BUKIDNON STATE UNIVERSITY

Alubijid Satellite Campus

SUBJECT CODE : BACC 14 - INCOME TAXATION

TOPIC : PRINCIPLES OF TAXATION

EVALUATION TEST
Instruction:
Write your answer in a separate sheet of paper. You may submit your answer via messenger or G-
classroom. Do not forget to write your name; course; and section.
Deadline of submission: September 8, 2021; 11:59 pm

Multiple Choice
Choose the letter of your choice that best fit the given question.
QUESTIONS:
1. Tax laws must be clear and concise, capable of proper enforcement, and not burdensome,
convenient as to time and manner of payment.
a. Fiscal Adequacy
b. Administrative Feasibility
c. Ability-to-pay principle
d. Theoretical justice

2. Under the basic principle of sound tax system, the government should not incur a deficit.
a. Theoretical Justice
b. Administrative Feasibility
c. Fiscal Adequacy
d. Debt reconstructing

3. What basic principle of a sound tax system is complied when Congress evolves a progressive system
of taxation as mandated in the Constitution?

a. Fiscal Adequacy
b. Equality
 c. Administrative Feasibility
d. Balanced budget

4. Which of the following is not a basic principle of a sound taxation system?

a. It should be capable of being effectively enforced.
b. It must be a progressive tax
c. It must be sufficient to meet government expenditures and other public needs.
d. It should be exercise to promote public welfare
5. Statement 1: The power of taxation is inherent in sovereignty being essential to the existence of
every government. Hence, even if not mentioned in the Constitution the State can still exercise
the power.
Statement 2: Taxation is essentially a legislative function. Even in the absence of any constitutional
provisions, taxation power falls to congress as part of the general power of lawmaking.
a. Both statements are false
b. Only statement 1 is false
c. Both statements are true
d. Only statement 1 is true

6. Which of the following statements are correct?

a. Taxes may be imposed to raise revenue or to provide incentives to certain activities within the
State
b. The State can have the power of taxation even if the Constitution does not expressly give it
the power to tax.
c. For the exercise of the power of taxation, the state can tax anything at anytime
d. The provisions of taxation in the Philippine Constitution are grants of power and not
limitations on the taxation power.

7. Which is the best answer? A tax reform at any given time underscores the fact that:
a. Taxation is the inherent power of the state
b. Taxation is essentially a legislative power
c. Taxation is a power that is very broad
d. The state can adopt a progressive taxation

8. 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
b. Lifeblood theory
c. Sumptuary theory
d. Symbiotic doctrine

9. One of the following is not a manifestation of lifeblood theory:

a. Imposition of tax even in the absence of constitutional grant
b. Right to select objects and subjects of taxation
c. No injunction to enjoin tax collection
d. equal protection of law

10. The power of taxation proceeds upon what theory?

a. Government is a necessity theory
b. Relativity Theory
c. Ability to pay theory
d. Severance test theory

11. The following are the constitutional limitations on the power of taxation, except
a. taxes being imposed should not be excessive
b. non-impairment of the obligation of contracts
c. taxes are not subject to set-off 0r compensation
d. the rule of taxation shall be uniformed

12. One of the characteristics of our internal revenue laws is that they are:
a. Political in nature
b. Penal in nature
c. Generally prospective in operation although the tax statute may nevertheless operate
retrospectively, provided it is clearly the legislative intent
d. Criminal in nature

13. The Bicol School of Accountancy (BSA), a private educational institution which is offering tertiary
 education is registered with and accredited by the CHED. Which of the following is exempt from
tax? What kind of tax?
a. The importation of laboratory equipment - from customs duties
b. The school building being rented by the school – from real property tax
c. A portion of the school building being leased to a fastfood chain – from real property tax
d. The income from operation – from income tax

14. In the preceding question, assuming that the school is a non-stock non-profit educational institution.
Which of the following is subject to tax? What kind of tax?
a. The school building owed by the school being used as administration office- from real estate
tax
b. The school building being rented by the school and used as science laboratory – from real
property tax
c. A portion of the school building being leased to a fastfood chain – from real property tax
d. The income from operation – from income tax

15. Which statement is wrong? A revenue bill:

a. Must originate from the House of Representatives and on which same bill the Senate may
propose amendments
b. May originate from the senate and on which same bill the House of Representatives may
propose amendments
c. May have a House version and a Senate version approved separately
d. may be recommended by the President to Congress

16. A fundamental rule in taxation is that the property of one country may not be taxed b another
country. This is known as:
a. international law
b. international comity
c. reciprocity
d. international inhibition

17. A taxed may be imposed for a public purpose. Which of the following is not a public purpose?
a. giving relief to victims of calamities
b. public education
 c. improvement of sugar industry
d. constructing a private wakeboarding place

18. Fr. Dinero had the following activities during the week. Which of the following activities is subject to
income tax?
a. Celebrates mass and collect the alms of the faithful
b. Solicits funds for the construction of the church
c. Teaches religion in one university and collects his salary
d. Sell bibles to the public

19. To provide means for the rehabilitation and stabilization of the sugar industry so as to prepare
for
the eventuality of the loss of the quota allocated to the Philippines resulting from the lifting of
U.S. sanctions against African countries, congress passes a law increasing the existing tax on the
manufacture of sugar on a graduated basis. All collections made under the law are to accrue to a
special fund to be spent only for the purposes enumerated therein, among which are to place
the sugar industry a living wage and to improve their working conditions.
Sweet, a sugar planter files a suit questioning the constitutionality of the law alleging that the
tax is not for a public purpose as the same as being levied exclusively for the aid and support of
the sugar industry.
Which of the following option is wrong?
a. The imposition is for public purpose.
b. The imposition is also an exercise of police power.
c. The imposition is unconstitutional because it does not benefit the general public.
d. None of them

20. First statement: Our constitution does not prohibit double taxation.
Second statement: If double taxation occurs, the taxpayer may seek relief under the uniformity rule
or equal protection guarantee.
a. 1st statement is correct, 2nd statement is wrong
b. 1st statement is wrong, 2nd statement is correct
c. Both statements are wrong
d. Both statements are correct

21. Which of the following question is answerable by “Yes?”

 a. May congress, under the 1987 Constitution, abolish the power to tax of local government
units?
b. may a tax be validly imposed also in the exercise of the police power and not solely of the
power to tax?
c. Is indirect duplicate taxation a valid defense against the legality of a tax measure?
d. When an item of income is taxed in another country, is there a case of direct and double
taxation?

22. no person shall be imprisoned for non-payment of:

a. property tax
b. Excise tax
c. Basic community tax
d. Additional community tax

23. May the purpose of a tax be partly public and partly private without violating the limitation that a
tax must be for public purpose?
a. Yes. The purpose to be accomplished by taxation need not be exclusively public. Although
private individuals are directly benefited (e.g., giving aids to victims of flood), the tax will
still be valid provided such benefit is only incidental.
b. No. The purpose to be accomplished by taxation need to be exclusively public. To benefit
private individuals will be tantamount to deprivation of property of those who paid the
tax without due process.
c. Yes. The purpose is not important as long as the use of the tax can be properly accounted for.
d. No. The purpose shall either be public or private. It cannot be both.

24. One of the following is not a public purpose?

a. national defense
b. improving sugar industry
c. building of churches common to all religions
d. retirement benefits of officials
25. Congress granted a franchise to Blackmountain Shipping Line for the operation of a passenger or
freight service between Manila and Iloilo subject to the condition that the shipping line should
carry government mails free of charge.
It was then exempted from the payment of the franchise tax. In a law that was passed later, the
Blackmountain’s exemption from the franchise tax was removed on the ground that the
government needed funds for its projects.
 Was the law valid?
a. Yes, Because the government had the power to remove exemptions if the need for public
funds arose
b. Yes, because the congress had the sole prerogative to enact laws including removal for
exemptions.
c. No, because the grant of franchise tax exemption was a valid consideration which may be
considered a contract. To remove the tax exemption would impair the obligation of the
contract.
d. No, because congress can only enact laws. It cannot remove or withdraw exemptions.

26. A fixed license fee on the sale of bibles and other religious literature is violative of:
a. Non-infringement of religious freedom.
b. No appropriation for religious freedom.
c. Exemptions of religious, charitable or educational entities, non-profit cemeteries and
churches from property taxation.
d. Exemptions of revenues and assets of non- stock, non-profit educational institutions and
donations for educational purposes from taxes and duties.

27. The basis or test of exemption of real properties owed by religious or charitable entities from real
property taxes is:
a. Use of real property.
b. Ownership of the real property.
c. Location of the real property.
d. Ownership or location of real property at the option of the Government.

28. ABC Colleges is a non-stock, non-profit educational institution run by the Archiodese of Nueva
Camarines. It is occupying the following buildings:
A Bldg. 1 being used by the students for classroom purposes
B Bldg. 2 being used as dormitory of its students but open to non-students who wants to stay therein:
and
C Bldg. 3 owned by Mr. Rent being leased to ABC Colleges and serves as administration building which
houses the offices for the school president, registrar, principal, deans and other school officials.
Which of the above buildings is exempt from real estate tax?
a. Building 1 and 3
b. Building 1 and 2
 c. Building 1 only
d. All of them

29. A taxpayer gives the following reasons in refusing to pay a tax. Which of his reasons is not acceptable
for legally refusing to pay the tax?
a. That he has been deprived of due process of law
b. That there is lack of territorial jurisdiction
c. That the prescriptive period for the tax has elapsed
d. That he will derive no benefit from the tax

30. It literally means the place of taxation:

a. Purpose of taxation
b. Subject of taxation
c. Object of taxation
d. Situs of taxation

31. 1st statement: The general rule is that the situs of intangible personal property such as shares of
stock is at the domicile of the owner.
2nd statement: Gain from sale of shares of stock in a domestic corporation of a nonresident foreigner
is taxable in the Philippines.
a. True, true
b. True, false
c. False, false
d. False, true

32. Which of the following statements is incorrect?

a. Tax amnesty is an immunity from all criminal, civil and administrative liabilities arising from
nonpayment of taxes.
b. Tax amnesty is legal
c. Tax amnesty applies only to past tax periods, hence of retroactive application, while tax
exemption has prospective application
d. All of the above
33. The Congress may, by law, delegate the legislative power to the President to fix within specified
limits the following, except:
a. tariff rates
b. tonnage and wharfage dues
c. import and export quotas
d. arrastre charges

34. The Municipality of Monte Cristo has a ten hectares cemetery consisting of four different cemeteries
which are differently owned.
Which of the following is subject to real estate tax?
a. Cementerio Municipal del Monte Cristo - a government cemetery owned by the municipal
government which was established for the purpose of using it is burial ground of the
paupers of the municipality.
b. Monte Cristo Catholic Cemetery – Owed by the catholic church; payments are remitted to the
catholic church and for the improvement of the cemetery.
c. Better Living Memorial Park – owned by a corporation where dividends are distributed to the
shareholders at the end of the year.
d. Quita-Quita Memorial Park – owned by an association consisting of 100 different families
each family owned several square meters of lot, not a single portion is held for sale to
either member of nonmember of the association.

35. A law was passed by he Congress which granted tax amnesty to those who have not paid income
taxes for a certain year without at the same time providing for the refund of taxes to those who
have already paid them.
The law is:
a. Not valid because only the president with the approval of the Congress may grant amnesty.
b. Not valid because those who did not pay their taxes are favored over those who have paid
their taxes.
c. Valid because it was Congress who pass the law and it did not improperly delegate the power
to tax.
d. Valid because there is a valid classification between the delinquent and non-delinquent
taxpayers.

35. Which of the following is ta natural quality of the power of taxation?

a. an inherent power of the state
b. essentially an executive function
 c. an absolute power of the state
d. territorial in operation

36. Which of the following may not raise money for the government?
a. Power of taxation
b. Police power
c. Power of eminent domain
d. Privatization of government’s assets

37. Police power is distinguished from eminent domain:

a. Just compensation is received by the owner of the property.
b. May be exercise by private individual.
c. Superior to the non-impairment clause of the Constitution
d. Property is taken by the government for public purpose

38. Statement 1. The power of taxation cannot be exercised without a previous constitutional authority.
Statement 2. The police power can be used to implement the power of taxation.
a. True, true
b. True, false
c. False, true
d. False, false

39. The following are the similarities of the inherent power of taxation, eminent and police power,
except one:
a. They are necessary attributes of sovereignty
b. They interfere with private rights and property
c. They affect all persons or the public
d. They are legislative in character

40. Police power is distinguished from taxation.

a. it involves taking of property.
b. the amount collected id limited to the cost of regulation.
 c. it is an inherent power of the state.
d. the benefit derived is the protection given by the state.

41. In case of deductions and exemptions on income tax results, doubts shall be resolved:
a. liberally in favor of the tax payer
b. Liberally in favor of the employer
c. Strictly against the government
d. Strictly against the taxpayer

42. One of the characteristics of tax is that it is generally:

a. Based on contract
b. Payable in money
c. Assignable
d. Optional

43. Which of the following is not an example of excise tax?

a. Estate tax
b. value added tax
c. Real property tax
d. Income tax

44. Which of the following distinguishes tax from license fee?

a. Non-payment does not necessarily render the business illegal.
b. A regulatory matter.
c. Imposed in the exercise of power.
d. Limited to cover cost of regulation

45. Value added tax as to rate, is an example of

a. Graduated tax
b. Progressive tax
c. Regressive tax
d. Proportional tax
46. The basic community tax of P5.00 for an individual is a/an:
a. Property tax
b. Direct tax
c. ad valorem tax
d. national tax

47. Which of the following terms describes the statement, ‘that the State has complete discretion on the
amount to be imposed, after distinguishing between a useful and non-useful activity”?
a. Tax
b. License fee
c. Customs duty
d. Toll

48. A tax on business is:

a. Direct tax
b. Indirect tax
c. Property tax
d. Poll tax

49. Which statement is wrong?

a. A tax is demand of sovereignty
b. A toll is demand of ownership
c. A special assessment is a tax
d. Customs duty is a tax

50. Statement 1. The estate tax is a property tax.

Statement 2. The value-added tax is a direct tax.
a. The two statement are correct
b. The two statements are wrong
c. Statement 1 is correct while statement 2 is wrong
d. Statement 1 is wrong while statement 2 is correct
51. The amount required as dictated by the needs of the government is:
a. License fee
b. Tax
c. Tariff
d. Toll

52. This is a demand of ownership

a. License fee
b. Tax
c. Toll
d. Franchise

53. Which is not an essential element of tax?

a. unlimited as to amount
b. payable in money
c. proportionate in character
d. legislative in character

54. All of the following except one are essential characteristics of a tax. Which is the exception?
a. it is based on the ability to pay
b. it is an enforced contribution
c. it is generally payable in money
d. it is proportionate in character

55. One is not a characteristic or an element of tax:

a. It is levied by the legislature
b. It is payable in money or in kind
c. It is proportionate in character
d. It is an enforced contribution

56. One of the characteristics of tax is that:

 a. It is generally based on contract
b. It is generally payable in money
c. It is generally assignable
d. Answer not given

57. A kind of tax system where the rate increases as the tax base increases.
a. Digressive tax
b. Proportional tax
c. Progressive tax
d. Pegressive tax
58. Which of the following is not a direct tax?
a. Travel tax
b. Transfer tax
c. Income tax
d. Value-added tax

59. It compromises of all kinds of funds derived by the government including taxes:
a. License fee
b. Debt
c. Customs duties
d. Revenue

60. It is collected for the use of somebody else’s property:

a. Toll
b. Debt
c. Tax
d. Special assessment

61. In case of conflict between the tax code and the Philippine Accounting Standards (PAS) or the
Philippine Financial Reporting Standards (PFRS):
a. PAS/PFRS shall prevail over the Tax Code.
b. Tax Code shall prevail over PAS/PFRS.
 c. PAS/PFRS and Tax Code shall be both disregarded.
d. The taxpayer may choose between PAS/PFRS or Tax Code.

62. The actual effort exerted by the government to effect the exaction of what is due from the taxpayer
is known as:
a. Assessment
b. Payment
c. Levy
d. Collection
63. 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. Identify who should collect the tax
c. Collect the tax levied under the law
d. Determine who should be the subject to the tax

64. A tax which could be ad valorem but sometimes maybe specific

a. Income tax
b. VAT
c. Excise tax
d. Real property tax

65. A tax which can be progressive or maybe proportional

a. Income tax
b. VAT
c. Excise tax
d. Real Property tax

END