Glossary — TAXpedia

A

Ability to pay #: Principle according to which each taxpayer contributes to public expenditure according to their economic capacity.

B

Budget deficit #: Negative difference between revenues and expenditures in a budget, when spending is higher than income.
Budget surplus #: Situation in which budget revenues exceed expenditures over a given period.

C

Capital expenditure #: Public expenditure devoted to investments and measures that generate medium- to long-term benefits, such as infrastructure and public works.
Current expenditure #: Public expenditure used for the ordinary functioning of the state and public services, such as wages, pensions and purchases of goods and services.

D

Debt-to-GDP ratio #: Public debt divided by nominal GDP, expressed as a percentage.
Deductions #: Expenses that can be subtracted from total income before calculating tax, reducing the taxable base.
Direct taxes #: Taxes levied directly on a taxpayer’s income or wealth, such as personal or corporate income taxes.

F

Fiscal drag #: Increase in the tax burden caused by inflation or nominal income growth when tax brackets and deductions are not adjusted accordingly.

G

Gross Domestic Product (GDP) #: Total value of final goods and services produced within an economy over a given period, usually one year.
Gross income #: Total income received before taxes, contributions and other deductions are applied.
Gross tax #: The amount of tax calculated on taxable income before deductions, tax credits or other tax benefits are applied.

I

Income tax bracket #: Income range to which a specific tax rate applies within a progressive tax system.
Income tax return #: Formal filing through which a taxpayer reports income and other relevant information to the tax authority.
Indirect taxes #: Taxes applied to the consumption or exchange of goods and services, regardless of the taxpayer’s income, such as VAT.
IRES (corporate income tax) #: Italy’s corporate income tax (IRES), levied on income earned by companies and certain legal entities.
IRPEF (Personal income tax, Italy) #: Italy’s personal income tax; a direct tax with progressive brackets.

L

Local surtaxes #: Additional tax amounts on top of a national tax, collected by local authorities such as regions and municipalities.

N

Net income #: Income actually available after taxes, contributions and other deductions have been paid.
Net tax #: The final amount of tax due after deductions, tax credits and other tax benefits have been applied.
No tax area #: Income range within which the tax due is zero or is eliminated through tax deductions.

P

Primary balance #: Difference between public revenues and public expenditures, excluding interest payments on public debt.
Public debt #: Total stock of financial liabilities of general government owed to creditors.
Public deficit #: Situation in which government and public administration expenditure exceeds revenues over a given period.
Public expenditure #: Total spending of general government over a period, including current and capital expenditure.
Public transfers #: Resources provided by the state or other public administrations to households, businesses or institutions without a direct exchange of goods or services.

S

Social contributions #: Mandatory payments used to finance the social security and welfare system, including pensions, unemployment benefits and other social benefits.
Social protection #: Public expenditure function financing social benefits and services, including pensions, unemployment and income support.
State budget #: Document that summarises a government’s revenues and expenditures over a period and defines how public resources are raised and used.

T

Tax #: Compulsory, unrequited payment to general government used to finance public expenditure.
Tax assessment (audit) #: Procedure by which the tax authority checks the accuracy of tax returns, declared income, and taxes paid.
Tax avoidance #: Formally legal arrangements that exploit rules to reduce tax liabilities while going against the intent of the law.
Tax credit #: Amount that can be deducted directly from the tax due, often granted to encourage specific spending or investments.
Tax credits #: Amounts deducted from gross tax liability to determine net tax payable.
Tax evasion #: Illegal non-compliance that results in unpaid taxes, typically through concealment or misreporting of the tax base.
Tax progressivity #: Principle according to which the tax rate or tax burden increases as the taxpayer’s economic capacity rises.
Tax rate #: Percentage applied to the taxable base to compute the tax due.
Tax regressivity #: Situation in which a tax burden weighs proportionally more on lower incomes than on higher incomes.
Tax reliefs #: Measures that reduce the tax burden for certain activities or groups through deductions, allowances, reduced rates, or tax credits.
Tax revenue #: Taxes collected by general government over a given period.
Tax wedge #: Difference between an employer’s total labour cost and a worker’s net take-home pay, driven by taxes and social security contributions.
Tax-to-GDP ratio #: Ratio of tax and social contribution revenues to GDP, expressed as a percentage.
Taxable base #: Amount or value to which the tax rate is applied in order to determine the tax due.
Taxable income #: The portion of income on which taxes are calculated, after any legally allowed deductions have been applied.
Taxpayer #: Natural or legal person who is legally liable for a tax obligation.

V

VAT (Value Added Tax) #: General consumption tax levied on value added, harmonised across the European Union.
VAT identification number #: Identification code assigned to VAT-taxable persons for registration and compliance purposes.

W

Welfare state #: System of public policies aimed at providing social protection, healthcare, education, pensions and income support.
Withholding agent #: Entity legally required to withhold and pay taxes on behalf of another taxpayer, such as an employer for employees.
Withholding tax #: Mechanism where tax is withheld by the payer of income and remitted to the government on the taxpayer’s behalf.