Tax law

Tax law

public law relating to taxes - the compulsory payments citizens pay to the state that does not return anything directly related to the payment

Who can impose & collect taxes?

taxing power is granted and limited by the Constitution.

Principle of legality

the government cannot take everything a citizen owns - only the law may impose tax obligations
the government may only take taxes to the extent that the parliament has approved

Principle of equality

legislation cannot impose arbitrary, discriminatory taxes
principle prohibits arbitrary taxation without a reasonable foundation

Checks & balances

legislative branch decides on the existence and the design of tax laws
executive branch carries out their enforcement
judiciary settles disputes between the tax administration and taxpayer

Social security law

public law that establishes the public social security system - one organised by the state that gives social benefits such as:

• sickness, maternity benefits

• pensions, pre-retirement schemes

• invalidity benefits (???)

• unemployment benefits

• family benefits (child allowances)

• benefits in respect of accidents at work and occupational diseases

Tax law v. social security law

the social security system is what the state can build with its funding i.e. taxes

Goals of tax law

revenue, redistribution, regulation

Goal of tax law - revenue

raise money to fund the State’s activities

Goal of tax law - redistribution

dividing income and wealth between rich and poor, preventing the rich from getting richer to the detriment of everyone else

Goal of tax law - regulation

encouraging certain activities through lighter taxes (mortgage interest deduction for residences, 6% VAT for repair services - what are these things?), discouraging others through heavier taxes (cigarettes & alcohol)

Direct tax

a tax where the economic and legal incidence lies with the same person

the one who bears the burden of the tax is the one who makes the payment to the government

e.g. income tax (personal income or corporation tax)

Indirect tax

a tax where there is a difference between the person economically paying the tax and the one legally responsible for paying the tax

e.g. VAT - the consumer economically pays the tax, the business legally pays the tax