Glossary

• Economic capacity: The one that the legislator takes into account when establishing each tax payable by taxpayers. Earning income, owning assets, acquiring an inheritance or a donation, and purchasing goods are considered to represent economic capacity, also known as tax capacity, because taxpayers make their tax contributions to the Public Treasury based on this capacity. That is, it is the money that one has, or that one can demonstrate that one has based on the things one buys or owns. Therefore, economic capacity is an indicator of tax capacity, because it shows how much a citizen can and should pay in taxes. Those with greater economic capacity have greater tax capacity (and vice versa).

• Equity: Principle or criterion that establishes the application of an appropriate proportion or correspondence between the economic means of each person and the contributions that must be made through the payment of taxes to finance public expenditures.

• Public expenditure: Use of public funds to satisfy public needs.

• Taxes: Amount of money that citizens are required by law to pay so that Public Administrations (the State, the Autonomous Communities, the Municipalities) have sufficient resources to finance the satisfaction of public needs.

• Public revenues: These are the amounts available to the State and other Public Administrations to finance public expenditure. The most important public revenues come from taxes.

• General State Budget: A document approved by law each year that determines the maximum amount the State can spend and how it must spend it, and estimates the revenue needed to finance that expenditure.

• Public budget: A document that fulfills the aforementioned purposes of the State Budget, but refers to another public entity, such as a City Council, a Provincial Council, or an Autonomous Community. The public budget constitutes the backbone of the financial activity of the respective public entity throughout the year, as it provides a guide and mandate for the tasks to be performed.