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BBE - Class 5 Introduction

The document discusses the significance of taxes for governments, businesses, and society, highlighting their role as a revenue source and cost of living. It defines taxes, outlines various types, and explains their purposes, including revenue generation and behavior influence. Additionally, it addresses tax system decision-making, sovereignty, and international agreements related to taxation.

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Jakob Huntington
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46 views6 pages

BBE - Class 5 Introduction

The document discusses the significance of taxes for governments, businesses, and society, highlighting their role as a revenue source and cost of living. It defines taxes, outlines various types, and explains their purposes, including revenue generation and behavior influence. Additionally, it addresses tax system decision-making, sovereignty, and international agreements related to taxation.

Uploaded by

Jakob Huntington
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Law, Economics, and Business

Class 5 - Introduction to Tax


Law and Tax Policy

Claus Staringer

Institute for Austrian and International Tax Law n www.wu.ac.at/taxlaw


Why are taxes so important?

§ For governments – a source of revenue

§ For businesses / taxpayers – a cost of business / living

§ For society – a price for civilization (Oliver Wendell Holmes)

§ How to measure the importance of taxes?


§ Tax to GDP ratio
§ „High“ and „low“ tax countries
§ Is there a „right“ / „fair“ level of tax?

Institut für Österreichisches und Internationales Steuerrecht n www.wu.ac.at/taxlaw 2


What is a tax?

§ One possible definition of tax (there are many)


§ Compulsory
§ Imposed by legislation / levied by a government
§ Under the Rule of Law
§ For a public purpose
§ Not paid in exchange for a specific service to the taxpayer

§ Taxes may be imposed / levied on different levels of States, e.g.


§ federal
§ subnational
§ municipal

Institut für Österreichisches und Internationales Steuerrecht n www.wu.ac.at/taxlaw 3


What types of taxes may exist?

§ Income tax
§ Corporate income tax
§ Value added tax (VAT) / goods and services taxes (GST) / sales taxes
§ Wealth taxes
§ Inheritance and gift taxes
§ Real estate transfer taxes
§ Consumption taxes
§ Energy taxes
§ Etc. etc. etc.

§ Is there a perfect tax mix?


§ What actually guides the policy design of a tax system?

Institut für Österreichisches und Internationales Steuerrecht n www.wu.ac.at/taxlaw 4


What is the purpose of a tax?

§ To generate revenue for public budgets

§ To influence behaviour
§ Example: Tobacco taxes (?)

§ To price-in external cost (Pigouvian Taxes)


§ Example: Carbon taxes

§ To pursue non-tax goals


§ Example: many tax exemptions, non-deductions etc.

§ Is a certain purpose / justification legally needed at all?


§ For the tax as such? / for the design of a certain tax?

Institut für Österreichisches und Internationales Steuerrecht n www.wu.ac.at/taxlaw 5


Who decides on a tax system?

§ Taxes are in the core of State sovereignty


§ „The power to tax is the power to govern“ - „Taxes are politics converted into money“

§ Tax sovereignty may result in tax competition between States – pros and cons

§ European Union
§ VAT – fully harmonized (but not on tax rate: standard rate 15 to 27%)
§ Income tax - not harmonized
§ Corporate income tax - Common [Consolidated] Corporate Tax Base (CC[C]TB)
proposed
§ Anti Tax Avoidance Directive (ATAD)
§ EU Fundamental Freedoms – to ensure non-discrimination in the Single Market
§ Prohibition of State Aid - to ensure fair competition

§ International Agreements (Tax Treaties) - to avoid international double taxation

Institut für Österreichisches und Internationales Steuerrecht n www.wu.ac.at/taxlaw 6

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