Income Taxation - CPAR Test Bank

Income Taxation - CPAR Test Bank

• Taxation vs. Police Power & Eminent Domain: Taxation is the government's power to raise funds for general welfare, whereas police power concerns public health and safety. Eminent domain involves taking private property for public use with just compensation.
• Constitutional Limitations on Taxation: Constitutional limitations on taxation include non-imprisonment for non-payment of poll tax, non-impairment of contracts, and uniformity and equity in taxation. There are also legal exemptions for certain religious, charitable, and educational institutions.
• Public Purpose: Taxes must be levied for a valid public purpose, which does not include certain private improvements (like those related to sugar or coconut industries).
• Essential Characteristics of a Tax: A tax must be unlimited in amount, payable in money, proportionate, and enforced.
• Special Assessment: This is a proportional tax on property owners who benefit from public improvements. Key characteristics are levied on land and based on benefit, not a personal liability for the assessed person.
• Tax Incentive/Exemption: A tax incentive is a privilege of not being subject to financial obligations like others are. Tax exemption is a complete exemption from paying a particular tax.
• Legislative Power to Tax: In the absence of constitutional restrictions, the power to tax is broad and applied within the state's territorial jurisdiction to persons, property, and professions.

General Principles of Taxation

• Nature of Taxation: Taxation is the sovereign power of the state to tax as it is necessary and inherent in its power.
• Scope of Taxation: Taxation is necessarily unlimited, but it is constrained by constitutional provisions, especially those addressing fairness and due process.
• Place of Taxation: The place or situs of taxation is generally determined by the source of income, citizenship of the taxpayer, and residence of the taxpayer.
• Delegation of Power: The power of taxation cannot be delegated to private institutions or entities.

Additional Exam Bank Questions

• Statement Analysis: Multiple statements about taxation are presented for students to evaluate as true or false, regarding principles and implications of the Philippine taxation system.
• Tax System Types: Questions regarding different types of tax systems, such as schedular, proportional, and progressive systems, and their application are presented.
• Constitutional Limitations: Exam questions check student knowledge regarding the constitutional limitations on the power to tax.
• Distinguishing Taxes: Examples of questions that address distinguishing taxes from other forms of government power are included.
• Tax Incidence: There are questions regarding the concepts and examples related to tax incidence.