Financial and Tax Law: Principles and Concepts
**Item 1: Financial Activity**
Financial Activity: Concept and Character
- Collection and administration of economic resources, so scarce, in order to meet public needs. That means that on a necessary and indispensable basis, involving an organized social group on which the common needs and concerns affecting all members. Social organization has to procure the public revenue to meet public expenditure.
- It is done when the State and other public entities obtain money resources and use them to perform the tasks that the community entrusts to them. This activity is characterized by the individual state and other public bodies by the subject of public revenue and expenditure and by its instrumental character.
Nature of Financial Activity
Financial activity is not only political or economic, but also provides various aspects. To address each of them (political, legal, economic, etc.), it may be the object of separate studies. Financial activity is essentially political in nature because the state defines itself as a political authority. However, it is not entirely political. To cover all of the nature, the various special sciences are needed to examine its various aspects. The political nature means choice.
Financial Activity as an Object of Knowledge
Financial activity arose in the 19th century, and it was political economy that began to systematize the phenomenon of real or financial activity. But from the 20th century, another discipline comes in: public finance, which organizes such financial activity. The evolution of the democratic state requires that all financial activity be written and published as standards, legal standards. Thus, mere instrumentation standards became legal norms. It surges as a discipline that is aimed at financial services law, the same real phenomenon. It takes several financial science concepts and different methods to study each of the financial aspects of the phenomenon, giving rise to autonomous disciplines such as financial history, financial economics, financial law, etc.
The Unitary or Integral Construction of the Science of Finance
Crizzoti and his disciples at the School of Pavia proposed replacing all of the methodologies by one, the “hacendística.” A unique and comprehensive approach would solve many of the problems of knowledge itself and the implementation of the financial position defended the science of the Treasury as a synthesis of these partial aspects (political, economic, legal, etc.). It was an encyclopedic vision that never prospered.
The Financial Activity as an Object of Knowledge of the Law
The set of standards was observed through the prism of a purely instrumental use. It turned out later that it was acquiring citizenship in the legal systems of modern states. Financial activity is now enshrined in the constitution of democratic states. It began to develop methodological analysis of financial activity that was pulled from the tax and its implementation. The legal study of the complete cycle of financial activity is implemented in financial law. The standards are not only laws but are any pattern of conduct. Not all laws are rules, nor are all rules written.
Complete Issue
Treasury referred to the State and other public bodies in both developed financial activity (subjectively) or financial activity in itself considered (meaning target). It is the place that represents the state capital, a subject of law, always involved in financial activity. Three meanings:
- Object: Joint property and rights that has or comprises a heritage.
- Subject: It refers to the owner of the assets, liabilities, etc.
- Functional: Faction been devoted to obtaining resources, management and expenditure control, the control duties, the application of taxes, etc.
The budget is a description of expenditure and income; it is the description of financial activity.
**Item 2: Financial and Tax Law**
Financial Law: Concept and Content
Financial law is the branch of internal public law that organizes the resources on which the State Treasury and other public entities, territorial and institutional, and governing procedures for the collection of revenue and expenditure management and payments such subjects intended to fulfill its purposes.
Part of the constitutional rules governing the Treasury, among which are the rules of budget rate. In terms of content:
- Public revenues (taxes, income from its own assets, debt products, any other remedy to obtain the estate).
- Expenditure (performed under budget).
- Budget (legal and financial management of revenue and public expenditure management).
Scientific Autonomy of Finance Law
Financial law is an autonomous science because it has its own purpose and principles. Financial law is not an isolated set of rules but a set of rules that are fused with an entire system. Therefore, one cannot build financial law in isolation with respect to general legal construction. It has different own principles, although it has its own rules different from those that integrate other fields of law because it regulates different relationships and situations, because it regulates a sector of the social, financial activity, unlike the other sectors of social reality. Financial autonomy is recognized in law regarding economics and other legal disciplines. It is a distinguishing factor from any other branch of law.
Branches of Financial Law: Tax Law and Fiscal Law
Many authors have set tax law as if it were a separate discipline. But while acknowledging the greater importance of tax in relation to other financial institutions, this does not in itself justify the separation of tax law from the financier. Tax law must be regarded as a branch of a broad discipline, financial law. The integrated financial law:
- Tax law: Obtaining revenue of a coercive nature, which goes from the collection of taxes to implementation.
- Budget law: It aims to explore ways and rules that public bodies must make public the budget formulation, approval, and implementation. Since 1977 is the General Appropriations Act.
Tax law was a pioneer in Spanish legislation. In 1963, the Public General Tax Act (now repealed) sought the creation of taxes and their implementation. The powers attributed to the Treasury to manage, verify, and collect the taxes. Some authors cite two branches arising from Tax Law:
- Public Equity: Regulates the management of certain assets and rights owned by the state.
- Public Debt: Regulation of the formulas through which the state and other public entities are financed from the market.
Supranational Tax Law
Tax law is in the analysis, study, and systematic nature of those tax rules that are promulgated and implemented in supranational organizations. As supranational law will be referred to Community law, that is, the set of rules emanating from the EC and applicable to both Member States and the EC itself. The position of supranational tax law will manifest in:
- Tributes themselves: staff salaries, rates of correspondence, etc.
- Unification rules tariffs, customs, etc. No tariffs between states in the union, but it can be a single tariff on third.
- Harmonization: will be highlighted through directives.
International Tax Law
It is the branch of international law governing international tax relations. It will manifest through agreements between states to avoid double taxation and tax evasion. The agreement moves the internal rule of the State without its repeal. The agreements determine that there is a transfer of tax sovereignty among States. The consequence is that richer countries tend to perform multiple conventions.
Criminal Tax Law
It is the branch of criminal law with respect to the violation of tax regulations (tax fraud) involving criminal sanctions. It is projected on a typology of offenses for which liability is strictly financial. In criminal law, tax will connect with the right tax penalties. The legislature will establish an ideal boundary, which states that for minor legal offenses, there is the sanctioning authority to the administration, but in any case, it should be a faculty prerogative of the judiciary. Penalty law in its two forms is not tax law because tax law is a positive right of contribution. Sanctions law is a law violator of the levy and is governed by principles different from those of tax law. Penalties may be economic or imprisonment. There is a limit of 6 years in prison for each tax crime.
System in Tax Law
In tax law, it is customary to consider the following classification:
- General tax law: It will analyze the tax as an obligation and the management model and revenue to be established in a particular political sovereignty. It should analyze administrative powers and reaching a review of administrative acts themselves before they can access effective judicial protection. It ranks in the “Material.” It will analyze the tax as an obligation, the legal relationship – taxes and the extinction of the tax liability.
- Formal: The model is the application of taxes, powers that are attributed to the administration. It would be equivalent to the tax procedures and verification management, collection, and administrative review.
- Special tax law: Taxes will be analyzed in particular: tax laws in force in the legal system. After the classification of taxes with respect to rates, special charges, and taxes.
**Item 3: Principles of Tax Law**
Introduction: Concept and Classification
Constitutional texts normally contain the fundamental principles governing the law of each country, through which the ideal of justice of a community in a particular historical moment is positively reflected. This idea of justice is also present in the area of taxation and should be reflected in the constitutional principles by which it is intended to achieve the fair sharing of the tax burden. These principles constitute the basic criteria according to which computers and read all tax matters. In general, it can be argued that constitutional principles are worth not only program but also prescriptive, in order to ensure production standards in accordance with certain criteria and values accepted in the legal system.
The main constitutional principles in force in tax matters:
- All contribute to sustaining public expenditure according to their economic capacity, through a fair tax system based on the principles of equality and progressiveness that in no case shall be confiscatory in scope.
- Public expenditure will make an equitable allocation of public resources, and its programming and execution shall comply with criteria of efficiency and economy.
- Personal benefits may be imposed (million) or property of a public nature under the law’s violation of the principles may lead to a constitutional challenge before the Constitutional Court, and he may declare unconstitutional any provision that goes against principles.
Our Constitution merely provides traditional principles in tax law but also incorporates our principles of law of public expenditure management material. The radical novelty definitely helps set the idea of fair distribution of the tax burden must necessarily be linked with a program just in public spending. Any violation of these principles will encourage the bringing of an action or issue of unconstitutionality before the Constitutional Court against the laws and statutes having the force of law.
Equity: provides for the allocation of individual citizens to the tax payable.
Financial Illusion: collect taxes without noticing that the citizen too.
The Material Principles of Justice
Concept
Different explanations are not in isolation, but among them, there is a logical unit as a result of the expression of the same ideal: the fair distribution of the tax burden. Thus the principle of equality requires, in fact, the generality that, in turn, reaches only sense in relation to the economic capacity, and finally, escalation is a demonstration of equality, understood as real equality.
Principle of Generality
The Constitution holds that all contribute to sustaining public expenditure according to their economic capacity, through a fair tax system based on the principles of equality and progressiveness that in no case shall be confiscatory in scope. The management of the tax system is based on the economic capacity of persons required to comply with taxation and the principles of justice, universality, equality, progressive, equitable distribution of tax burden, and non-confiscatory.
The general does not imply that everyone has to pay the same amount of money, as it would be unfair to those who cannot pay. Everyone has to pay taxes (principle of equality: all are equal to the legislature at the time of implant taxes, but equal requires equal treatment of equals and unequals unequally), but all who can and those with financial ability to bear the burden (principle of economic capacity). So the legislature, to establish when taxable events of taxes should consider equally all those facts that are indicative of economic strength. The general principle of bankruptcy if the definition of taxable transactions tax leaves out facts that reveal economic capacity. This situation will occur if exemptions and subsidies were granted in an arbitrary and discriminatory manner. For exemptions and deductions not to break that principle, these (necessary in order to give the principles of equality and progressive) have to be justified and not arbitrary, causing a tax benefit rather than a tax privilege, which goes against the principle.
The duty to contribute does not refer only to Spanish citizens but also to foreigners and legal persons, Spanish and foreign. That is, all who have directly or indirectly connected with Spanish society. It prohibits the existence of tax privileges. The establishment of tax benefits may be materially legitimate, even when favorable to persons with sufficient financial capacity, provided by the award was intended to achieve certain ends that are also provided constitutional cover. You may not, in such cases, talk of privilege against the principle of generality in the uprising of public burdens.
Principle of Equality
Subsequent taxable amount payable base and rebates. Equality requires that equal situations are treated as economic capacity is the same. All subjects are the same for the legislature to the setting of taxes, but equality requires equal treatment of equals and unequals unequally: The higher is the wealth of an individual, the greater should be the amount that should help.
Criteria on the concept of equality:
- The principle of equality shall not prevent any inequality, only that which can be considered discriminatory or arbitrary.
- The offense occurs when introducing inequalities in situations that can be considered equal and not justified.
Principle of Economic Capacity
It takes into account earned income, rental income spent, and saved. The principle of economic capacity may be considered the basic and central criterion in the allocation of the tax burden of all principles. It can be said that economic capacity is the most significant both in the creation of tax legislation, as in the interpretation thereof. It must take into account the principle of economic capacity, always taking into account the other principles, in particular, the principles of equality and progressive. More than a principle, one could say that is a prism, a view on the principles of equality and generality. Taxes must be based on the economic capacity of taxpayers. For them, it is necessary to determine:
- Who has and who has no financial capacity: the ability to pay absolute references that can only be established with respect to those charges made or action that demonstration of financial capacity.
- Once established he has to pay tax, it should be established to what extent must contribute each according to his ability to contribute on: identification of the absolute ability to pay for each person.
They cannot levy taxes in connection with a fact or an assumption of fact, other than a demonstration of capacity. There are facts that reveal the economic capacity, indicating that the person has made economic capacity:
- Direct indices: Perception of rent or possession of the estate.
- Indirect indices: Consumption expenditure or income or heritage movement.
Some criteria or principles within the principle of economic capacity are:
- Principle of normality: the legislature, when it establishes a situation as a taxable event, should be aware that it usually is indicative of economic strength. However, those facts are configured as taxable events and are not indicative of economic strength, the solution must come by way of tax exemptions or reductions.
- Principle of free allowance: There should be an amount that cannot be taxed because it is intended to vital basic needs of the owner.
The tax is intended to raise revenues for the state for domestic product growth and better distribution, but the taxes can also pursue other purposes, that is, in our taxation system also can be used for tax extra.
Principle of Progressiveness
Taxable income subject to progressive reductions, payable base, scale of tax rates, and fee in full. Progressiveness is a feature of the tax system by which, with increasing the wealth of each subject, the contribution increases, but higher in proportion to the increase of wealth. That is, it is those who have contribute proportionally more than those with less. In fact, progressiveness is the articulation of the tax system so as to deliver, in addition to strict tax collection purposes, the effective redistribution of income and wealth. Therefore the goal of progressivity and income redistribution are closely connected with the principle of equality, unity between the two where the expected result is a substantial improvement in the process of redistribution of wealth. The whole tax system must be progressive, not each tax individually, but most important, the less important would be proportionate.
Principle of Non-Confiscation
The limit on progressiveness is non-confiscation: confiscation is to deprive a person of his property to apply to the Treasury. The property needs to be protected by the Constitution also recognized another right: the Law of State to require all tax payments, and protects in the sense that they have prevents scope confiscatory taxes. Therefore, the non-confiscation also requires the failure to exhaust the wealth tax under the guise of duty to contribute.
Principle of Legality
Introduction: Basis of the Principle of Legality
Law in our legal system is the source of production of internal rules of the highest rank, conditioned only by the Constitution and rules of international law. The basic rule on production rules in the tax field is the principle of legality, by which it is possible that the regulation of certain subjects is made other than via the Act’s principle of legality has been identified with the demand for car taxation, which are the citizens themselves through their representatives who determined the distribution of the tax burden, this is the essential meaning of the principle of legality.
The principle also serves other functions:
- A guarantee of the democratic role in sharing the tax burden, since decisions on the allocation of the tax burden are made by the body, which better ensures the presence of conflicting interests.
- A role in ensuring equality and the law ensures the achievement of uniform distribution of tax burdens.
Principle of Legality of Taxation
The tax is to be established under the law, no tax can be levied without a previous law that authorizes it. The law should establish all the rules, but you can send a tribute of this legislation to the regulations. Such a referral is justified in an appropriate division of tasks between the Legislative and the Executive. Legislature set to address the basic and fundamental rules and the framework in which such rules must be developed and supplemented by the regulations (Executive). The Reserve Act is the mechanism through which is effective rule of law, trying to ensure that key decisions relating to taxes are taken through a law. Reserve Act excludes the possibility that certain matters are governed by rules other than law.
Reasons why the law exists Reserve:
- Individual guarantee self-taxation.
- Guarantee democratic because the law is prepared and approved in parliament.
- Guarantee of Equality: Everyone must comply with common laws.
- Guarantee legal certainty: That the taxpayer knows that standards be applied at all times and content.
Scope of the Rule of Law
Doctrine usually distinguishes between:
- Absolute book: The law should provide for full and finished it matter quiet, but may involve any other type of rule.
- Reservation on: The law may be limited to establishing the principles and essential criteria under which it may develop the classified, in whole or in part, by a secondary source.
The freezing range is the effect by which a matter is reserved to Act not because of a constitutional provision, but provision of the law itself can only delegitimize another law later this area by assigning to regulate the possibility of regulation, this does not happen until the status of the rules appears frozen. Therefore the law must always dial the possibilities and the rules and he can not enter the regular classified, but is in the terms intended by the law The rule of law completely determines tax, law-regulation relationships. The government can not regulate a matter through a regulatory standard is not whether a law has allowed previously, so the law only the consent of the Constitution, may authorize the regulation to come into their regulation. Regulations on tax matters are always instruments of implementation of the Law Regulation must always be the indispensable complement to the law.