General Principles of Taxation

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Questions and Answers

Who is primarily responsible for exercising the power of taxation?

The government or its political subdivisions (correct)

Public service corporations

Non-profit organizations

Private entities operating public utilities

What is the primary constitutional limitation on taxation?

Taxes must be progressive

Taxes can vary based on geographical location

Uniform and equitable rule of taxation (correct)

Tax rates must be set by state governments

What does the principle of 'equal protection of the laws' signify in taxation?

Different classes may be subject to different tax rules based on necessity (correct)

Everyone must be taxed at the same rate regardless of circumstances

No one can evade taxes in any form

All individuals may benefit equally from tax-funded services

Which of the following best describes 'uniformity' in the context of taxation?

Persons or properties in the same class should be taxed at the same rate Signup and view all the answers

Which power may also be exercised by public service corporations or private entities?

Eminent domain Signup and view all the answers

What is the first stage of taxation?

Levying or imposition of the tax Signup and view all the answers

Which entity primarily exercises the taxing power in the Philippines?

Congress Signup and view all the answers

Which of the following best defines the power to tax?

A legislatively imposed financial obligation Signup and view all the answers

What does the police power of the state enable it to do?

Regulate property and personal liberties Signup and view all the answers

What limitation is placed on the exercise of the power of eminent domain?

Just compensation must be provided for taken property Signup and view all the answers

What does it mean when it is stated that the power to tax is 'supreme'?

It is regarded as unrestricted by lower authorities Signup and view all the answers

Which of the following is NOT considered an inherent power of the state?

Power to Regulate Corporations Signup and view all the answers

Tax collection is characterized as which type of activity?

Administrative Signup and view all the answers

What is required for a non-profit educational institution's income to be exempt from taxation?

The income must be used for educational purposes only. Signup and view all the answers

Which of the following is a limitation of the taxing power?

The tax must apply within defined geographic boundaries. Signup and view all the answers

When can a local government unit (LGU) be subject to income and business taxes?

When it engages in businesses similar to those of private companies. Signup and view all the answers

What happens to unused funds from a special purpose tax?

They are transferred to the general funds of the Government. Signup and view all the answers

Which of the following is exempt from the income tax imposed under the National Internal Revenue Code?

The Philippine Health Insurance Corporation. Signup and view all the answers

What is the general rule regarding the delegation of the taxing power of the legislature?

It cannot be delegated at all. Signup and view all the answers

Which governmental action is explicitly outlined as an exception to the non-delegability of the taxing power?

The President has the authority to fix tariff rates. Signup and view all the answers

Why would a special fund collected for a specific purpose be restricted in its use?

To ensure accountability for taxpayer money. Signup and view all the answers

What principle limits the government's authority to impose taxes on foreign entities?

International comity Signup and view all the answers

Which of the following is a characteristic of direct double taxation?

Taxing the same subject by the same authority within the same jurisdiction Signup and view all the answers

What does the principle of Fiscal Adequacy ensure in a tax system?

Revenue sources meet public expenditure demands Signup and view all the answers

Which type of double taxation occurs when the same subject is taxed multiple times by the same authority within the same jurisdiction?

Direct double taxation Signup and view all the answers

What is the main purpose of the Life-blood Theory in taxation?

To emphasize that taxes are essential for government function Signup and view all the answers

Which of the following is NOT a basic principle of a sound tax system?

Equal taxation for all Signup and view all the answers

What is a key requirement of the tax laws related to Administrative Feasibility?

Tax laws must allow for effective administration Signup and view all the answers

Which forms of taxation are local government units permitted to create?

Taxes, fees, and charges within guidelines Signup and view all the answers

What distinguishes tax obligations from debt obligations?

Taxes are obligations due to the government, while debts are based on contracts Signup and view all the answers

Which of the following forms of payment can be made for debts?

Money, property, or services Signup and view all the answers

Under which circumstance can a person be imprisoned for non-payment?

For failing to pay poll tax Signup and view all the answers

How is assignability of tax obligations different from that of debt obligations?

Debt obligations are generally assignable Signup and view all the answers

What is the primary role of the Bureau of Internal Revenue (BIR)?

To assess, collect, and enforce all national internal revenue taxes Signup and view all the answers

What distinguishes a tax from a toll?

Taxes can be based on income; tolls are based on property usage Signup and view all the answers

Which aspect of debt does compensation or set-off apply to?

Debts can use set-off, but taxes cannot Signup and view all the answers

Which of the following best describes the nature of a tax?

A forced contribution to the government Signup and view all the answers

Study Notes

Taxation Defined

Taxation is the sovereign power used to raise revenue for government expenses.

Stages or Coverage of Taxation

Three main areas of taxation:
- Levying: Involves the passage of tax laws by Congress in the Philippines.
- Assessment: Determining the correct tax amount owed.
- Collection and Payment: Taxpayer compliance, managed by the Bureau of Internal Revenue (BIR).

Inherent Powers of a State

There are three inherent powers:
- Power to Tax: Supreme and comprehensive; courts don't interfere unless constitutional limits are breached.
- Police Power: Regulates for public health, safety, welfare, and morals, can include taxation to promote welfare.
- Power of Eminent Domain: Allows the government to take private property for public use with just compensation.

Limitations on the Power to Tax

Constitutional Limitations:
- No deprivation of life, liberty, or property without due process.
- Taxation must be uniform and equitable.
- Special funds must only be used for specific purposes they were collected for.
Inherent Limitations:
- Taxes must apply within territorial limits.
- Funds must be used for public purposes.
- Government entities are typically exempt, but can be taxed when engaged in business activities.
- The power to tax cannot generally be delegated, with exceptions for local government and tariff/fixed rates by the President.
- International comity limits taxation on foreign entities.
- Double taxation includes direct and indirect forms, not constitutionally forbidden but not favored.

Basic Principles of a Sound Tax System

Fiscal Adequacy: Revenue sources must meet public expenditure demands.
Equality or Theoretical Justice: Taxes should reflect taxpayers' abilities to pay.
Administrative Feasibility: Tax laws should be just and easily administered.

Theory of Taxation

Life-blood Theory: Taxes are essential for government function.

Tax vs. Debt

Tax: Obligations due to government by law, no interest (except delinquency), non-assignable, penalties for non-payment.
Debt: Obligations under a contract, may include interest, generally assignable, no imprisonment for non-payment.

Tax vs. Toll

Tax: A demand for sovereignty imposed by the government, not tied to property value.
Toll: A charge by private entities, based on property use or improvements.

Tax Administration

Involves assessment, collection, and enforcement related to taxes, including execution of judgments in favor of the BIR.

Powers and Duties of the BIR

Responsible for the assessment and collection of national internal revenue taxes, enforcing penalties, and executing judgments from tax court rulings.

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Description

Explore the fundamental concepts of taxation as defined by Atty. C. Llamado. This quiz covers the definition, stages, and aspects of taxation, providing insights into how government raises revenues. Test your knowledge on the legislative process and the covering areas of taxation.