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PRINCIPLES
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FORMULATION
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BUDGETARY-FISCAL
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1. SUFFICIENCY
| The tax system must be structured in such a way that tax revenue permits lasting coverage of expenditure.
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2. CAPACITY TO INCREASE
| If necessary, and in the short term, the tax system must supply the complementary revenue necessary to cover new expenditure of permanent character or of unique and extraordinary character.
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3. GENERALITY
| All natural and legal persons with capacity to pay should pay the tax, with no exceptions unless justified by unavoidable reasons of public policy or tax technicalities.
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| SOCIO-POLITICAL AND
ETHNICAL
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4. EQUALITY
| Individuals in identical circumstances must receive equal tax treatment, while individuals in different circumstances must receive unequal tax treatment.
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5. PROPORTIONALITY
| The tax burden must be fixed in proportion to the indicators of the capacity to pay, in such a way that taxation is equally onerous, in relative terms, for all taxpayers.
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6. REDISTRIBUTION
| Tax policy must affect the primary distribution of income provoked by the market, diminishing income differences via progressiveness.
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7. AVOIDANCE OF FISCAL DIRIGISME
| Tax policy must avoid fragmentary and non-systematic intervention which unjustifiably favours or harms specific economic groups, productive sectors or expenditure categories, or the adoption of certain juridical forms.
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8. MINIMAL FISCAL INTERVENTION
| The Tax Administration must limit its intervention in the private sphere of the taxpayers, and in the exercise of their individual economic liberty, to the minimum necessary for the observance of budgetary-fiscal and justice principles.
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| POLITICAL-ECONOMIC
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8. NEUTRALITY REGARDING
COMPETITION
| Tax policy must avoid all involuntary consequences which harm the functioning of competition and must suppress or attenuate such imperfections.
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10. ACTIVE FLEXIBILITY
| The design of the tax system must allow the discretionary execution of anti-cyclical fiscal policies, by the alteration of their structure or tax procedures, or variation in the rates.
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11. PASSIVE
FLEXIBILITY
| The tax system must be structured in such a way that it automatically contributes to the mitigation of the temporary fluctuations in macroeconomic activity.
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12.ORIENTATION TOWARDS GROWTH
| Fiscal policy must be structured, bothas a whole and in its constituent elements, in such a way as not to slow growth but instead allows it to exercise a positive influence, should the desired rate not be achieved.
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13. CONGRUENCE AND SYSTEMIZATION
| The tax system must pay equal attention to the achievement of its various objectives, avoiding the neglect of some objectives to the benefit of others, and the existence of gaps or contradictions in its
composition and structure.
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14. TRANSPARENCY
| The tax regulations must be intelligible, clear and precise, unambiguously establishing the rights and duties of taxpayers, in order to avoid arbitrariness in tax
settlement and collection.
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15. FEASIBILITY
| The tax regulations must be acceptable to the taxpayers and capable of being applied by the Tax Administration.
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| JURIDICAL AND TECHNICAL-FISCAL
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16. CONTINUITY
| The tax regulations must be continuously in force, and only be changed in the context of general
and systematic reforms.
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17. ECONOMIC VIABILITY
| The structure of the tax system and the composition of its elements must be established in such a way that the costs of administration and compliance do not exceed the minimum necessary to comply with its political-economic and socio-
political objectives.
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18. CONVENIENCE
| The taxpayer must enjoy all possible facilities for compliance with his or her tax obligations, while the higher principles of taxation are observed
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1. Whose principles are these? Why is his system considered the most refined?
2. Why cannot any of these principles of taxation be omitted?
3. What criteria should be taken into account in designing the ideal tax system?
4. Why are the principles placed in such an order?
5. What criteria should be taken into account in designing the ideal tax system?
