by Hugo Flores da Silva, Assistant Professor at Law School of UMinho
1. Introduction and wealth taxation characterization
Though widely used in the European Union, the wealth taxes account for a relatively small part of the EU Member States’ tax revenue, when compared with the main sources of revenue[i]. At the same time, the political debate and the scientific research developed in the field of wealth taxation is very incipient, when compared to another taxation bases[ii]. Not even the fact that this kind of taxation constitutes one of the oldest ways employed by the states to obtain revenue was able to counter the identified trend[iii].
However, in the current time of fiscal consolidation and macroeconomic adjustment, taxation of wealth is gaining momentum. The lack of alternatives capable of generating an increase in tax revenue within the income and consumption taxation[iv], the growing interest in the fairness and redistributions aspects of the tax system[v] and the need to adjust the tax system to make it more growth friendly[vi], can be pointed out as the main reasons for the recent academic and political debate on wealth taxation.
When we talk about wealth taxation we’re referring to a very complex reality, capable of reunite a very large group of different taxes[vii]. Although there are many types of wealth taxes, and with very different characterization between them, we consider that they can be grouped into two major categories[viii]: taxes on wealth transfers; and taxes on wealth itself. Inside these two main categories it is possible to identify a wide variety of distinct taxes.
The taxes on wealth transfers usually assume the following characterization[ix]: (i) taxes on onerous transfers – as the onerous movable transfers are subject to VAT, in this subcategory we include the taxes levied on onerous immovable transfers[x]; (ii) and taxes on gratuitous transfers – in this subcategory we include the inheritance and gift taxation[xi]. The taxes on wealth itself can be classified as follows[xii]: (i) taxes levied on the holding or ownership of specific assets – usually immovable property[xiii]; and (ii) taxes levied on the taxpayer’s aggregate net-wealth[xiv].
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