Tax law is a branch of public law that covers legal standards by which the state exercises its power of taxation for the purpose of obtaining income which serves to compensate public spending.
Tax law generally contains all the rules governing the taxation of economic activity of individuals and businesses. And economic activity is considered in its various manifestations as industrial and commercial, agricultural, real estate, etc.
It is recognized that traditional tax law consists of various branches, namely:
– The taxation of individuals, that is in relation to income tax;
– Commercial tax affairs, which includes corporate tax and the tax rules governing business activities, such as value added tax, for example;
– Property taxes which entail taxation of property transactions (sales of buildings);
– Taxation of assets – for the imposition of detention and transfer of assets (inheritances, donations, solidarity tax on wealth);
– Tax procedures, including rules governing relations between the tax litigation and individuals or businesses.
The parallel branches of tax law
– Special levies, which are compulsory taxes collected for use by public entities.
– Criminal tax law, which allows the authorities to sanction tax evasion. Tax evasion is subject to double penalty: a financial sanction or jail term based on the prosecution;
– International taxation, which can be defined as the set of rules governing the taxation of persons and property, both during the collection of income and the transmission of an inheritance, particularly when the collection of such revenue or transmission of this inheritance involves a foreign element.
Its scope is extremely broad in that it includes not only the rules governing the taxation of the receipt of income, regardless of the nature of income (wages, ownership of shares and securities, sale of property, etc).
Or the method of collecting that income but also the principles governing the taxation of variations of inheritance, it has been specified that these principles are limited to the rights of inheritance tax, excluding consideration for transfer duties.
– Environmental taxation generally refers to methods of deduction or bonuses designed to protect natural heritage. And a special tax is emerging around the theme of carbon in the fight against climate change.
Economic effects of taxes
The establishment of tax leads to the reduction of income and therefore a deterioration of their purchasing power for the taxpayer. This can cause variations in the behavior of the subject which affects income and distribution factors. On the other hand, some taxes affect the price of products; taxed producers may wish to pass on the burden of taxes through an increase in prices.
Taxes are paid by those to whom the laws impose obligations. This does not only have legal significance, as this comes with consequences relating to the taxpayer’s economic behavior and changes in the market. This is an economic rather than legal effect because it shifts the financial burden but not the tax obligation.