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What is the primary purpose of taxation?
What is the primary purpose of taxation?
To raise revenue to finance governmental expenditures.
What are the four characteristics of taxation, according to C. U. P. S.?
What are the four characteristics of taxation, according to C. U. P. S.?
What are the three principles of a sound tax system, according to F.A.T.?
What are the three principles of a sound tax system, according to F.A.T.?
Where is the power of taxation inherent?
Where is the power of taxation inherent?
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Which of the following is NOT an inherent limitation on the power of taxation?
Which of the following is NOT an inherent limitation on the power of taxation?
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Which of the following is NOT a constitutional limitation on the power of taxation?
Which of the following is NOT a constitutional limitation on the power of taxation?
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According to the Life-blood Theory, taxes are essential for a functioning government.
According to the Life-blood Theory, taxes are essential for a functioning government.
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The Benefits Protection Theory suggests a symbiotic relationship between the government and the people.
The Benefits Protection Theory suggests a symbiotic relationship between the government and the people.
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Which of the following is NOT an essential element of a tax?
Which of the following is NOT an essential element of a tax?
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What is the main difference between national tax and municipal or local tax?
What is the main difference between national tax and municipal or local tax?
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Match the following types of taxes with their corresponding descriptions:
Match the following types of taxes with their corresponding descriptions:
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Which of the following is an example of a direct tax?
Which of the following is an example of a direct tax?
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Which of the following is an example of a special tax?
Which of the following is an example of a special tax?
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Which tax rate system involves a higher tax rate as the tax base increases?
Which tax rate system involves a higher tax rate as the tax base increases?
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Which tax measurement method is based on weight or physical measurement?
Which tax measurement method is based on weight or physical measurement?
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Police power and eminent domain are exercised by the government, while taxation is only exercised by the government.
Police power and eminent domain are exercised by the government, while taxation is only exercised by the government.
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What is the primary purpose of police power?
What is the primary purpose of police power?
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Eminent domain is the power of the government to do what?
Eminent domain is the power of the government to do what?
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What is the main difference between tax and debt?
What is the main difference between tax and debt?
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Individuals can be imprisoned for non-payment of taxes.
Individuals can be imprisoned for non-payment of taxes.
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Toll is an example of a tax imposed by the government.
Toll is an example of a tax imposed by the government.
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What is the main purpose of a license?
What is the main purpose of a license?
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Special assessment is imposed on all property in a prescribed area.
Special assessment is imposed on all property in a prescribed area.
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What is the primary difference between direct and indirect duplicate taxation?
What is the primary difference between direct and indirect duplicate taxation?
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Which of the following is NOT a form of escape from taxation?
Which of the following is NOT a form of escape from taxation?
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The general rule for interpreting tax laws is to interpret them liberally in favor of the taxpayer and strictly against the government.
The general rule for interpreting tax laws is to interpret them liberally in favor of the taxpayer and strictly against the government.
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What is the least source of tax laws?
What is the least source of tax laws?
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Tax laws are considered penal in nature.
Tax laws are considered penal in nature.
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Tax exemptions are presumed in law.
Tax exemptions are presumed in law.
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Which of the following is NOT a principle governing tax exemptions?
Which of the following is NOT a principle governing tax exemptions?
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Tax regulations are interpretations of tax laws.
Tax regulations are interpretations of tax laws.
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Who is responsible for promulgating tax regulations?
Who is responsible for promulgating tax regulations?
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BIR rulings are considered binding legal precedents.
BIR rulings are considered binding legal precedents.
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Tax administration involves assessing, collecting, and enforcing taxes.
Tax administration involves assessing, collecting, and enforcing taxes.
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The BIR has the power to assess and collect all national internal revenue taxes, fees, and charges.
The BIR has the power to assess and collect all national internal revenue taxes, fees, and charges.
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The BIR has the power to issue tax audits and terminate taxable periods.
The BIR has the power to issue tax audits and terminate taxable periods.
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Which of the following is NOT a power or duty of the BIR Commissioner?
Which of the following is NOT a power or duty of the BIR Commissioner?
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The Commissioner of the BIR can delegate most of their powers to subordinate officials.
The Commissioner of the BIR can delegate most of their powers to subordinate officials.
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The BIR is authorized to inquire into bank deposits of individuals who are suspected of tax evasion.
The BIR is authorized to inquire into bank deposits of individuals who are suspected of tax evasion.
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The BIR has the power to compromise or abate any tax liability.
The BIR has the power to compromise or abate any tax liability.
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The BIR is responsible for administering oaths, taking testimony, and making arrests and seizures.
The BIR is responsible for administering oaths, taking testimony, and making arrests and seizures.
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The BIR is the only agency responsible for collecting taxes on imported goods.
The BIR is the only agency responsible for collecting taxes on imported goods.
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Which of the following is NOT a source of internal revenue?
Which of the following is NOT a source of internal revenue?
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The power to tax is limited only to persons, property, or businesses within the jurisdiction of the taxing power.
The power to tax is limited only to persons, property, or businesses within the jurisdiction of the taxing power.
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Which of the following factors does NOT determine the situs of taxation?
Which of the following factors does NOT determine the situs of taxation?
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Study Notes
Primary Purpose of Taxation
- To fund government expenditures.
Scope of Taxation
- Taxation is comprehensive, unlimited, plenary, and supreme, but limited by the constitution and legislature.
Principles of a Sound Tax System
- Fiscal Adequacy: Tax revenue must be sufficient to meet government needs.
- Administrative Feasibility: Taxes must be easy to collect and administer.
- Theoretical Justice/Equality: Taxes should be based on the taxpayer's ability to pay.
Characteristics of Tax Power
- Inherent in sovereignty: The power to tax is a fundamental aspect of governing authority.
- Legislative in character: Only the legislature can impose taxes.
- Subject to limitations: Taxation is not absolute power.
Limitations on Tax Power
-
Inherent limitations (PEN.T.I):
- Public Purpose: Taxes must be levied for a public purpose.
- Exemption from taxation of government entities: Government entities are often exempt from taxes.
- Non-delegation of legislative power to tax: The power to tax cannot be delegated to others.
- Territoriality: Taxes are levied on property within a specific jurisdiction.
- International comity: Taxation should not conflict with international agreements.
-
Constitutional limitations:
- Due process of law: Individuals are entitled to due process before being subjected to taxes.
- Equal protection of law: Tax laws should treat all citizens equally.
- Non-imprisonment for non-payment of poll tax: People cannot be imprisoned for not paying certain taxes
- Non-impairment of contracts: Existing contracts should not be unduly affected by tax laws.
- Uniform and equitable rule of taxation: Tax laws should be applied consistently to similar situations.
- Exemption of properties: Charitable institutions, churches, and educational institutions may receive tax exemptions.
Theory/Basis of Taxation
- Lifeblood Theory: Taxes are essential for the functioning of government.
Benefits Protection Theory
- Taxes finance society's organization and essential services.
Essential Elements of a Tax
- Enforced contributions: Taxes are mandatory payments.
- Generally payable in money: Taxes are usually paid in cash.
- Proportionate in character: The amount of tax should be proportionate to the wealth or ability to pay.
- Levied by lawmaking body: Only the legislature can levy taxes.
Classification of Taxes (Scope/Authority)
- National Tax: Imposed by the national government. Examples include income tax, estate tax, and donor's tax.
- Municipal/Local Tax: Examples include occupation tax and real property tax.
Classification of Taxes (Subject Matter/Object)
- Personal/Capitation/Poll Tax: Imposed on individuals without regard to property.
- Property Tax: Taxed on tangible or intangible property. Real property tax
- Excise Tax: Imposed on the performance of an act or exercise of a right.
Classification of Taxes (According to Burden of tax)
- Direct Tax: The liability and burden fall on the same taxpayer (Income tax)
- Indirect Tax: The liability/impact is on one party, but burden is shifted (VAT, excise, custom duties)
Classification of Taxes (According to Purpose)
- General/Revenue Tax: No specific purpose
- Special Tax: For a specific purpose (protective tariffs).
Classification of Taxes (According to Rate Applied)
- Proportional: Fixed percentage of tax base.
- Progressive: Higher tax rate on higher incomes or amounts.
- Regressive: Lower tax rate for higher incomes or amounts.
Classification of Taxes (According to Measurement)
- Specific: Measured by quantity.
- Ad Valorem: Measured by value/amount.
Taxation vs Police Power vs Eminent Domain
- Taxation: For revenue.
- Police Power: For public welfare/regulation.
- Eminent Domain: For public use; requires compensation.
Tax vs. Debt
- Tax: Imposed as a legal obligation by the government.
- Debt: A result of a contract or agreement.
Tax vs. Toll
- Tax: A demand of sovereignty, paid for the use of another's property.
- Toll: Demand of ownership, paid for support of government or certain public improvements.
Tax vs License
- Tax: To raise revenue. Not subject to taxation limitations.
- License: To regulate businesses, businesses/industries. Subject to limitations on cost.
Special Assessment
- Characterisitics: -levied on land -based on benefits -exceptional to tax
Double Taxation
- Direct Duplicate: Taxing the same property twice.
- Indirect Duplicate: Taxing same income twice.
Forms of Escape from Taxation
- Tax Evasion: Illegal avoidance.
- Tax Avoidance: Permitted legal minimization.
Tax Laws
- Interpretation: Favor the taxpayer and strictly against the government.
Sources of Tax Law
- Constitutions, Statutes, Regulations (Rule Making), Court Decisions, Executive Orders
Nature of Internal Revenue Laws
- Civil, not penal (other than in violation of laws), not political.
Different Principles Governing Tax Exemptions
- Disfavored, not presumed; the law on exemption must be clear.
Tax Regulations
- Explanations of the law to clarify details on how laws are administered.
Requirements of Tax Regulations
- Reasonable
- Within authority
- Not contrary to the law.
BIR Rulings
- General Interpretations of Law.
Administrative vs. Judicial Interpretation
- Administrative rulings are weighty but not laws, court rulings are laws.
Tax Administration Agencies
- BIR (Bureau of Internal Revenue) – The primary body responsible for collecting taxes.
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Description
Explore the fundamental principles and limitations of taxation in this informative quiz. Understand the characteristics of tax power and the necessary conditions for a sound tax system. This quiz covers aspects like fiscal adequacy, administrative feasibility, and the concept of theoretical justice.
