The fiscal system of a country is the set of laws, rules and regulations that govern how public revenues are raised, in particular through taxation.
The configuration of the tax system
is one of the key elements in the organization of a State for two reasons:
1st: It must
generate sufficient resources to finance public services (health, education, care for the elderly), universal benefits (unemployment benefits and retirement pensions), collective investments (infrastructures) and public expenditure (functioning of political institutions and the Administration).
2nd: Through the fiscal system, using taxes, the State can substantially modify the distribution of income in a country. Hence the wide-ranging debates about the tax system, from those who believe that the tax system should be neutral, that is, that it should have as little impact as possible on income distribution and private decision-making, to those who expect the tax system to play an important role in levelling out differences in income among the population. Depending on who, how and how much tax is paid, people’s disposable income changes.