Legal and Tax Systems: Principles and Functions
Legal Definition and Norms
Right definition: A set of rules of law regulating the life of man in society.
Legal norm: It is a prescription by which an authority, empowered to regulate, intends to maintain coexistence among men. It is backed by the sanction of the established exercise of force.
Tax Law: Resolves constitutional issues that are difficult to change.
Characteristics of Legal Norms
- Bilateral: In front of a rule-obligated party, there is another power to demand compliance.
- Heteronomous: The one who dictates the rule has a desire different from or foreign to the subject governed by the standard.
- Coercible: In case of a breach of duty or infraction of the rule, it is possible to enforce compliance by force.
- Exteriority: It is concerned with the relationship when it leaves the inner self.
Imperative: It is an established imposition (equal to the empire).
Characteristics of Moral Norms
- Unilateral: An individual has a moral obligation to the rule; there is no other authority to require compliance.
- Autonomous: The implementation of the rule is imposed on the recipient by his own conscience.
- Incoercible: It lacks the possibility of using force if compliance is not desired.
- Internal: Takes care of the inner human being.
Legal norm scale: Entities dictate laws / law / DS-DFL / DL / rules / ordinance.
Classification of Law
Objective Law: A set of rules in an organized and autonomous society that disciplines, usually under threat of sanction, the behavior of the members in society to establish relations with each other, satisfy their material and spiritual needs, and achieve the common good.
Subjective Law: It is the power that a person has to demand from another the fulfillment of a legal requirement or an obligation.
Natural Law: The expression of the first principles of justice that govern the relations of men in society and determine the powers that each possesses according to the material order.
Positive Law: It is a set of rules of conduct and coercive, imperative principles inspired by natural law that effectively regulate the behavior of men in society at a particular historical moment, in order to establish a just ordering of human coexistence (if it is not written, it does not exist).
Public Law: Defined as the set of principles and rules establishing the powers of public powers, the organization of its institutions, and the guarantees of individuals against the state (you can only do what the law allows).
Private Law: Is a set of rules governing relations between individuals and between them and the state when it acts as a private entity (you can do whatever the law does not prohibit).
Taxation
Tax Purpose: The manifestation of the ability to pay, susceptible to being recorded.
- Expenditure or Consumption: When a person is constantly making expenditures, disbursements, or expenses in general, it can be deduced that the person has resources to make those expenditures and, therefore, can be affected by the application of taxes.
- Income: When a person has income or means, a portion of the revenues or income may be used for the payment of such taxes.
Tax Functions
- Tax Function: To finance the state’s revenue to fund public spending.
- Extra-Tax Function: A collection of tributes can guide the economy in a given direction (Tariff: a tax added to an imported product).
- Social Function: A collection of tributes can be used to apply social benefits and redistribute wealth.
Tax System Features
- Simplicity: The whole system, not only in terms of the normative but also the organic, should be the least complex possible. Taxpayers should be able to easily meet their tax obligations in a timely manner. This requires clear and simple laws and a lack of excessive bureaucracy.
- Flexibility: The tax system should generally adjust to changes in the economy. For example, if there is an increase in national income, there should also be a parallel increase in tax revenue. If that does not happen, the system should be reviewed to raise tax rates or create new taxes to establish proportionality between national income and tax revenue.
- Sufficiency: The multiple taxes required in our tax system should yield sufficient tax revenue to at least cover the operating expenses of the public sector.
- Range or Character: The operating system must be fair and sustained throughout any conflict of interest between taxpayers and the tax authority. Solutions to this conflict should aim to find the right balance between the need to finance public spending and meet the needs of the community.
Taxing Powers
Taxing Powers: The power or legal possibility of the state to levy taxes with respect to persons or property within its jurisdiction.
Characteristics of Taxing Powers
- Abstract: The power is inherent in the existence of the state, regardless of its exercise.
- Inherent: It derives from the fact that as long as the state exists, so does the power to tax. Without the state, there is no power to tax.
- Delegated: The power to tax is an inherent function of the state and cannot be given to other public entities without incurring sanctions of nullity. This power is pursued through the legislature.
- Irrenunciable: As an inherent attribute of the state, it cannot be waived. However, this characteristic is not absolute, as taxes are one of the state’s funding sources, and it may use other sources, dispensing with taxes.
- Limited: The power to tax has limits, given by the contribution or territories. Any legal norm can state that the power to tax is exercised in the geographic area where the state exists. Therefore, this option cannot be exercised in the territories of other states.
Legal or Constitutional Limits to the Power of Taxation
Principle of Legality: The power to tax is inherent to the state and is exercised through empowering legislation. It follows that taxes, as an integral part of a tax system, can only be created by law. Therefore, no other public authority can arrogate the power to impose taxes.