Chapter 1

Question 1

• it is the power to enact laws to promote the general welfare of the people.

Answer 1

Police Power -

Question 2

it is the power to take private property for public use upon payment of just compensation.

Answer 2

Eminent Domain-

Question 3

it is the power to take property (generally money) for the support of the government and the public purpose.

Answer 3

Taxation Power

Question 4

PURPOSE OR OBJECTIVE OF TAXATION

Answer 4

Primary and secondary purpose

Question 5

To raise revenue/funds to defray the necessary expenses of the government (also called Revenue Purpose).

Answer 5

Primary purpose

Question 6

As a tool for general, social and economic welfare (also called regulatory/Sumptuary/Compensatory Purpose

Answer 6

Secondary purpose

Question 7

These are the secondary purpose of taxation

Answer 7

1. Regulation
2. Promotion of General Welfare
3. Reduction of Social Inequality
4. Encourages Economic Growth

Question 8

THEORY ON TAXATION

Answer 8

A. Necessity Theory
B. The Benefits- Protection Theory
C. Lifeblood Doctrine

Question 9

The existence of government is necessity, it cannot continue
without means to pay its expenses, for this reason, it has the right to compel all its citizens and property to continue.

Answer 9

Necessity Theory

Question 10

Taxes are what we pay for a civilized society. The
government and the people have a reciprocal and mutual duties of support and protection to one another (symbolic relationship between the government and the taxpayer).

Answer 10

The Benefits- Protection Theory

Question 11

Taxes are the lifeblood of the government without it can neither exist nor endure.

Answer 11

Lifeblood Doctrine

Question 12

Are enforced proportional contributions from persons and property, levied by the State by
virtue of its sovereignty for the support of the government and for all its public needs.

Answer 12

TAX

Question 13

ESSENTIAL CHARACTERISTIC OF TAX

Answer 13

1. A tax is a for forced charge, imposition or contribute;
2. It is a pecuniary burden payable in money;
3. It is imposed for public purpose;
4. It is imposed pursuant to a legislative authority;
5. It is levied within the territorial and legal jurisdiction of a state;
6. It is assessed in accordance with some reasonable rule of apportionment.

Question 14

STAGES OR PROCESS OF TAXATION (LAP)

Answer 14

1. Levy or Imposition
2. Assessment and Collection
3. Payment of Tax

Question 15

The process involves the passage of tax law or
ordinance through the legislature.

Answer 15

Levy or Imposition –

Question 16

This process involves the act of
administration and implementation of tax laws by the executive through
its administrative agencies such as the Bureau of Internal Revenue or
Bureau of Customs.

Answer 16

Assessment and Collection

Question 17

This process involves the act of compliance by the
taxpayer on contributing his share to pay the expenses of the
government.

Answer 17

Payment of Tax

Question 18

BASIC PRINCIPLES OF A SOUND TAX
SYSTEM

Answer 18

1. Fiscal Adequacy
2. Administrative Feasibility
3. Theoretical Justice

Question 19

The sources of government revenue must be
sufficient to meet government expenditures and other public needs

Answer 19

Fiscal Adequacy –

Question 20

Tax laws must be capable of convenient,
just and effective administration- free from confusion and uncertainty.

Answer 20

Administrative Feasibility

Question 21

A good tax system must be based on the
taxpayer’s ability to pay. This suggests that taxation must be
progressive conformably with the constitutional mandate that congress
shall evolve a progressive system of taxation.

Answer 21

Theoretical Justice –

Question 22

CLASSIFICATION OF TAXES

Answer 22

1. According to Subject Matter:
2. According to Who Bears the Burden:
3. According to Determination of Amount:
4. According to Purpose
5. According to Jurisdiction/Scope or Authority
6. According to Graduation or Rate

Question 23

According to Subject Matter:

Answer 23

A) Personal, Poll or Capitation Tax – tax of a fixed amount imposed upon
individual, whether citizens or not, residing within a specified territory without
regard to their property or the occupation in which he may be engaged (e.g.
basic community tax)
B) Property Tax – tax imposed on property, whether real or personal, in
proportion either to its value, or in accordance with some other reasonable
method of apportionment (e.g. real estate tax)
C) Excise Tax – any tax which does not fall within the classification of a poll
tax or a property tax. This is a tax on the exercise of certain rights and
privileges (e.g. income tax, estate tax, donor’s tax, VAT)

Question 24

According to Who Bears the Burde

Answer 24

a) Direct Tax – imposed on the person obliged to pay the same and this
burden cannot be shifted or passed on to another. (e.g. income tax, estate tax,
donor’s tax)
b) Indirect Tax – the payment is demanded from a person who is allowed to
transfer the burden of taxation to another. (e.g. VAT)

Question 25

According to Determination of Amount:

Answer 25

a) Specific Tax – this is fixed amount based on volume, weight or quality of
goods as measured by tools, instruments or standards. (e.g. excise tax on
cigars and liquors)
b) Ad Valorem Tax – this imposition is based on the value of the property
subject to tax. (e.g. VAT, income tax, donor’s tax and estate tax)

Question 26

According to Purpose:

Answer 26

Fiscal/General/Revenue Tax – levied without a specific or pre-determined
purpose. (e.g. Income tax, donor’s tax and estate tax)
b) Regulatory/Special/Sumptuary Tax – those intended to achieve some
social or economic goals. (e.g. tariff and certain duties on imports)

Question 27

According to Jurisdiction/Scope or Authority

Answer 27

A. National Tax – imposed by the National Government
NATIONAL INTERNAL REVENUE TAXES UNDER THE ADMINISTRATION
OF THE BIR:
a) Income Tax
b) Estate and donor’s tax
c) Value-added tax
d) Other percentage taxes
e) Excise taxes
f) Documentary stamp taxes
B. Local Tax – imposed by municipal corporations (e.g. real estate tax)

Question 28

According to Graduation or Rate

Answer 28

A. Proportional/Flat Rate Tax – unitary or single rate. (e.g. VAT)
B. Progressive/Graduated Tax – as the tax base grows, the tax rate increase.
(e.g. income tax on individuals)
C. Regressive Tax – the tax rate increases as the tax base decreases.