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Questions and Answers
The power of taxation is limited only by the Constitution.
The power of taxation is limited only by the Constitution.
False
The Legislative power to tax includes discretion over the subjects of taxation.
The Legislative power to tax includes discretion over the subjects of taxation.
True
Non-revenue objectives of taxation include the promotion of social equality.
Non-revenue objectives of taxation include the promotion of social equality.
True
Tax collection consists only of determining the rate or amount of tax to be imposed.
Tax collection consists only of determining the rate or amount of tax to be imposed.
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Tax exemptions are considered a power of the legislative body.
Tax exemptions are considered a power of the legislative body.
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Taxes on tobacco products are an example of a non-revenue objective of taxation.
Taxes on tobacco products are an example of a non-revenue objective of taxation.
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The manner of tax collection does not fall under the legislative power to tax.
The manner of tax collection does not fall under the legislative power to tax.
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The existence of the power to tax is recognized by the constitutional provisions relating to taxation.
The existence of the power to tax is recognized by the constitutional provisions relating to taxation.
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Protective tariffs are included under the principle of economic growth.
Protective tariffs are included under the principle of economic growth.
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Fiscal adequacy means that tax revenues should significantly exceed government expenditure.
Fiscal adequacy means that tax revenues should significantly exceed government expenditure.
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Direct taxes are designed such that the burden cannot be shifted to another person.
Direct taxes are designed such that the burden cannot be shifted to another person.
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The ability-to-pay principle requires that tax burdens are unrelated to taxpayers' financial situations.
The ability-to-pay principle requires that tax burdens are unrelated to taxpayers' financial situations.
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Excise taxes are classified as indirect taxes because their burden can be passed on to another person.
Excise taxes are classified as indirect taxes because their burden can be passed on to another person.
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Community tax is an example of property tax classification.
Community tax is an example of property tax classification.
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An example of a special tax is the educational fund tax under Real Property Taxation.
An example of a special tax is the educational fund tax under Real Property Taxation.
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Specific taxes apply a uniform rate regardless of measurement standards.
Specific taxes apply a uniform rate regardless of measurement standards.
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Taxation is the process of collecting voluntary contributions from citizens.
Taxation is the process of collecting voluntary contributions from citizens.
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The obligation to pay taxes is categorized as a statutory liability.
The obligation to pay taxes is categorized as a statutory liability.
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Taxes must always be levied in the form of goods or services, rather than money.
Taxes must always be levied in the form of goods or services, rather than money.
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The Benefits-Protection Theory asserts that only individuals who pay taxes receive benefits from government services.
The Benefits-Protection Theory asserts that only individuals who pay taxes receive benefits from government services.
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One of the essential characteristics of taxation is that it is based on the individual's ability to pay.
One of the essential characteristics of taxation is that it is based on the individual's ability to pay.
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The Necessity Theory suggests that taxation is a burden that can be avoided by citizens.
The Necessity Theory suggests that taxation is a burden that can be avoided by citizens.
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Taxes only apply to property and do not include contributions based on rights or privileges.
Taxes only apply to property and do not include contributions based on rights or privileges.
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The law-making body of the State has the power to levy taxes as a demonstration of its sovereignty.
The law-making body of the State has the power to levy taxes as a demonstration of its sovereignty.
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A progressive tax increases as the income to be taxed decreases.
A progressive tax increases as the income to be taxed decreases.
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A regressive tax applies a uniform rate regardless of income levels.
A regressive tax applies a uniform rate regardless of income levels.
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Real property tax is an example of a proportional tax.
Real property tax is an example of a proportional tax.
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National taxes are imposed by local government units.
National taxes are imposed by local government units.
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Tolls are generally intended to raise revenue for public improvements.
Tolls are generally intended to raise revenue for public improvements.
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A penalty is typically designed to raise revenue like a tax.
A penalty is typically designed to raise revenue like a tax.
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Special assessments are levied on all properties in a jurisdiction.
Special assessments are levied on all properties in a jurisdiction.
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The liability for a special assessment is a personal liability of the person assessed.
The liability for a special assessment is a personal liability of the person assessed.
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A tax is primarily imposed for revenue purposes, while a license fee is mainly for regulation purposes.
A tax is primarily imposed for revenue purposes, while a license fee is mainly for regulation purposes.
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Non-payment of a license fee does not make the act illegal.
Non-payment of a license fee does not make the act illegal.
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Imprisonment for non-payment can occur for both taxes and debts.
Imprisonment for non-payment can occur for both taxes and debts.
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A license fee can be considered both a tax and a fee if it primarily regulates but incidentally generates revenue.
A license fee can be considered both a tax and a fee if it primarily regulates but incidentally generates revenue.
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Licenses and taxes are both exempt from special regulations.
Licenses and taxes are both exempt from special regulations.
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Taxes are generally not subject to assignment, while debts can be assigned.
Taxes are generally not subject to assignment, while debts can be assigned.
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Debts may be settled by payment in kind, while taxes must always be paid in money.
Debts may be settled by payment in kind, while taxes must always be paid in money.
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The power to impose fees for revenue purposes is included in the exercise of police power.
The power to impose fees for revenue purposes is included in the exercise of police power.
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Study Notes
Taxation: Concepts, Nature, and Characteristics
- Taxation is the act of levying a tax; a process governments use to raise revenue to fund operations and a power inherent in the state to demand enforced contributions for public purposes.
- Taxes are enforced, proportional, pecuniary contributions from persons and property, levied by the state for government support and public needs. The rationale is a symbiotic relationship—taxes fund the services citizens enjoy.
- Essential characteristics of taxes include legislative origin, enforced contribution, typically monetary payment, proportionality (based on ability to pay), levied on persons/property/acts/transactions/etc., for public purposes, and levied by the state with jurisdiction.
Theories and Basis of Taxation
- Necessity Theory: Taxation is necessary to preserve the state's sovereignty and provide essential services (defense, civil service, public works, protection).
- Benefits-Protection Theory: Citizens benefit from living in an organized society; the benefit is not specific to individuals but encompasses the overall social order.
- Lifeblood Theory: Taxes are essential for the government's functioning; without them, the government is paralyzed.
Nature of the Power of Taxation
- Inherent in sovereignty: Exists regardless of constitutional provisions; constitutional provisions are limitations, not grants, of this power.
- Legislative in character: The power is exercised by the legislative branch.
- Subject to constitutional and inherent limitations (both explicit and implied).
Aspects of the Taxation System
- Levy: Determining subjects, amounts, due dates, and methods of levying and collecting taxes.
- Collection/Tax Administration: The enforcement of the tax obligation.
Scope of Legislative Power to Tax
- Discretion exists in choosing subjects, purposes, amounts/rates, apportionment, location (situs), and collection methods.
- The legislature can grant tax exemptions or condonations and provide administrative/judicial remedies.
Objectives of Taxation
- Revenue Objective: Primarily to generate funds for government needs.
- Non-Revenue Objectives: Promoting general welfare (police power), regulation (e.g., sin taxes), reducing social inequality (progressive taxation), encouraging economic growth (tax incentives/exemptions), and protectionism (tariffs).
Sound Tax System Characteristics
- Fiscal Adequacy: Sufficient revenue to meet government spending needs.
- Administrative Feasibility: Convenient, just, and effective enforcement.
- Theoretical Justice/Equality: Tax burden proportional to ability to pay.
Classifications of Taxes
- As to Subject Matter: Personal (poll), property, and excise (privilege).
- As to Burden: Direct (incidence and impact on same person) and indirect (incidence on one, burden shifted to another).
- As to Purpose: General/fiscal/revenue (raising funds) and special/regulatory (achieving social/economic goals).
- As to Measure of Application: Specific (per unit/weight) and ad valorem (value-based).
- As to Rate/Graduation: Progressive (rate increases with base), regressive (rate decreases with base), and proportional/flat/uniform (constant rate).
- As to Scope/Authority: National and municipal/local.
Distinctions Between Taxes and Other Impositions
- Tax vs. Toll: Tax is a government demand based on sovereignty; toll is a charge for using another's property.
- Tax vs. Penalty: Tax is for revenue; penalty is for regulating conduct.
- Tax vs. Special Assessments: Tax is imposed on persons and property; special assessments are levied on land benefiting from public works. The liability for the latter is limited to the land.
- Tax vs. License/Permit Fee: Tax is for revenue; license fee is for regulation. Non-payment of a tax doesn't automatically make an act illegal, while non-payment of a license fee often does.
- Tax vs. Debt: Tax is based on law; debt is based on contract.
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Description
This quiz covers the fundamental concepts, nature, and characteristics of taxation, as well as the various theories that justify it. Participants will explore key terms and the rationale behind tax systems, which are essential for public services and state functions.
