Chap 1

Question 1

What is taxation?

Answer 1

Taxation may be defined as a state power, a legislative process, and a mode of government cost distribution.

Question 2

What does taxation represent as a state power?

Answer 2

Taxation is an inherent power of the state to enforce a proportional contribution from its subjects for public purposes.

Question 3

How is taxation levied?

Answer 3

Taxation is a process of levying taxes by the legislature of the state to enforce proportional contribution.

Question 4

What is the mode of taxation?

Answer 4

Taxation is a mode by which the state allocates costs or burdens to its subjects who benefit from spending.

Question 5

What is the primary goal of taxation?

Answer 5

The primary goal of taxation is to raise revenue.

Question 6

What is the basis of taxation?

Answer 6

The basis of taxation refers to the mutuality of support between the people and the government.

Question 7

What is presumed regarding the receipt of benefits in taxation?

Answer 7

Receipt of benefits is conclusively presumed.

Question 8

What are the theories of cost allocation in taxation?

Answer 8

The theories of cost allocation are the benefit received theory and the ability to pay theory.

Question 9

What is the benefit received theory?

Answer 9

More benefit received = more tax paid

This theory suggests that individuals should pay taxes in proportion to the benefits they receive from public services.

Question 10

What is the ability to pay theory?

Answer 10

Consider circumstances of the taxpayer

This theory emphasizes that taxes should be based on the taxpayer’s ability to pay.

Question 11

What is vertical equity in the context of taxation?

Answer 11

Directly proportional tax base; gross concept

Vertical equity means that individuals with a greater ability to pay should contribute more in taxes.

Question 12

What is horizontal equity in taxation?

Answer 12

Particular circumstance; net concept

Horizontal equity refers to the principle that individuals in similar financial circumstances should pay similar amounts in taxes.

Question 13

What is the life blood doctrine?

Answer 13

Taxes are essential & indispensable to the continued subsistence of government.

Question 14

What is one implication of the life blood doctrine?

Answer 14

Tax can be imposed even in the absence of constitutional grants.

Question 15

How are claims for tax exemptions construed?

Answer 15

Claims for tax exemptions are construed against the taxpayer.

Question 16

What right does the government reserve regarding taxation?

Answer 16

The government reserves the right to choose the object of taxation.

Question 17

What is not allowed in relation to tax collection?

Answer 17

Chords are not allowed to interfere with the collection of taxes.

Question 18

When is income received in advance taxable?

Answer 18

Income received in advance is taxable upon receipt.

Question 19

What is preferred regarding claimable expenses?

Answer 19

A lower amount of deduction is preferred when the claimable expense is subject to limit.

Question 20

What happens when a tax object has multiple tax bases?

Answer 20

A higher tax base is prepared when the tax object has multiple tax bases.

Question 21

What are the three inherent powers of the state?

Answer 21

1. Taxation - unlimited; most important; inferior
2. Police power - limited; most superior; superior
3. Eminent domain - no amount; important; superior

Question 22

What is the scope of taxation?

Answer 22

The scope of taxation is comprehensive, plenary, unlimited, and supreme (CPLUS).

Question 23

What are the inherent limitations of the taxation power?

Answer 23

1. Territoriality of taxation
2. International comity
3. Public purpose
4. Exemption of the government

Question 24

What are the constitutional limitations on taxation?

Answer 24

1. Non-delegation of the taxing power
2. Due process of law
3. Equal protection of the law
4. Uniformity rule in taxation
5. Progressive system of taxation
6. Non-imprisonment for non-payment of debt or poll tax (basic community tax)
7. Free worship rule
8. Non-impairment of obligation and contract
9. Exemption of religious or charitable entities, non-profit cemetery churches and mosques from property taxes
   9.1 exemption from taxes of revenues and assets of non-profit non-stock educational institution including grants and endowments and donation
10. Non-diversification of tax collections
11. Concurrence of a majority of all members of Congress for the passes law granting tax exemption
12. Non-delegation of the power of taxation Cases
13. Non-impairment of the jurisdiction of the Supreme Court to review tax cases
14. The requirement that appropriation revenue or talent bill should originate exclusively in the house of representatives
15. The delegation of taxing power to local government units

Question 25

Who is taxable on income derived within and outside the Philippines?

Answer 25

Resident citizens and domestic corporations are taxable on income derived within and outside the Philippines.

Question 26

Who is taxable on the transfer of properties within or outside the Philippines?

Answer 26

Residents or citizens are taxable on the transfer of properties within or outside the Philippines.

Question 27

Are embassies or employees of foreign governments in the Philippines subject to income tax or property tax?

Answer 27

No, embassies or employees of foreign governments in the Philippines are not subject to income tax or property tax.

Question 28

Is government income from its properties and activities conducted for profit subject to income tax?

Answer 28

Yes, government income from its properties and activities conducted for profit or GOCC is subject to income tax.

Question 29

Who has the exclusive delegation of taxing power?

Answer 29

The delegation of taxing power is vested exclusively in Congress.

Question 30

What power do local government units have regarding taxation?

Answer 30

Local government units are allowed to exercise power to tax to exercise fiscal autonomy.

Question 31

Who can fix the amount of tariffs under the Tariff and Customs Code?

Answer 31

The President can fix the amount of tariffs under the Tariff and Customs Code.

Question 32

What are the two aspects of due process?

Answer 32

1. Substantive due process - public purpose; legal basis 2. Procedural due process - right to notice and hearing

Question 33

What is equal protection of law in taxation?

Answer 33

Taxpayers in the same circumstances and conditions should be treated equally in taxation. ## Footnote Example: Taxing balut and penoy similarly.

Question 34

What is the uniformity rule in taxation?

Answer 34

Taxpayers under dissimilar circumstances should not be taxed the same.

Question 35

What is a progressive system of taxation?

Answer 35

A taxation system that taxes the rich more than the poor.

Question 36

What are the requirements for a property to be exempt from property tax?

Answer 36

Properties must be actually, directly, and exclusively used for charitable, religious, and educational purposes.

Question 37

What does the exemption apply to?

Answer 37

Exemption applies only on revenues and assets that are actually, directly, and exclusively devoted for educational purposes.

Question 38

What is required for the approval of an exemption law?

Answer 38

Approval requires an absolute majority or majority of all members of Congress.

Question 39

What is required for the withdrawal of a tax exemption?

Answer 39

Withdrawal of tax exemption requires a relative majority.

Question 40

What are the two bodies of Congress?

Answer 40

1. House of Representatives - tax bills must originate. 2. Senate - may propose amendments.

Question 41

What are the stages of the exercise of taxation power?

Answer 41

1. Levy or imposition - enactment of tax law by Congress. 2. Assessment and collection - implemented by the administrative branch.

Question 42

What is the first stage of taxation power?

Answer 42

Levy or imposition - enactment of tax law by Congress, also called impact of taxation or legislative act in taxation.

Question 43

What is the second stage of taxation power?

Answer 43

Assessment and collection - implemented by the administrative branch, also called incidence of taxation or administrative act of taxation.

Question 44

What are the situs rules for business tax?

Answer 44

Business tax is based on where business is conducted.

Question 45

What are the situs rules for services tax?

Answer 45

Services tax is based on where services are rendered.

Question 46

What are the situs rules for sale of goods tax?

Answer 46

Sale of goods tax is based on the place of sale.

Question 47

What are the situs rules for property tax?

Answer 47

Property tax is based on location.

Question 48

What are the situs rules for personal tax?

Answer 48

Personal tax is based on the place of residence.

Question 49

Power to tax involve power to destroy; instrument of police power; used to discourage

Answer 49

Marshall doctrine

Question 50

Taxation powers not the power to destroy while the court sits; can be used to encourage

Answer 50

Holme's doctrine

Question 51

Ex post factor law that retroacts r prohibited by constitution

Answer 51

Prospectivity of tax laws

Question 52

Are taxes subject to automatic set off or compensation?

Answer 52

No. Taxpayer cannot delay payment of tax except this cases of obvious over payment of taxes or it is a local taxes

Question 53

Can taxes be assigned or transferred to another entity by contract

Answer 53

No. Tax obligation cannot be assigned or transferred to another entity by contract

Question 54

It is the lapsing of a right due to the passage of time

Answer 54

Prescription

Question 55

Does government's right to collect taxes prescribed?

Answer 55

No. Unless the law except provides for such prescription -- imprescriptibility in taxation

Question 56

Assessment shall be made within ___ from the due date of filing of return or actual filing which ever is later. Collection should be made within ____ from date of assessment

Answer 56

3 years; 5 years

Question 57

Under this doctrine any misrepresentation made by one part toward another in good faith will be held true and binding against that person who made the misrepresentation

Answer 57

Doctrine of estoppel- error of government employee does not bind government

Question 58

Are courts allowed to interfere in collection of taxes of government

Answer 58

No. This rule is anchored on life blood doctrine

Question 59

Maxim for strict construction of tax law

Answer 59

Taxation is the rule exemption is the exception

Question 60

Vague tax laws are construed against the_________; no tax laws Vague exemption law are construed against the_______; no exemption law

Answer 60

Government; taxpayer

Question 61

Same tax payer tax twice by the same tax jurisdiction for the same thing

Answer 61

Double taxation

Question 62

What are the elements of double taxation?

Answer 62

Primary element; same object Secondary elements: Same type of tax Same purpose of tax Same taxing jurisdiction Same tax period

Question 63

Types of double taxation

Answer 63

Direct double taxation - all element of double taxation exist for both imposition Indirect double taxation-at least one of secondary elements of double taxation is not common for both imposition

Question 64

How can double taxation be minimized?

Answer 64

Provision of tax exemption Allowing foreign tax credit Allowing reciprocal tax treatment Entering into treaties or bilateral agreements

Question 65

Escape from taxation that results loss of government revenue

Answer 65

1. Tax evasion- also called tax dodging; illegal 2. Tax avoidance- also called tax minimization; legal 3. Tax exemption- also called tax holidays; Notes: all tax exemption can be revoked by congress except granted by constitution or contract

Question 66

Escape from taxation that do not result loss of government revenue

Answer 66

Shifting- transfer in tax burden to another taxpayer A) forward - normal flow ;essential commodities B) backward - commodities with numerous substitute C) onward- Capitalization -adjustment of value of asset caused by change in tax rate Transformation- elimination of waste or losses by taxpayer to form savings to compensate for tax imposition

Question 67

It is the general pardon granted by government for in taxpayer to give them a chance to reform and enable them to have a fresh start to be part of a society with a clean slate;

Answer 67

Tax amnesty- administrative civil criminal liabilities -Retrospectively -conditional paying government a portion of the tax

Question 68

It is a forgiveness of the state obligation of a certain taxpayer under certain justifiable grounds ; also called tax remission

Answer 68

Tax condonation- civil liabilities - prospectively -no payment