Public Financial Law and Tax Law: Principles and Concepts
Public Financial Law
Public Financial Law (PFL) is an area of law that studies the financial activity of public entities, their legal regimen, and the management of the public treasury. We understand financial activity as an activity related to the obtainment of revenue and expenditure with which the state can satisfy collective needs, such as education. As an object of knowledge, PFL is concerned with the financial activity performed by regional and institutional bodies. The function of these bodies is to represent the general interest.
Financial activity substantially consists of two elements: revenue and expenditure. There are certain features that must be highlighted:
- Firstly, it is mainly a political activity ruled by political criteria.
- Secondly, it presents different aspects that are studied by different branches.
- Thirdly, its relevance has been more emphasized as the state has assumed goals in the different fields of the social reality.
In regards to this, we can extract the following ideas:
- The financial activity is directly related to the goals pursued by an entity.
- From the quantitative point of view, if the number of objectives increases, the number of revenue must be increased.
- From the qualitative point of view, depending on those aims, one source of revenue or another will be applied.
Public Treasury
Taking into account the concept of public treasury, we must differentiate between a static and a dynamic perspective. The concept can be applied and generalized to all the autonomous communities, local, and in general to all public entities.
- Static Concept: The static concept of public treasury is the whole assets, rights, and obligations of an economic nature of the public treasury. The economic rights can have a public nature, derived from the exercise of administrative powers (compulsory contributions or obligatory quotation of Social Security), or a private nature, subject to the rules and procedures of private law. With those rights exist obligations of economic content for which the public treasury is responsible.
A few other aspects exist that are assigned to other branches of the legal system, mainly to administrative law, although they can affect the financial system.
- Dynamic Point of View: From a dynamic point of view, the analysis is on the procedures to obtain revenue and to distribute expenditure. Movements in regards to the financial activities that explain or allow these movements to happen and to decide and distribute the expenditure. The legal order must analyze through which procedure the obtainment of revenue is done.
Financial law will analyze the rules through which to achieve the obtainment and effective purpose of revenue to pay the public needs. Here, the budget acquires an essential meaning.
Public Entities
In regards to public entities, for every decision that is made, a procedure is required because it ensures the accountability, control, and standard quality of the decision. In other words, decisions cannot be arbitrary. As a consequence of this standardization, the Public Administration has a bureaucracy that could be avoided by the state assigning public services to be managed by private entities regulated by private law.
In conclusion: PFL is the branch of the internal law that organizes the constitutive resources of the state public treasury and the remaining public entities, both territorial and institutional, and provides the procedures to obtain revenue, distribute the expenditure, and make payments that such entities need to fulfill their purpose.
Tax Law
Tax law can be understood as a field that studies the legal order that regulates the establishment and application of compulsory contributions. It is a part of Financial Law and it has been developed over the concept of tribute. We could define this legal institution as a pecuniary obligation through which the state or any other public entity becomes a creditor of a passive subject as a consequence of an act or fact indicative of having economic capacity.