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Taxation is solely the act of imposing monetary contributions on citizens without any consideration of benefits received.
Taxation is solely the act of imposing monetary contributions on citizens without any consideration of benefits received.
False
The enforced contributions from persons and property can be considered a statutory liability mandated by the law-making body of the State.
The enforced contributions from persons and property can be considered a statutory liability mandated by the law-making body of the State.
True
The Necessity Theory suggests that taxation is an unnecessary burden for citizens.
The Necessity Theory suggests that taxation is an unnecessary burden for citizens.
False
Taxes are levied exclusively on individuals and do not include levies on property or transactions.
Taxes are levied exclusively on individuals and do not include levies on property or transactions.
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The Benefits-Protection Theory states that all citizens benefit equally from the taxes they pay.
The Benefits-Protection Theory states that all citizens benefit equally from the taxes they pay.
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The ability to pay is a common basis for the proportionate nature of taxation.
The ability to pay is a common basis for the proportionate nature of taxation.
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Levies for taxes must always serve a private interest rather than a public purpose.
Levies for taxes must always serve a private interest rather than a public purpose.
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The sovereign state has the inherent power to demand enforced contributions from its citizens.
The sovereign state has the inherent power to demand enforced contributions from its citizens.
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The government can exercise its power of taxation without any constitutional provisions regarding taxation.
The government can exercise its power of taxation without any constitutional provisions regarding taxation.
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The scope of legislative power to tax does not include discretion over the rate of tax.
The scope of legislative power to tax does not include discretion over the rate of tax.
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Tax collection solely involves determining the due date for taxes without considering enforcement.
Tax collection solely involves determining the due date for taxes without considering enforcement.
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One of the non-revenue objectives of taxation is the promotion of general welfare.
One of the non-revenue objectives of taxation is the promotion of general welfare.
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Tax exemptions and condonation fall outside the legislative power to tax.
Tax exemptions and condonation fall outside the legislative power to tax.
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Taxation can be used as a tool for reducing social inequality through a progressive system.
Taxation can be used as a tool for reducing social inequality through a progressive system.
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A tax on tobacco products does not serve any regulatory purpose.
A tax on tobacco products does not serve any regulatory purpose.
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The power of taxation is fundamentally unlimited, except for specific constitutional provisions.
The power of taxation is fundamentally unlimited, except for specific constitutional provisions.
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Protective tariffs and customs duties are forms of tax exemptions aimed at promoting investment.
Protective tariffs and customs duties are forms of tax exemptions aimed at promoting investment.
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The ability-to-pay principle suggests that tax burden should be proportional to the taxpayer's financial capacity.
The ability-to-pay principle suggests that tax burden should be proportional to the taxpayer's financial capacity.
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Indirect taxes are those where the burden of the tax is faced exclusively by one individual.
Indirect taxes are those where the burden of the tax is faced exclusively by one individual.
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A community tax is considered a personal tax under the classifications of taxes.
A community tax is considered a personal tax under the classifications of taxes.
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Taxes that are imposed per unit or standard measure are known as specific taxes.
Taxes that are imposed per unit or standard measure are known as specific taxes.
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General/Fiscal/Revenue taxes are primarily aimed at achieving specific social goals.
General/Fiscal/Revenue taxes are primarily aimed at achieving specific social goals.
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Excise taxes are a type of direct tax where the burden cannot be shifted to another party.
Excise taxes are a type of direct tax where the burden cannot be shifted to another party.
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Fiscal adequacy in a sound tax system means there should be a perfect match between tax revenue and public expenditure requirements.
Fiscal adequacy in a sound tax system means there should be a perfect match between tax revenue and public expenditure requirements.
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Taxes are an enforced contribution assessed by sovereign authority for regulation purposes.
Taxes are an enforced contribution assessed by sovereign authority for regulation purposes.
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License fees are generally limited to the necessary expenses of inspection and regulation.
License fees are generally limited to the necessary expenses of inspection and regulation.
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Non-payment of tax automatically makes the act or business illegal.
Non-payment of tax automatically makes the act or business illegal.
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A debt is based on law and generally cannot be assigned to another party.
A debt is based on law and generally cannot be assigned to another party.
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Imprisonment is a possible sanction for non-payment of debt in all cases.
Imprisonment is a possible sanction for non-payment of debt in all cases.
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An extraction can be classified both as a tax and a license fee based on its purpose.
An extraction can be classified both as a tax and a license fee based on its purpose.
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Real property taxes are classified as a progressive tax.
Real property taxes are classified as a progressive tax.
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The primary purpose of a tax is to generate revenue, while a license fee's primary purpose is regulation.
The primary purpose of a tax is to generate revenue, while a license fee's primary purpose is regulation.
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The power to regulate includes the power to impose fees for revenue purposes.
The power to regulate includes the power to impose fees for revenue purposes.
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Estate Tax and Donor’s Tax have a combined flat rate of 6% under the TRAIN Law effective January 1, 2018.
Estate Tax and Donor’s Tax have a combined flat rate of 6% under the TRAIN Law effective January 1, 2018.
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A regressive tax rate increases as the income or earning tax base increases.
A regressive tax rate increases as the income or earning tax base increases.
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National taxes can be imposed by local government units.
National taxes can be imposed by local government units.
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Tolls are a type of tax that primarily serves to raise revenue for the government.
Tolls are a type of tax that primarily serves to raise revenue for the government.
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Special assessments are liabilities that extend beyond the land benefitted by public works.
Special assessments are liabilities that extend beyond the land benefitted by public works.
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Municipal taxes include both local and national internal revenue taxes.
Municipal taxes include both local and national internal revenue taxes.
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Generally, penalties are designed to raise revenue for the government.
Generally, penalties are designed to raise revenue for the government.
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Study Notes
Meaning of Taxation
- Taxation is the act of levying taxes.
- It refers to the inherent power of the state to require enforced contributions for public purposes.
- It's used to raise revenue to cover necessary government expenses.
Taxes
- Enforced proportional and pecuniary contributions from individuals and property.
- Levied by the law-making body of the State based on its sovereignty.
- Essential characteristics include:
- Levied by the law-making body of the State
- Enforced contribution
- Generally payable in money
- Proportionate in character (ordinarily based on ability to pay)
- Levied on persons or property, acts, transactions, rights, or privileges
- Levied for public purpose or purposes
- Levied by the State which has jurisdiction over the persons or property.
Theories and Basis of Taxation
- Necessity Theory: Taxation is vital for the state's sovereignty, providing essential services like defense, public improvements, and protection.
-
Benefits-Protection Theory / Benefits-Received Principle: Everyone in society benefits from government services, regardless of their direct taxes.
- The theory highlights the importance of living in an organized society.
- Lifeblood Theory: Taxation is a necessary burden to activate and operate the government, ensuring vital services for the benefit of its citizens.
Nature of the Power of Taxation
- Inherent in sovereignty: States have the power to tax even without explicit constitutional provisions.
- Legislative in character: The power to tax is exercised by the legislative branch.
- Subject to constitutional and inherent limitations: Limitations may be explicitly stated in the Constitution or implied from its nature.
Aspects of Taxation
- Levy: Determining the subjects of taxation, the amount to be raised, due dates, and methods of collecting taxes.
- Collection / Tax Administration: Enforcing the tax obligation on taxpayers.
Extent of Legislative Power to Tax
-
Discretion: The legislature has discretion in choosing:
- Subjects of taxation
- Purposes for which taxes shall be levied
- Amount or rate of the tax
- Apportionment of the tax
- Situs (Place) of taxation
- Method of collection
- Grant Tax Exemption / Condonation: The legislature can provide tax exemptions or condone taxes.
- Provide Remedies: The legislature establishes administrative and judicial remedies regarding taxation.
Objectives of Taxation
- Revenue Objective: Raising funds for the government to promote general welfare and citizen protection.
-
Non-Revenue Objectives: To achieve societal or economic goals:
- Promotion of General Welfare
- Regulation (e.g., taxes on tobacco or alcohol)
- Reduction of Social Inequality (progressive tax systems)
- Encourage Economic Growth (incentives and exemptions)
- Protectionism (e.g., tariffs)
Sound Tax System
- Fiscal Adequacy: Ensuring sufficient tax revenue to meet public expenditure needs.
- Administrative Feasibility: Tax laws must be easily administered and enforced at a reasonable cost.
- Theoretical Justice / Equality: The tax burden should be proportional to the taxpayer's ability to pay.
Classifications of Taxes
-
As to Subject Matter:
- Personal, capitation, or poll taxes (e.g., community tax)
- Property taxes (e.g., real property tax)
- Excise taxes / Privilege taxes (e.g., income tax, value-added tax, estate tax)
-
As to Burden:
- Direct taxes (incidence and burden fall on the same person, e.g., income tax)
- Indirect taxes (incidence on one person, burden shifted to another, e.g., VAT)
-
As to Purpose:
- General / Fiscal / Revenue (to raise revenue, e.g., income taxes, VAT)
- Special / Regulatory (to achieve social/economic goals, e.g., educational fund tax)
-
As to Measure of Application / Amount:
- Specific tax (per unit or weight, e.g., taxes on liquor)
- Ad Valorem tax (value-based, e.g., real property taxes)
-
As to Date / Graduation / Rate:
- Progressive tax (rate increases with income, e.g., income tax)
- Regressive tax (rate decreases with income)
- Proportional / Flat / Uniform tax (fixed rate, e.g., real property tax)
-
As to Scope or Authority:
- National tax (imposed by the National Government, e.g., income taxes)
- Municipal / Local tax (imposed by Local Government units, e.g., real property tax)
Distinctions
- TAX vs TOLL: Tax is a demand of sovereignty while toll is a demand of proprietorship, paid for using another's property.
- TAX vs PENALTY: Tax intended for revenue while penalty is designed to regulate conduct.
- TAX vs SPECIAL ASSESSMENTS/SPECIAL LEVY: Tax imposed on persons and property whereas special assessments are levied only on land benefited by public works.
- TAX vs LICENSE/PERMIT FEE: Tax is an enforced contribution while license fee is a legal compensation for an officer's services.
- TAX vs DEBT: Tax is based on law whereas debt is based on contracts.
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Description
This quiz explores the fundamental concepts of taxation, including its definition, the role of the state in levying taxes, and the various theories underpinning tax systems. It covers essential characteristics of taxes and their importance for government revenue and public services.
