TEST 3 PRINCIPLES OF TAXATION

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Congress passed a sin tax law that increased the tax rates on cigarettes by 1,000%. The law was thought to be sufficient to drive many cigarette companies out of business, and was questioned in court by a cigarette company that would go out of business because it would not be able to pay the increased tax. The cigarette company is __________ (1%) (2013 Bar Question)

1 point

wrong because taxes are the lifeblood of the government

wrong because the law recognizes that the power to tax is the power to destroy

correct because no government can deprive a person of his livelihood

correct because Congress, in this case, exceeded its power to tax

Clear selection

XYZ Corporation manufactures glass panels and is almost at the point of insolvency. It has no more cash and all it has are unsold glass panels. It received an assessment from the BIR for deficiency income taxes. It wants to pay but due to lack of cash, it seeks permission to pay in kind with glass panels. Should the BIR grant the requested permission?

1 point

It should grant permission to make payment convenient to taxpayers.

It should not grant permission because a tax is generally a pecuniary burden.

It should grant permission; otherwise, XYZ Corporation would not be able to pay.

It should not grant permission because the government does not have the storage facilities for glass panels.

Clear selection

Money collected from taxation shall not be paid to any religious dignitary EXCEPT when:

1 point

the religious dignitary is assigned to the Philippine Army

it is paid by a local government unit

the payment is passed in audit by the COA

it is part of a lawmaker’s pork barrel

Clear selection

A law that allows taxes to be paid either in cash or in kind is valid.

1 point

True

False

Clear selection

Which statement below expresses the lifeblood theory?

1 point

The assessed taxes must be enforced by the government.

The underlying basis of taxation is government necessity, for without taxation, a government can neither exist nor endure;

Taxation is an arbitrary method of exaction by those who are in the seat of power;

The power of taxation is an inherent power of the sovereign to impose burdens upon subjects and objects within its jurisdiction for the purpose of raising revenues.

Clear selection

Anne Lapada, a student activist, wants to impugn the validity of a tax on text messages. Aside from claiming that the law adversely affects her since she sends messages by text, what may she allege that would strengthen her claim to the right to file a taxpayer’s suit?

1 point

That she is entitled to the return of the taxes collected from her in case the court nullifies the tax measure.

That tax money is being extracted and spent in violation of the constitutionally guaranteed right to freedom of communication.

That she is filing the case in behalf of a substantial number of taxpayers.

That text messages are an important part of the lives of the people she represents.

Clear selection

Real property taxes should not disregard increases in the value of real property occurring over a long period of time. To do otherwise would violate the canon of a sound tax system referred to as:

1 point

theoretical justice.

fiscal adequacy.

administrative feasibility.

symbiotic relationship.

Clear selection

Which theory in taxation states that without taxes, a government would be paralyzed for lack of power to activate and operate it, resulting in its destruction?

1 point

Power to destroy theory

Lifeblood theory

Sumptuary theory

Symbiotic doctrine

Clear selection

The power to tax is the power to destroy. Is this always so?

1 point

No. The Executive Branch may decide not to enforce a tax law which it believes to be confiscatory.

Yes. The tax collectors should enforce a tax law even if it results to the destruction of the property rights of a taxpayer.

Yes. Tax laws should always be enforced because without taxes the very existence of the State is endangered.

No. The Supreme Court may nullify a tax law, hence, property rights are not affected.

Clear selection

Double Taxation

1 point

is one of direct duplicate taxations wherein two (2) taxes must be imposed on the same subject matter, by the same taxing authority, within the same jurisdiction, during the same period, with the same kind or character of tax, even if the purposes of imposing the same are different.

is forbidden by law; and therefore, it is a valid defense against the validity of a tax measure.

means taxing the same property twice when it should be taxed only once; it is tantamount to taxing the same person twice by the same jurisdiction for the same thing.

exists when a corporation is assessed with local business tax as a manufacturer, and at the same time, value-added tax as a person selling goods in the course of trade or business.

Clear selection

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