The primary purpose of taxation is to raise revenue for the support of the government. However,
taxation is often employed as a device for regulation by means of which, certain effects or
conditions envisioned by the government may be achieved such as:
a. Taxation may be used to provide incentive to greater production through grant of tax
exemptions.
b. Taxation can strengthen weak enterprises by creating conditions conducive to their growth
through grant of tax exemptions.
c. Tax may be increased in periods of prosperity to curb spending power and halt inflation or
lowered in periods of slump to expand business and ward off depression.
d. All of the above.
Which of the following statements is correct?
a. The purpose of taxation may also be compensatory meaning it may be used to make up
for the benefit received.
b. Taxes may be imposed for the equitable distribution of wealth and income in society.
c. Both a and b
d. Neither a nor b
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?
a. Power to destroy theory
b. Lifeblood theory
c. Sumptuary theory
d. Symbiotic doctrine