“This is a question too difficult for a mathematician. It should be asked of a philosopher”(when asked about completing his income tax form)”
― Albert Einstein | 1879-1955
A tax (from the Latin “taxo”) is a financial charge or other levy imposed upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state to fund various public expenditures. A failure to pay, or evasion of or resistance to taxation, is usually punishable by law. Taxes consist of direct or indirect taxes.
The purpose of taxes is to raise revenue to fund government. Money provided by taxation has been used by states and their functional equivalents throughout history to carry out many functions. Some of these include expenditures on economic infrastructure (roads, public transportation, sanitation, legal systems, public safety, education, health care systems), military, scientific research, culture and the arts, public works, distribution, data collection and dissemination, public insurance, and the operation of government itself. The government’s ability to raise taxes is known as fiscal capacity. (wikipedia)
The most common DIRECT TAXES is the income tax (Impuesto sobre la Renta de las Personas Fisicas | IRPF), which has to be declared once a year by all Residents in Spain, based on your income. The percentage to be applied varies, the more you earn the more tax you pay. Apart from that you can apply certain tax allowances. As a resident you are obliged to present this tax return. Not doing so can result in high fines (if you are caught, the capacity of the tax inspectors to trace your income is getting more efficient every day).
Other direct taxes are the Transfer tax in case you buy a house (Impuesto de Transmisiones Patrimoniales | ITP). This varies according to what you buy and where. In de Comunidad Valencia you pay 10% on the purchase price of a house. And also a very well knowx tax is the “Impuesto sobre Sucesiones y Donaciones” or tax on donations and inheritance tax. We’ll talk about that in a later post.
The most common indirect tax is the Value Added Tax (IVA). There are more indirect taxes, unknown for many, like special tax on alcohol or petrol. These taxes are included in the price you pay in the establishment you buy your products.
Most of us do not like to pay tax. We are aware that money is needed to maintain the different services the country provides. We all need hospitals, schools, roads, police and a large etcetera, and obviously all this has to be paid, but we’d rather these services were paid by everyone else!!!
If you really start to calculate how much of what we earn goes – directly or indirectly – to the state, most of us pay more than half some way or the other, to the state. In this link: http://www.levante-emv.com/economia/2015/07/01/mitad-dia-fisco/1285315.html you can see that people in the Comunidad Valenciana work 183 days/year for the government!!!
Is it worth it?
We really have no choice, it’s the way modern life is configured, you either adapt and try to make the best of it, or you are fined!!
Just try to look at it another way. Saying that you are working 183 days/year for the Spanish government is really quite a negative way of viewing the situation. Instead of this you could state that you are working 183 days/year to pay for the use of all the services the state offers. You pay for the education of your children, for the maintenance of security, for health care, for roads, and of course for all common areas, parks, beaches, etc.
Looking at the situation this way in my honest opinion it’s definitely worth it!! We all hope that we do not need health care, but if we need it, it’s available, and knowing this give an enormous peace of mind. Obviously the same can be said for the police system, fire brigades, schools, roads and all other public services.
There’s a lot more to be said about taxes, and we’ll definitely return to this matter in the future.
