Taxes and tributes

The public revenue needed to meet collective needs and fund the public services from which we all benefit is primarily obtained through the payment of taxes and other duties by citizens in accordance with the laws of our country.

Taxes are amounts of money that citizens are required to pay. Taxes include duties, fees, and special contributions. The taxes are the most important taxes, and are the amounts that citizens must pay so that institutions can cover public expenses for everyone, without each person who pays receiving an individual compensation. On the other hand, fees are amounts that citizens must pay as a result of some administrative action that does benefit them individually. This action must be expressly requested, for example, garbage collection.

In addition to taxes and fees, are special contributions, which are that must be paid when a public action is carried out to satisfy a collective need and produces a special benefit for certain people. Example: increase in the value of a property after the completion of a public work.

Taxes are not a fixed amount equal for all citizens, as this would be unfair, since not everyone has the same amount of money. Therefore, those who have more, earn more, or spend more pay more taxes, while those who have less money pay less taxes. This is called “economic capacity.” The economic capacity of people can be known through the assets they have, that is, their wealth (assets), through the money they earn (income) or through what they spend (consumption). Therefore, there are several types of taxes, for each of these manifestations of what we have called people's "economic capacity."

Taxes are usually classified as direct and indirect:

• Direct payments allow those who have more or earn more money to pay higher amounts than those who have less and earn less. One of the most well-known direct taxes is the Income Tax (IRPF), which people pay based on their earnings—that is, the salary they receive, the benefits a doctor, a lawyer, a plumber, or a taxi driver receives, etc. Other direct taxes include Corporate Tax, which is paid by companies; Inheritance and Gift Tax, which is paid when we receive an inheritance from a deceased relative (inheritance) or when we receive assets from someone during their lifetime (donation); and Wealth Tax, which only those with assets above a certain value must pay.

• Indirect costs, which are those that everyone must pay equally when making a purchase, regardless of whether they earn or have more or less money. The best known is VAT, which is paid every time we buy something, for example, clothes, a pen, a sweet or when we eat in a restaurant. Other indirect taxes include the Tax on Property Transfers and Documented Legal Acts, which is paid, for example, when a house is purchased. And Special Taxes, which are paid when purchasing certain items or products, such as gasoline, alcoholic beverages, or tobacco.

So far we've talked about taxes, but we also need to mention other amounts we pay called fees. Fees belong to the same family as taxes, the family of tributes, but there are differences between them, as we pointed out at the beginning. The most important is that, while taxes must be paid in the cases stipulated by law, regardless of the public goods or services we use, fees only have to be paid to enjoy a specific service or to be able to carry out a specific activity. For example, fees are charged for garbage collection, drinking water supplies, or obtaining or renewing an ID card, driver's license, or passport.

Special contributions are also a tribute and, as we have already said, are paid when a public action is carried out to satisfy a collective need and produces a special benefit for certain people. Example: increase in the value of a property after the completion of a public work.

As you know, in Spain there are other public administrations besides the State, such as the Autonomous Communities, Provincial Councils, and City Councils. They all have their budgets, their income and their public expenditures. Therefore, not only does the State impose taxes, but some of the taxes we've seen correspond to the Autonomous Communities, while others correspond to the Municipalities, and the same applies to fees.