General Principles Of Taxation Trivia Quiz

1. Which of the following is/are the nature of the power of taxation?

It is an inherent attribute of sovereignty.
It is legislative in character.
It is regarded as comprehensive, unlimited, plenary and supreme.

A. I only.

B. I and II only.

C. II and III only.

D. I and III only.

Answer: B III is the extent of the power of taxation not its nature.

Explanation

Answer: B III is the extent of the power of taxation not its nature.

2. Under the benefits-protection/reciprocity theory, while taxes are intended for general benefits, special benefits to taxpayers are not required.

True

False

Answer: A. True

Explanation

Answer: A. True

3. Motor vehicle registration fees are now considered revenue or tax measures.

A. True

B. False

Answer: A. True

Explanation

Answer: A. True

4. Which of the following is not an inherent limitation of the power to tax?

A. Non-delegability of the taxing power

B. Public purpose of taxes

C. Tax Exemption of the government

D. None of the above.

Answer: D

A. INHERENT LIMITATIONS (KEY: SPINE)
1. Territoriality or Situs of taxation
2. Public purpose of taxes
3. International comity
4. Non-delegability of the taxing power
5. Tax Exemption of the government

Explanation

Answer: D

A. INHERENT LIMITATIONS (KEY: SPINE)
1. Territoriality or Situs of taxation
2. Public purpose of taxes
3. International comity
4. Non-delegability of the taxing power
5. Tax Exemption of the government

5. Which of the following is not considered tax?

A. Compromise penalty

B. Special assessment

C. License or fee

D. All of the above

Answer: D

Explanation

Answer: D

6. Tax upon the value of the article or thing subject to taxation; the intervention of another party is needed for the computation of the tax.

A. Customs duties

B. Specific tax

C. Ad valorem tax

D. Special tax

Answer: C.

Explanation

Answer: C.

7. Vote needed in Congress to grant tax exemption

1/3 of all the members of Congress

2/3 of all the members of Congress

Majority of all the members of Congress

A unanimous vote of all members of Congress.

Answer: C

Explanation

Answer: C

8. Which of the following is not a requisite of taxpayer's suit?

A. The tax money is being extracted and spent in violation of specific constitutional protections against abuses of legislative power.

B. That public money is being deflected to any improper purpose

C. That the petitioner seeks to restrain respondents from wasting public funds through the enforcement of an invalid or unconstitutional law

D. None of the above.

Answer: D

Explanation

Answer: D

9. It is also known as impact of taxation

A. Tax imposition

B. Tax collection

C. Tax evasion

D. Tax avoidance

Answer: A

Explanation

Answer: A

10. A grant of immunity to particular persons or corporations from the obligation to pay taxes

Tax amnesty

Tax exemption

Tax avoidance

Tax evasion

Answer: B

Explanation

Answer: B

11. Which of the following is not an element of direct double taxation?

A. both taxes are levied for the same purpose

B. imposed by the same taxing authority

C. imposed at the same amount

D. imposed during the same taxing period

Answer: C

Elements:
a. the same property or subject matter is taxed twice when it should be taxed only once.
b. both taxes are levied for the same purpose
c. imposed by the same taxing authority
d. within the same jurisdiction
e. during the same taxing period
f. covering the same kind or character of tax.

The absence of one or more of the above-mentioned elements makes the double taxation indirect.

Explanation

Answer: C

Elements:
a. the same property or subject matter is taxed twice when it should be taxed only once.
b. both taxes are levied for the same purpose
c. imposed by the same taxing authority
d. within the same jurisdiction
e. during the same taxing period
f. covering the same kind or character of tax.

The absence of one or more of the above-mentioned elements makes the double taxation indirect.

12. A characteristic of taxes which means taxes are assessed with some reasonable rule of apportionment

Due process

Equal protection

Theoretical justice

Uniformity

Theoretical justice

Explanation

Theoretical justice

13. In which of the following powers of the state does the taxpayer receive a direct benefit?

Taxation

Police power

Eminent domain

None of the above.

Answer: C. Eminent domain In the power of an eminent domain, a direct benefit results in the form of just compensation to the property owner.

Explanation

Answer: C. Eminent domain In the power of an eminent domain, a direct benefit results in the form of just compensation to the property owner.

14. I. The power of taxation is peculiarly and exclusively exercised by the legislature.II. The President has the authority to fix tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts.III. Local government units have the power to levy taxes, fees, and charges.IV. Tax legislation may be delegated to administrative agencies. Which of the above statements is/are false?

A. II and IV only

B. II and III only

C. II, III and IV only

D. IV only

Answer: D. IV only

Explanation

Answer: D. IV only

15. I. The principle of international comity limits the authority of the government to effectively impose taxes on a sovereign state and its instrumentalities, as well as on its property held and activities undertaken in that capacity.II. International comity may not apply when one enters the territory of another.

A. Statement I is true; Statement II is false

B. Statement I is false; Statement II is true

C. Both statements are true

D. Both statements are false

Answer: A

Even where one enters the territory of another, there is an implied understanding that the former does not thereby submit itself to the authority and jurisdiction of the other.

Explanation

Answer: A

Even where one enters the territory of another, there is an implied understanding that the former does not thereby submit itself to the authority and jurisdiction of the other.

16. Which of the following taxes are non-stock non-profit educational institutions exempt?

A. Income tax

B. Customs duties

C. Property tax

D. All of the above.

Answer: D

Explanation

Answer: D

17. I. In the Philippines, a tax law adopting a regressive system of taxation is unconstitutional.II. Income tax on individual is an example of a progressive system of taxation.

A. Statement I is true; Statement II is false

B. Statement I is false; Statement II is true

C. Both statements are true

D. Both statements are false

Answer: B

The Constitution does not really prohibit the imposition of indirect taxes which, like the VAT, are regressive. The Constitutional provision means simply that indirect taxes shall be minimized. The mandate to Congress is not to prescribe, but to evolve, a progressive tax system.

Explanation

Answer: B

The Constitution does not really prohibit the imposition of indirect taxes which, like the VAT, are regressive. The Constitutional provision means simply that indirect taxes shall be minimized. The mandate to Congress is not to prescribe, but to evolve, a progressive tax system.

18. Which of the following powers of the state is superior to the non-impairment clause of contracts?

Taxation
Police power
Eminent domain

A. I only

B. I and II only

C. I and III only

D. II and III only

Answer: D The power to tax is not superior to the non-impairment clause.

Explanation

Answer: D The power to tax is not superior to the non-impairment clause.

19. I. Tax laws are political in character. II. Tax laws are civil in nature. III. Tax laws are not penal in character. Which of the above statements is/are true?

A. I and II only

B. II and III only

C. I and III only

D. II only

Answer: B

Tax laws are not political in nature.

Explanation

Answer: B

Tax laws are not political in nature.

20. Which of the following may be subject to tax imposed by the local government units?

A. A GOCC

B. Local water districts

C. Cooperatives duly registered under RA No. 6938

D. Non-stock and non-profit institutions

Answer: A

Unless otherwise provided in the Local Government Code (LGC), tax exemptions granted to all persons, whether natural or juridical, including GOCC, except local water districts, cooperatives duly registered under RA No. 6938, non-stock and non-profit institutions, are withdrawn upon effectivity of the LGC. (Sec. 193, LGC)

Explanation

Answer: A

Unless otherwise provided in the Local Government Code (LGC), tax exemptions granted to all persons, whether natural or juridical, including GOCC, except local water districts, cooperatives duly registered under RA No. 6938, non-stock and non-profit institutions, are withdrawn upon effectivity of the LGC. (Sec. 193, LGC)

21. I. Donations in favor of governmental institutions are considered as income on the part of the done.II. However, it is not considered as taxable income because it is an exclusion from the computation of gross income.

A. Statement I is true; Statement II is false

B. Statement I is false; Statement II is true

C. Both statements are true

D. Both statements are false

Answer: C

Explanation

Answer: C

22. Which of the following statements on construction of tax laws is false?

A statute will not be construed as imposing a tax unless it does so clearly, expressly and unambiguously.

In case of doubt, it is construed most strongly against the Government, and liberally in favor of the taxpayer.

Tax laws are special laws and prevail over a general law.

The retroactive application of tax laws is not permitted.

ANSWER: D Tax laws operate prospectively unless the purpose of the legislature to give retrospective effect is expressly declared or may be implied from the language used.

Explanation

ANSWER: D Tax laws operate prospectively unless the purpose of the legislature to give retrospective effect is expressly declared or may be implied from the language used.

23. Which of the following taxes are religious, educational, charitable institutions exempt?

A. Income tax

B. Customs duties

C. Property tax

D. All of the above.

Answer: C

Religious, educational, and charitable institutions are exempt from property tax only.

Explanation

Answer: C

Religious, educational, and charitable institutions are exempt from property tax only.

24. Shares, obligations or bonds by any foreign corporation are only includible in the gross estate of a resident decedent when

A. 50% of the business of the foreign corporation is located in the Philippines

B. 70% of the business of the foreign corporation is located in the Philippines

C. 85% of the business of the foreign corporation is located in the Philippines

D. 90% of the business of the foreign corporation is located in the Philippines

Answer: C.

Explanation

Answer: C.

25. Which of the following statements is true on the power of the courts of judicial review in taxation? I.It is within the province of the courts to inquire into the wisdom or policy of the exaction, the motives behind it, the amount to be raised or the persons, property, or other privileges to be taxed. II. The court's power in taxation is limited only to the application and interpretation of the law. III. The principle of judicial non-interference does not extend to the administrative realm.

A. II and III only

B. I and III only

C. II only

D. I and II only

ANSWER: C. II only It is not within the province of the courts to inquire into the wisdom or policy of the exaction, the motives behind it, the amount to be raised or the persons, property, or other privileges to be taxed. The principle of judicial non-interference extends to the administrative realm.

Explanation

ANSWER: C. II only It is not within the province of the courts to inquire into the wisdom or policy of the exaction, the motives behind it, the amount to be raised or the persons, property, or other privileges to be taxed. The principle of judicial non-interference extends to the administrative realm.

26. I. Property actually, directly and exclusively used for educational purposes by government educational institutions are exempt from property or real property tax.II. Income of whatever kind and character from any properties of government educational institutions, real or personal, regardless of the disposition, is taxable.

A. Statement I is true; Statement II is false

B. Statement I is false; Statement II is true

C. Both statements are true

D. Both statements are false

Answer: C

Explanation

Answer: C

27. Which of the following statements is/are true?

Taxes are personal to the taxpayer.
Stockholders may be held liable for unpaid taxes of a dissolved corporation.
A corporation's tax delinquency cannot be enforced against its stockholders.

A. I only

B. I and II only

C. I and III only

D. I, II and III

Answer: D

TAXES ARE PERSONAL TO THE TAXPAYER

A corporation’s tax delinquency cannot be enforced against its stockholders. (Corporate Entity Doctrine)

Exception: Stockholders may be held liable for unpaid taxes of a dissolved corporation:
a. if it appears that the corporate assets have passed into their hands or
b. when the stockholders have unpaid subscriptions to the capital of the corporation

Explanation

Answer: D

TAXES ARE PERSONAL TO THE TAXPAYER

A corporation’s tax delinquency cannot be enforced against its stockholders. (Corporate Entity Doctrine)

Exception: Stockholders may be held liable for unpaid taxes of a dissolved corporation:
a. if it appears that the corporate assets have passed into their hands or
b. when the stockholders have unpaid subscriptions to the capital of the corporation

28. In which of the following circumstances is the non-impairment clause of contracts violated when withdrawn?

Tax exemption bilaterally agreed by the government and the taxpayer
Tax exemption unilaterally granted by law, withdrawn by virtue of another law
Tax exemption granted under a franchise

A. I only

B. I and III only

C. I and II only

D. I, II and III

Answer: A

When the exemption is granted under a franchise – it may be withdrawn at any time thus, not a violation of the non-impairment of contracts.

Explanation

Answer: A

When the exemption is granted under a franchise – it may be withdrawn at any time thus, not a violation of the non-impairment of contracts.

29. I. Although the government is tax exempt, it can however tax itself.II. GOCCs' income is taxable at special rates.

A. Statement I is true; Statement II is false

B. Statement I is false; Statement II is true

C. Both statements are true

D. Both statements are false

Answer: A.

GOCCs

General Rule: Income is taxable at the rate imposed upon corporations or associations engaged in a similar business, industry, or activity.

Explanation

Answer: A.

GOCCs

General Rule: Income is taxable at the rate imposed upon corporations or associations engaged in a similar business, industry, or activity.

30. Which of the following is not of the nature of tax exemption?

Deductions for income tax purposes

Claims for refund

Tax credits

Tax amnesty

Answer: C

Explanation

Answer: C