient to meet the demands of public
expenditures
a. Fiscal adequacy c. Administrative feasibility
b. Equality or theoretical justice d. Revenue generation
25. The tax laws must be capable of convenient, just and effective administration
a. Fiscal adequacy c. Administrative feasibility
b. Equality or theoretical justice d. Psychological compatability
26. Statement 1 – The point on which a tax is originally imposed is impact of taxation
Statement 2 – Police power is superior 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
27. Statement 1 – Congress, which has the power to tax, also has the power to grant tax
exemptions.
Statement 2 – Power to tax includes the power to destroy.
Statement 3 – Police power includes the power to tax.
Statement 4 – Police power may be exercised through taxation.
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
28. Persons or things belonging to the same class shall be taxed at the same rate
a. Simplicity in taxation c. Equality in taxation
b. Reciprocity in taxation d. Uniformity in taxation
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31. 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.
32. It is the privilege of not being imposed a financial obligation to which others are subject
a. Tax incentive c. Tax amnesty
b. Tax exemption d. Tax credit
34. The use of illegal or fraudulent means to avoid or defeat the payment of tax
a. Shifting c. Avoidance
b. Exemption d. Evasion
41. 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
42. 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 c. Excise
b. Property d. Regressive
43. 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 c. Excise
b. Property d. Regressive
44. Tax imposed upon the performance of an act, upon the enjoyment of a privilege, or upon
engaging in an occupation.
a. Personal, poll or capitation c. Excise
b. Property d. Progressive
45. Tax which is demanded from the person whom the law intends or desires to pay it
a. Direct b. Indirect c. Excise d. Income
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46. Tax which is demanded from one person in the expectation and intention that he shall
indemnify himself at the expense of another
a. Direct b. Indirect c. Property d. Income
47. 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
48. Tax of a fixed proportion of the value of the property with respect to which the tax is assessed
a. Specific c. Excise
b. Ad-valorem d. Percentage
49. Tax based on a fixed percentage of the amount of property, income or other basis to be taxed
a. Proportional c. Regressive
b. Progressive d. Indirect
50. Tax where the rate decreases as the tax base increases
a. Proportional b. Progressive c. Regressive d. Indirect
51. Tax where the rate increases as the tax base increases
a. Proportional b. Progressive c. Regressive d. Indirect
54. 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.
55. The distinction of a tax from permit or license fee is that a tax is:
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56. A tax wherein both the impact of or the liability for the payment of the tax as well as the
burden of the tax falls on the same person.
a. Direct tax b. VAT c. Indirect tax d. Percentage tax
59. One of the characteristics of internal revenue laws is that they are:
a. Criminal in nature c. Political in nature
b. Penal in nature d. Generally, prospective in application
60. 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 provides
64. 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 c. Administrative feasibility
b. Theoretical justice/Equitability d. Inherent in sovereignty
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66. Under this basic principle of a sound tax system, the Government should not incur a deficit:
a. Theoretical justice c. Fiscal adequacy
b. Administrative feasibility d. Uniformity in taxation
70. 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 is no benefit derived from the tax
71. 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
72. No person shall be imprisoned for debt or non-payment of a poll tax. This is a (an)
a. Inherent limitation c. International limitation
b. Constitutional limitation d. Territorial limitation
73. President Rodrigo Duterte and President Vladimir Putin entered into a bilateral agreement. In
such agreement, Russian pharmaceutical firms which establish branches in the Philippines
shall be exempt from all national and local taxes. In exchange, such firms shall provide
COVID-19 drugs and vaccines to the Philippine population at a 50% discount rate. The
agreement is:
a. Valid, because it is pursuant to the President’s executive power.
b. Void, because the power to grant tax exemption is vested in Congress
c. Void, because it is unfair to other foreign pharmaceutical firms.
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75. A charge imposed on land for special benefits derived resulting from public improvements
a. Tax b. Toll c. License d. Special assessment
79. I. There can only be a tax if there is a law imposing the tax. II. The power to tax includes the
power to destroy.
80. 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.
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81. 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.
IV. Special assessment is imposed regardless of public improvements.
82. A system of taxation where the amount of revenue from indirect taxes is more than the direct
taxes is
a. Progressive b. Regressive c. Proportional d. Schedular
83. 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?
a. Power to destroy theory c. Sumptuary theory
b. Lifeblood theory d. No money, no honey theory
84. An example of a tax where the concept of progressivity 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
85. 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.
91. Dante Company is a hotel company registered as a local economic enterprise (“LEE”) of the
City of Dapitan. The company is asserting that, as an LEE owned and operated by a local
government unit (“LGU”), it should no longer be required to pay income taxes to the BIR. It
argues that all revenues collected by it must accrue exclusively to the city government of
Dapitan. Is the company correct?
a. Yes. Since the company is owned by an LGU which itself is exempt from taxes imposed by
the Tax Code, the same privileges must also be accorded to it.
b. Yes. Under Section 18 of the Local Government Code, LGUs are authorized to generate
their own sources of revenues, and the allocation of the same shall accrue exclusively to
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them.
c. No. The company is not one of those corporations exempt from taxes under Section 30 of
the Tax Code or under any special laws. Besides, the acts of an LGU in its corporate
capacity and for the purpose of economic gain may be subject to tax just like any other
private or government corporation.
d. None of the above.
92. Mr. Compton sells shoes in Makati through a retail store. He pays the VAT on his gross sales to
the BIR, and the local business tax based on the same gross sales to the City of Makati. He
comes to you for advice because he thinks he is being subjected to double taxation which he
thinks is illegal.
a. There is double taxation and it is not allowed.
b. The City of Makati has no taxing power.
c. There is double taxation, and it is allowed.
d. All of the above.
93. Statement 1: Any person convicted of a crime penalized under the Tax Code shall be subject
to the penalties of incarceration and/or fine.
Statement 2: A person convicted of a crime penalized under the Tax Code shall be dismissed
from public office if he is a public officer/employee.
Statement 3: A person convicted of a crime penalized under the Tax Code shall
be perpetually disqualified from holding any public office, from voting, and from
participating in any election.
Statement 4: Atty. Dehado was convicted of tax evasion back in 2010, but was elected Senator
in 2019. This violates the non-impairment clause in the Constitution.
94. The Municipality of Oslob in the Province of Cebu conducts Butanding Watching Activity
operations for visiting tourists. It also provides guides to assist the tourists. For such services,
the municipality charges and collects fees from the tourists. Are these fees taxable?
(a) No. The municipality is a political subdivision of the National Government and thus exempt
from taxes.
(b) Yes. The income derived by the municipality is not in the exercise of its essential
government functions, but pursuant to its proprietary function. The income derived
therefrom is subject to both income tax and VAT.
(c) It depends whether the fees received shall be used for the benefit of the residents of the
municipality.
(d) None of the above.
THE END
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