Topic 3 Key players in the taxation system
Welcome to topic 3. In this topic we will learn who are the main actors in the tax system, i.e. to which entities we will have to pay taxes either as workers or as entrepreneurs. We will also learn about the purpose of paying taxes and how this translates into benefits for society.
Firstly, it is important to define who the key actors in the Spanish tax system are. These actors are:
- Tax Agency
- Valencian Tax Agency
- General Treasury of the Social Security
It should be noted that each of these institutions collects different taxes that are used for different purposes. The role of each of these institutions is explained below:
It should be noted that each of these institutions collects different taxes that are used for different purposes. The role of each of these institutions is explained below:
This institution has the following competences:
- Registration of companies.
- Affiliation, registration and deregistration of workers.
- The management and control of contributions and the collection of contributions and other resources for financing the Social Security System.
- Deferment or payment in instalments of Social Security contributions.
- Employment life report.
This entity collects taxes in the following areas:
- Property Transfer Tax
- Wealth Tax
- Environmental taxes
- Fees and other revenues
There are two types of taxes, direct and indirect. Below is a brief explanation of each of them:
Direct taxes. The most relevant direct taxes are:
- IRPF (personal income tax)
- Corporate income tax
- Wealth tax
- Inheritance and gift tax
Indirect Taxes. Of this type of taxes, the ones that interest us most are:
- IVA
- Transfer Tax
- Special taxes
- Local taxes
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Taxes make it possible to finance common needs, i.e. they are the “price” paid for public goods and services. In addition, taxes allow for greater equality of income and wealth among citizens. This is what is known as the redistributive function of taxes.
Thanks to the collection of taxes, a variety of public goods and services can be paid for. The most important of these are listed below:
- Those for the construction and maintenance of hospitals and health centres; the purchase of equipment; the purchase of medicines.
- Educational expenditure, such as for the construction of schools, the purchase of teaching materials, computer equipment and furniture.
- Cultural and recreational, such as building, equipping and maintaining museums, libraries, parks, gardens, sports facilities.
- Those arising from the payment of pensions, unemployment benefits and other benefits or aid of a social nature.
- Those for the construction and maintenance of infrastructure, such as roads, motorways and highways, railways, ports and airports.
- Waste collection, drinking water supply, public transport.