TAX TEST

1. How are tax laws to be construed?

2. May the police power of the state be exercised through taxation?
3. In taxation, is there any distinction between the operation of a proprietary educational institution
and a government educational institution?
4. Explain the principle of strictissimi juris in connection with tax exemptions.
5. Discuss the basic feature of our present income tax system.
6. Distinguish the Domiciliary Theory from the Nationality Theory. Which of the two is material in
determining the tax situs of intangible personal property owned by an individual taxpayer.
7. Is the power of taxation absolute?
8. May the State exercise the police power and the taxing power of the government simultaneously?
9. Who has the power to interpret tax laws?
10. Is the government bound by the errors committed by its agents?

ANSWER
1. If the statute is clear it should interpreted according to the words used therein and in
accordance with the intention of the legislature. It must be construed against the
government and in favor of the tax payer. In case of tax exemption it is construed
against the tax payer and in favor of the government.
2. Yes, police power may be exercise through taxation by means of regulation.
3. Yes, the distinction between a proprietary educational institution and a government
educational institution is that the former is subject to taxes while the latter is
exempted.
4. The principle of strictissimi juris provides that tax exemptions are strictly construed
against the tax payer and in favor of the state.
5. The basic feature of our income tax system is it is progressive and ____
6. Domiciliary Theory as distinguished from Nationality Theory. The former states that
for purposes of taxation the domicile of the taxpayer determines whether he is subject
to the jurisdiction of the taxing authority while the latter states that it is the
nationality of the tax payer which determines the if he is subject to tax. For purposes of
tax in intangible property the Domiciliary Theory is material since it does not qualify
whether he is a national or not.
7. No, the power to tax is not absolute for it is subject to constitutional and inherent
limitations.
8. Yes, the state in the exercise of its taxing power may simultaneously exercise its police
power through regulation. An example of this is the imposition of taxes on tobacco and

alcohol to regulate the consumption of tobacco and protect the health and welfare of
the people.
9. The power to interpret tax law or statutes belongs to the Bureau of Internal Revenue.
10.No. The government is not bound by the mistakes of its agents or employees in their
erroneous application or interpretation of tax statutes. Estoppel does not apply against
the government in tax cases and they may subsequently correct such errors.