Fundamental Principles and Quantitative Elements of Taxation

Fundamental Tax Principles

Rule 31.1: All citizens must contribute to the maintenance of public expenditure according to their economic capacity through a fair tax system based on the principles of equality and progressivity, which shall have no confiscatory character.

Economic Capacity and Equality

Economic capacity refers to the requirement that the tax burden must be shared based on the wealth of each individual subject. This is linked to other key principles:

• Equality: Treating those who are in the same situation equally and those who are in different situations differently.
• Escalation: The principle that those who have more must pay more.

Distinction Between Relative and Absolute Capacity

• Relative economic capacity: Affects each individual in a particular way.
• Absolute economic capacity: Affects all taxpayers covered in the abstract.

Progressivity and Non-Confiscation

The principle of progressivity should enable charges to increase as the taxable amount of the taxpayer increases. Conversely, non-confiscation protects private property; the tax system should not deprive citizens of their property rights.

General Principle of Equality and Reserve of Law

Equality is not just a principle but a basic constitutional tax requirement. The Reserve of Law principle provides that no charge may be created or established except by law.

Quantitative Elements of the Tax Charge

The Tax Base and Its Determination

The tax base is the monetary magnitude resulting from the measurement or valuation of the taxable event.

• Monetary base: Percentages established by law can be applied directly to this base.
• Non-monetary base: Taxed by the application of monetary amounts based on physical units or other expressions.

Methods for Determining the Tax Base

• Direct estimation: This is the ordinary and general method used for tax proceedings.
• Objective estimation: Results from application only in cases legally provided for, and is voluntary for the required taxes.
• Indirect estimation: This constitutes a subsidiary method used when the previous two are excluded. Its application is appropriate in cases refined under Article 53.1 LGT.

Liquidatable Base Calculation

The liquidatable base is the magnitude resulting from the practice of applying tax base reductions prescribed by law.

Formula: Liquidatable Base = Tax Base - Reductions

Tax Rates and Gravamen Types

The tax rate (gravamen) is a quantifiable element of the tax obligation. Specifically, it is the amount, ratio, or percentage applied to the liquidatable base to determine the total payment.

Types of Charges

• Specific types: Used if the base is expressed in a non-monetary magnitude. In such cases, the law sets a certain amount of money to be paid per unit of the base.
• Percentage or Aliquot: Used if the base is expressed in units of currency. The tax rate is a percentage applied to the base.