Compiled Questions in Taxation

Compiled Questions in Taxation
1. When is a tax for public purpose?
The tax is for public purpose when money raised by taxation can be expended only for
public purposes and not for the advantage of private individuals.
The public purpose of a tax may legally exist even if the motive which impelled the
legislature to impose the tax was to favor one industry over another. It is inherent in the
power to tax that a state be free to select the subjects of taxation, and it has been
repeatedly held that “inequities which result from a singling out of one particular class for
taxation or exemption infringe no constitutional limitation”. Taxation has been made the
implement of the state’s police power.
2. Give and explain the two tests for a valid delegation of legislative function?
Two tests determine the validity of delegation of legislative power:

(1) the completeness test and;
(2) (2) the sufficient standard test.
3. The congress passed a law imposing a tax on the manufacturer of sugar by sugar
centrals and another tax on owners of land planted to sugar cane. The collection
from said taxes were to accrued to a special fund to be used exclusively for the
rehabilitation of the sugar industry. The constitutionality of the law is assailed on the
grounds that it is discriminatory and that the levy is not for public purpose. Decide
with reasons.
4. A law was enacted imposing a tax on manufacturers of coconut oil, the proceeds of
which are to be used exclusively for the protection and promotion of the coconut
industry, namely to improve the working conditions in coconut mills and to conduct
research on the use of coconut oil for motor fuel. Some of the manufacturers of
coconut oil challenge the validity of the law, contending that the tax us to be used
for a private purpose, and therefore the law violates the rule that public revenues
shall not be appropriated for anything but a public purpose.
5. The City of Manila enacted Ordinance No. 55-66 which imposes a municipal
occupation tax on persons practicing various professions in the city. Among those
subjected to the occupation tax were lawyers. Atty. Mariano Batas, who has a law
office in Manila, pays the ordinance-imposed occupation tax under protest. He goes
to court to assail the validity of the ordinance for being discriminatory. Decide with
reasons. (3%)
6. Heeding the pronouncement of the President that the worsening traffic condition in
the metropolis was a sign of economic progress, the Congress enacted Republic Act
No. 10701 (RA 10701), also known as An Act Imposing a Transport Tax on the
Purchase of Private Vehicles.
Under RA 10701, buyers of private vehicles are required to pay a transport tax
equivalent to 5°/o of the total purchase price per vehicle purchased. RA 10701
provides that the Land Transportation Office (LTO) shall not accept for registration
any new vehicles without proof of payment of the 5% transport tax. RA 10701
further provides that existing owners of private vehicles shall be required to pay a
tax equivalent to 5% of the current fair market value of every vehicle registered with
the LTO. However, RA 10701 exempts owners of public utility vehicles and the
Government from the coverage of the 5% transport tax.
A group of private vehicle owners sue on the ground that the law is unconstitutional
for contravening the Equal Protection Clause of the Constitution.
Rule on the constitutionality and validity of RA 10701
7. The Congress passed a legislation and portion of which is read as follows:
SEC. 4. Sec. 106 of the same Code, as amended, is hereby further amended
to read as follows:
SEC. 106. Value-Added Tax on Sale of Goods or Properties. –
(A) Rate and Base of Tax. – There shall be levied, assessed and collected on
every sale, barter or exchange of goods or properties, a value-added tax equivalent
to ten percent (10%) of the gross selling price or gross value in money of the goods
or properties sold, bartered or exchanged, such tax to be paid by the seller or
transferor: provided, that the President, upon the recommendation of the
Secretary of Finance, shall, effective January 1, 2006, raise the rate of
value-added tax to twelve percent (12%), after any of the following conditions
has been satisfied.
(i) value-added tax collection as a percentage of Gross Domestic Product
(GDP) of the previous year exceeds two and four-fifth percent (2 4/5%) or
(ii) national government deficit as a percentage of GDP of the previous year
exceeds one and one-half percent (1 ½%).
The Bayan Tiis Movement filed a case questioning the constitutionality of the
said provision, and contends that giving the President the stand-by authority to raise the
VAT rate from 10% to 12% when a certain condition is met, constitutes undue delegation of
the legislative power to tax.
Rule on the constitutionality and validity of the said section. Discuss your
answer.

Compiled Questions in Taxation

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Compiled Questions in Taxation

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Compiled Questions in Taxation

1. When is a tax for public purpose?

Two tests determine the validity of delegation of legislative power:

Rule on the constitutionality and validity of RA 10701

7. The Congress passed a legislation and portion of which is read as follows:

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