The levy, or tax levy in this case, is the act by which the State requires taxpayers to pay taxes, fees and tributes, in general. It also includes the requirement to pay fines, as well as the fulfillment of debts or other types of obligations.
Therefore, when we speak of levy, we are talking about any requirement by the State to the taxpayer for the payment of a certain amount.
When we talk about a tax levy –which is much more common–, we are talking about the task carried out by the Public Administration of a State, by means of which it demands from its citizens - having the capacity to do so - the payment of a certain capital. This can be required in terms of taxes, fees, as well as taxes in general. Or, also, for the fulfillment of debts or other obligations.
All this capital collected has the main purpose of meeting the obligations that said State has with its respective creditors.
Therefore, we are talking about the act by which the State collects taxes, debts, fines, as well as any type of obligation, from its taxpayers. That is, the action by which a State generates income, mainly to meet its expenses. These tax levies, as we say, serve to finance the country's spending, meeting the obligations with these resources, arising from said levy.
In short, it is the task by which the State collects resources from its taxpayers.
Once we know the concept "levy", it is convenient to know what parafiscal levy is.
Thus, they are called parafiscal levies when this levy does not come from the application of laws, but from ordinances or regulations inferior to the law; when it has not been imposed by the Administration, but the exaction has been carried out by organizations other than the Ministry of the Economy; or when they are not foreseen in the annual budget of the State, demanding for the achievement of concrete objectives.
Parafiscal levies, in other words, are not previously contemplated by the State. Instead, they have been promoted to meet a certain objective, or have been subsequently applied due to a deficit situation that required the collection of these parafiscal charges. In short, it is a charge by the State to taxpayers that, previously, was not contemplated.
Numerous social charges could be a good example of a parafiscal levy.
Another very interesting concept when we talk about levies is that of illegal levy.
The illegal levy, as its name indicates, is one that is outside the law, even if the payment has been demanded by the Administration, or some worker of the same.
In this sense, many officials around the world have committed crimes, such as demanding the payment of illegal levies for certain favors, or because the official has chosen to do so.
The collection of undue commissions, the collection of fees not contemplated so that a merchant can pass something across the border, the payment of officials to "turn a blind eye" to illegal merchandise, as well as all those events in which a taxpayer delivers a capital to an official without said collection being previously contemplated in the law, is an illegal levy.
Therefore, we are talking about all the money collected by government officials improperly. That is, the money generated by officials who, using their position, collect taxes, fees or fines from other citizens for imposition of the official, or for obtaining favorable treatment.
These illegal exactions are harshly persecuted by the different Administrations.