Government Funding and Taxation
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Questions and Answers

What does the basis of taxation refer to?

  • The government's mandate to regulate businesses.
  • The legal obligation for citizens to serve in government.
  • The government's entitlement to create taxes.
  • The mutual support between the government and the people. (correct)

    • Which theory presumes that the more benefits one receives from the government, the more taxes they should pay?

  • Cost allocation theory
  • Equitable taxation theory
  • Ability to pay theory
  • Benefit received theory (correct)

    • According to the ability to pay theory, how should taxation be structured?

  • It should be uniform for all citizens regardless of income.
  • It should focus solely on the number of services used.
  • It should be based on the taxpayer's citizenship duration.
  • It should consider the taxpayer's financial capacity. (correct)

    • Which statement about taxpayer obligations is correct?

    <p>Receipt of public benefits does not exempt taxpayers from their obligations.</p> Signup and view all the answers

    What principle is illustrated by the phrase 'those who have more should be taxed more'?

    <p>Ability to pay theory</p> Signup and view all the answers

    What does the principle of mutuality in taxation imply?

    <p>All citizens benefit regardless of their tax contributions.</p> Signup and view all the answers

    In terms of taxation, what is a key consideration in cost allocation?

    <p>The fairness of tax burdens across different income levels.</p> Signup and view all the answers

    Which of the following best describes the receipt of benefits from the government in relation to taxation?

    <p>Benefits received are presumed for taxation purposes.</p> Signup and view all the answers

    Which body has the constitutional authority to originate tax bills?

    <p>The House of Representatives</p> Signup and view all the answers

    What does 'situs' refer to in the context of taxation?

    <p>The place where tax jurisdiction applies</p> Signup and view all the answers

    Which of the following correctly describes the situs of a business tax?

    <p>Subject to tax where the business is conducted</p> Signup and view all the answers

    Which of the following is NOT a matter of legislative discretion regarding taxation?

    <p>Assessing tax liabilities</p> Signup and view all the answers

    If a foreign corporation leases property to a non-resident in another country, what is the tax implication?

    <p>It is exempt from Philippine taxation</p> Signup and view all the answers

    What stage refers to the administrative act of determining and collecting tax liabilities?

    <p>Incidence of taxation</p> Signup and view all the answers

    Which of these activities is an example of determining the object of taxation?

    <p>Deciding which goods are taxable sales</p> Signup and view all the answers

    When assessing the situs of taxation, which principle applies to the income from services?

    <p>Taxed where the service is rendered</p> Signup and view all the answers

    Where is the situs of taxation for the gain on sale of goods when the sale is consummated in a different country?

    <p>In the country where the contract is perfected</p> Signup and view all the answers

    What is the tax implication for an overseas Filipino worker who owns a residential lot in the Philippines?

    <p>He pays real property tax despite being absent</p> Signup and view all the answers

    What determines the personal tax situs for a non-resident alien studying in a country?

    <p>His place of residence</p> Signup and view all the answers

    Which doctrine states that taxation power can be used as an instrument of police power?

    <p>Marshall Doctrine</p> Signup and view all the answers

    In what way does Holme's Doctrine differ from Marshall's Doctrine?

    <p>It encourages beneficial activities through tax incentives</p> Signup and view all the answers

    If a non-resident OFW sells his property while abroad, where would the gain be taxed?

    <p>In the country where the property is located</p> Signup and view all the answers

    Which of the following is true regarding the taxation of non-residents?

    <p>They pay tax based on their residence based on local laws</p> Signup and view all the answers

    What is one potential outcome of the Marshall Doctrine in practice?

    <p>Discouraging of undesirable activities through taxation</p> Signup and view all the answers

    What is a potential manifestation of the Marshall Doctrine in taxation?

    <p>Imposition of excessive tax on cigarettes</p> Signup and view all the answers

    Which of the following is an application of Holme's Doctrine?

    <p>Creation of Ecozones with tax incentives</p> Signup and view all the answers

    Under what condition can income tax laws operate retrospectively?

    <p>If specifically permitted by Congress</p> Signup and view all the answers

    What does the principle of non-compensation in taxation imply?

    <p>Tax obligations must be paid regardless of other claims</p> Signup and view all the answers

    When can a taxpayer's claim for a tax refund be considered for set-off?

    <p>When a government acknowledgment of the claim is made</p> Signup and view all the answers

    What is the implication of non-assignment of taxes?

    <p>Tax obligations cannot be transferred to another entity</p> Signup and view all the answers

    What does the concept of imprescriptibility in taxation signify?

    <p>The government's right to collect taxes can always be enforced</p> Signup and view all the answers

    According to the NIRC, when does tax prescription occur?

    <p>If tax is not collected within 5 years from assessment</p> Signup and view all the answers

    What is the primary goal of tax avoidance?

    <p>To legally minimize tax liabilities</p> Signup and view all the answers

    Which of the following accurately describes tax exemption?

    <p>It is a privilege to not be subject to certain taxes.</p> Signup and view all the answers

    What does backward shifting in tax refer to?

    <p>Shifting the tax burden back to suppliers</p> Signup and view all the answers

    How does capitalization relate to tax changes?

    <p>It adjusts the value of an asset due to tax rate changes.</p> Signup and view all the answers

    What does tax shifting primarily aim to accomplish?

    <p>To transfer tax liabilities from one party to another</p> Signup and view all the answers

    What is meant by forward shifting of tax?

    <p>Shifting tax from producers to consumers</p> Signup and view all the answers

    Which statement about transformation in tax is true?

    <p>It focuses on eliminating losses to save on taxes.</p> Signup and view all the answers

    Which type of tax shifting is most common with essential goods and services?

    <p>Forward shifting</p> Signup and view all the answers

    Study Notes

    Government Funding and Taxation

    • Government funding is essential for maintaining public services and infrastructure.
    • Taxation is the primary means through which the government receives financial support from citizens.
    • This funding structure is described as a mutual support system between the government and its people.

    Benefits of Public Services

    • All citizens automatically benefit from government services, even if these benefits are indirect.
    • Examples of public services include infrastructure, healthcare, education, and security.
    • Taxpayers cannot avoid tax obligations by claiming they have not directly received benefits.

    Theories of Cost Allocation

    • Taxation distributes government costs among the population based on specific theories:
      • Benefit Received Theory: Tax liability correlates with the level of government benefits received.
      • Ability to Pay Theory: Taxpayers contribute according to their financial capability, implying wealthier individuals should pay higher taxes, regardless of the benefits received.

    Legislative Framework for Taxation

    • Tax bills must originate in the House of Representatives as specified by the Constitution.
    • Legislative discretion in taxation includes:
      • Object of taxation selection
      • Setting tax rates
      • Defining the purpose of tax levies for public use
      • Types of taxes imposed
      • Allocation of tax revenue between national and local governments
      • Determining tax situs and collection methods

    Assessment and Collection

    • Tax laws are enforced by the administrative branch through assessment and collection of tax liabilities.
    • This enforcement is referred to as the incidence of taxation.

    Situs of Taxation

    • Situs refers to the geographic location where taxation takes place, with rules to determine tax jurisdiction.
    • Business Tax Situs: Taxes are imposed where a business operates.
    • Income Tax Situs on Services: Tax depends on the location where services are rendered.
    • Income Tax Situs on Sale of Goods: Tax applies based on the sale's location.
    • Property Tax Situs: Property is taxed where it is located, regardless of the owner's residence.
    • Personal Tax Situs: Individuals are taxable based on their residence.

    Fundamental Doctrines in Taxation

    • Marshall Doctrine: Taxation can be used as a mechanism to discourage harmful activities, equating the power to tax with the power to destroy.
    • Holmes Doctrine: Taxation can promote beneficial activities through incentives and tax holidays, creating space for economic growth.
    • Tax laws typically operate prospectively, although there may be exceptions for specific tax situations.

    Important Tax Principles

    • Taxes cannot be automatically set off against claims the taxpayer may have against the government.
    • Tax obligations are non-transferable; a taxpayer cannot assign tax liabilities to another party.
    • The right to collect taxes does not expire unless specifically provided by law; typically, taxes must be collected within five years post-assessment.

    Tax Strategies

    • Tax Avoidance: Legally reducing tax liabilities through careful planning and strategic financial decisions.
    • Tax Exemption: Certain entities may be exempt from taxes, which can be constitutionally or contractually granted.

    Tax Burden Shifting

    • Shifting refers to transferring the tax burden across various taxpayers or market segments:
      • Forward Shifting: Consumers bear the cost after manufacturers increase prices to cover taxes.
      • Backward Shifting: Producers absorb costs, impacting their pricing strategies for certain products.
      • Onward Shifting: General tax burden adjustments passed along the supply chain.
    • Capitalization: The impact of tax rate changes on asset values, resulting in adjusted market valuations.
    • Transformation: Taxpayers may reduce waste to offset the effects of increased taxes, maximizing financial efficiency.

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    Description

    Explore the critical relationship between government funding and taxation. This quiz covers the significance of public services, the benefits received by citizens, and the theories of cost allocation related to taxation. Understand how these financial systems operate within society.

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