The Constitutional Doctrine of Taxes: Some Problems of Its Development
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Abstract
The article reveals the constitutional doctrine of taxes as developed in the jurisprudence of the Constitutional Court and deals with problematic aspects of this doctrine. It is investigated how the Constitutional Court interprets the content of the provisions of Article 127(3) of the Constitution “taxes, other payments to the budgets, and levies shall be established by the laws.” It is revealed that the concept of this constitutional provision gradually undergoes changes in the Constitutional Court rulings and the Constitutional Court corrects the constitutional doctrine of taxes formulated in its previous rulings. The author presents a detailed analysis of the arguments presented in the Constitutional Court rulings upon which the Court grounded the incompliance or compliance of provisions of laws and Government resolutions with the Constitution and gives a critical assessment of some Constitutional Court rulings in tax cases.
The Constitutional Court ruling of 15 March 1996 points out that while deciding whether the provisions of laws whereby the Seimas grants the powers to the Government to establish the rates (tariffs) of corresponding taxes are not in conflict with the Constitution, one has to distinguish between taxes in their proper sense from those payments to the budget which, although referred to as taxes, are not taxes in their proper sense. The Constitutional Court held that these taxes. which in their essence are levies (their nature is that of direct recompense), are not taxes in their proper sense. Therefore, the Seimas, after it has established such taxes (levies), enjoys, under the Constitution, the powers to commission the Government to establish the tariffs of such taxes (levies). The Constitutional Court, after it had formulated this rule, did not refer to any particular article of the Constitution, from which precisely this rule could be derived either directly or indirectly, nor did it reveal the relation of this rule with the provision “taxes, other payments to the budgets, and levies shall be established by the laws of the Republic of Lithuania” of Article 127(3) of the Constitution. We can see from the Constitutional Court rulings adopted in subsequent cases on taxes that this rule was not further developed in its jurisprudence. On the contrary, while forming the constitutional doctrine of taxes, the Constitutional Court has corrected this rule rather substantially.
In its ruling of 9 October 1998, the Constitutional Court held that “assessing whether the Seimas has delegated the Government its prerogative to established the rates of excise tax, one has to take account of the fact that every year, when the law on approving the financial indices of the state budget and those of the budgets of local governments is passed, by a special clause a concrete sum of revenues which is to be acquired from excise taxes is confirmed among other tax revenues. Thus it is only the Seimas that establishes as to what sum the Government must collect from excise taxes. The sum defined in the law on the budget virtually determines certain limits on the rates of excise taxes. Due to this, in establishing the rates of excise taxes, the Government may not be independent absolutely”. These statements of the ruling indicate that, in the opinion of the Constitutional Court, the Seimas can establish, by means of a law, excise tariffs also indirectly, i.e. by establishing annually in the state budget law as to what sum of revenues must be collected from the excises into the budget. Such position of the Constitutional Court could be disputed. There are grounds to doubt whether the fact that the Seimas annually establishes in the state budget law the sum of revenues that must be collected from the excises into the budget actually means that the tax tariffs are established by a law in the manner as required by the Constitution. It is to be presumed that such an approach of the Constitutional Court creates preconditions to the Seimas to delegate the powers of establishing the rates (tariffs) of taxes (which belong to the Seimas under the Constitution) to the Government, and this grants too much freedom to the Government in the area of establishing the rates (tariffs) of taxes.
The Constitutional Court gradually corrects the approach set forth in its previous rulings that the Seimas, by taking account of the peculiarities of corresponding taxes, may, by means of a law, commission the Government to establish the rates (tariffs) of taxes. The Constitutional Court rulings, which have been adopted in recent years, formulated the constitutional doctrine of taxes whereby only the Seimas itself has to establish all essential elements of taxes and other compulsory payments, thus, also the rates( tariffs) of taxes, by means of a law, that the Seimas, may not delegate this powers belonging to it under the Constitution either to the Government or any other institution of the executive. Having formulated such constitutional doctrine of taxes whereby only the Seimas itself has to establish all essential elements of taxes and other compulsory payments, thus, also the rates (tariffs) of taxes, by means of a law, the Constitutional Court did not indicate expressis verbis that thereby one has corrected the doctrine set forth in its previous rulings whereby the Seimas, by taking account of the peculiarities of corresponding taxes, may, by means of a law, commission the Government to establish the rates (tariffs) of the taxes. Thus, the previous doctrine of the Constitutional Court is denied only indirectly, while this creates certain preconditions to understand and interpret the existing constitutional doctrine of taxes in a different manner. It is to be presumed that in the future the Constitutional Court will have to additionally construe the content and interrelation of the provisions of Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution.
The Constitutional Court ruling of 15 March 1996 points out that while deciding whether the provisions of laws whereby the Seimas grants the powers to the Government to establish the rates (tariffs) of corresponding taxes are not in conflict with the Constitution, one has to distinguish between taxes in their proper sense from those payments to the budget which, although referred to as taxes, are not taxes in their proper sense. The Constitutional Court held that these taxes. which in their essence are levies (their nature is that of direct recompense), are not taxes in their proper sense. Therefore, the Seimas, after it has established such taxes (levies), enjoys, under the Constitution, the powers to commission the Government to establish the tariffs of such taxes (levies). The Constitutional Court, after it had formulated this rule, did not refer to any particular article of the Constitution, from which precisely this rule could be derived either directly or indirectly, nor did it reveal the relation of this rule with the provision “taxes, other payments to the budgets, and levies shall be established by the laws of the Republic of Lithuania” of Article 127(3) of the Constitution. We can see from the Constitutional Court rulings adopted in subsequent cases on taxes that this rule was not further developed in its jurisprudence. On the contrary, while forming the constitutional doctrine of taxes, the Constitutional Court has corrected this rule rather substantially.
In its ruling of 9 October 1998, the Constitutional Court held that “assessing whether the Seimas has delegated the Government its prerogative to established the rates of excise tax, one has to take account of the fact that every year, when the law on approving the financial indices of the state budget and those of the budgets of local governments is passed, by a special clause a concrete sum of revenues which is to be acquired from excise taxes is confirmed among other tax revenues. Thus it is only the Seimas that establishes as to what sum the Government must collect from excise taxes. The sum defined in the law on the budget virtually determines certain limits on the rates of excise taxes. Due to this, in establishing the rates of excise taxes, the Government may not be independent absolutely”. These statements of the ruling indicate that, in the opinion of the Constitutional Court, the Seimas can establish, by means of a law, excise tariffs also indirectly, i.e. by establishing annually in the state budget law as to what sum of revenues must be collected from the excises into the budget. Such position of the Constitutional Court could be disputed. There are grounds to doubt whether the fact that the Seimas annually establishes in the state budget law the sum of revenues that must be collected from the excises into the budget actually means that the tax tariffs are established by a law in the manner as required by the Constitution. It is to be presumed that such an approach of the Constitutional Court creates preconditions to the Seimas to delegate the powers of establishing the rates (tariffs) of taxes (which belong to the Seimas under the Constitution) to the Government, and this grants too much freedom to the Government in the area of establishing the rates (tariffs) of taxes.
The Constitutional Court gradually corrects the approach set forth in its previous rulings that the Seimas, by taking account of the peculiarities of corresponding taxes, may, by means of a law, commission the Government to establish the rates (tariffs) of taxes. The Constitutional Court rulings, which have been adopted in recent years, formulated the constitutional doctrine of taxes whereby only the Seimas itself has to establish all essential elements of taxes and other compulsory payments, thus, also the rates( tariffs) of taxes, by means of a law, that the Seimas, may not delegate this powers belonging to it under the Constitution either to the Government or any other institution of the executive. Having formulated such constitutional doctrine of taxes whereby only the Seimas itself has to establish all essential elements of taxes and other compulsory payments, thus, also the rates (tariffs) of taxes, by means of a law, the Constitutional Court did not indicate expressis verbis that thereby one has corrected the doctrine set forth in its previous rulings whereby the Seimas, by taking account of the peculiarities of corresponding taxes, may, by means of a law, commission the Government to establish the rates (tariffs) of the taxes. Thus, the previous doctrine of the Constitutional Court is denied only indirectly, while this creates certain preconditions to understand and interpret the existing constitutional doctrine of taxes in a different manner. It is to be presumed that in the future the Constitutional Court will have to additionally construe the content and interrelation of the provisions of Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution.
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