Taxes are mandatory financial contributions that individuals and businesses make to government bodies. These payments fund public services, infrastructure, and various state activities essential for society's functioning.

Direct taxes are levied directly on income, wealth, or property. Examples include:

• Income Tax
• Corporate Tax
• Property Tax
• Wealth Tax

Indirect taxes apply to transactions, goods, and services. The most common is Value Added Tax (VAT), which in Spain has three rates:

• General VAT: 21% (standard rate for most goods and services)
• Reduced VAT: 10% (applies to food products, hospitality, transportation)
• Super-reduced VAT: 4% (basic necessities, medicines, books)

Tax Classification by Rate Structure:

1. Proportional Taxes

• Fixed percentage regardless of income
• Example: VAT remains constant regardless of purchase amount

2. Progressive Taxes

• Rate increases with higher income
• Example: Income tax where higher earners pay a higher percentage

3. Regressive Taxes

• Effective rate decreases as taxable amount increases
• Example: VAT on basic goods affects lower-income individuals more heavily

Key Functions of Taxes:

• Fund public services (healthcare, education)
• Maintain infrastructure
• Support social programs
• Finance national defense
• Enable government operations

Understanding taxes is crucial for:

• Legal compliance
• Financial planning
• Business operations
• Contributing to social welfare

Taxes form the backbone of government funding and public services, making them essential for modern society's functioning. Their collection and distribution directly impact the quality of public services and infrastructure available to citizens.

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