Sources of Tax Law and Constitutional Principles

Question 1

Is checks and balances respected in new vs. old constitutions?

Answer 1

More in old constitutions with old traditions

Question 2

Constitutional framework of taxation - 5 points that the constitution guides

Answer 2

1. Limiting legislative power - when can the legislative/executive make laws?
2. Restricting whether the state vs. federal level can levy taxes
3. Principles with which taxes must comply (equality, ability-to-pay- fairness)
4. Delimit the competence of the legislature vis-a-vis the executive (e.g., when the executive can make laws - usually temporary power)
5. Guarantee citizens substantive and procedural rights

Question 3

Centralized vs. decentralized constitutional review

Answer 3

Centralized means constitutional review is exercised by a specialized court

Decentralized means the entire court system exercises constitutional review

Question 4

Timing of the constitutional review

Answer 4

Constitutional reviews can either happen before or after the enactment of the law

Before: asking for advice from constitutional court -> must change before law is introduced

After: constitutional court declares a law unconstitutional after citizen complaints

Question 5

4 places you can find the principles of taxation

Answer 5

1. Constitution
2. Declaration of rights
3. Income tax laws
4. Administrative tax laws

Question 6

Tax principle: Ability to pay

Answer 6

Tax rates for individuals are based on their ability to pay -> higher-income individuals earn more more, so they have a better ability-to-pay higher taxes

Question 7

Tax principle: Annuality

Answer 7

Taxes are administered/calculated on a yearly basis

Question 8

Tax principle: Efficiency (two opinions)

Answer 8

Citizens are free to arrange their taxes in the way that is most efficient for them, as long as it is in line with the law and constitution -> can set up a subsidiary in tax havens

OR
If the law obtains the objective that it wanted, it is efficient

Question 9

Tax principle: Equality

Answer 9

Equality between citizens; everyone is treated the same

Are specific tax allowances for only certain people or groups allowed?

Equality of what? Opportunities, treatment, between cultures, outcome? Depends on the country

Question 10

Tax principle: Equity

Answer 10

Taxes are imposed in line with ability to pay

Question 11

Tax principle: Good faith

Answer 11

Parties will deal with each other honestly, fairly, and in good faith

Question 12

Tax principle: Legality

Answer 12

Taxes must be imposed by law - no tax can be made, changed, or repealed without law

Question 13

Tax principle: Legal certainty

Answer 13

The time and reason of payment as well as the
amount to be paid by an individual should be well documented and certain
or known -> laws must be made public and easily available for citizens to understand

Question 14

Tax principle: Legitimate expectations

Answer 14

You can expect to be treated the same as others; application of the law is for you because it has been used on others; other cases and laws create legitimate expectations

Question 15

Tax principle: Necessity (of tax levy)

Answer 15

Taxes imposed must be necessary (?)

Question 16

Tax principle: Non-seizure

Answer 16

State cannot seize personal, necessary property

Question 17

Tax principle: (Non-)retroactivity

Answer 17

Can a law implemented on a certain date count retroactively? E.g., can you introduce a law to correct technical mistakes, prevent tax avoidance, or reverse a judicial decision that the legislature disagrees with

If retroactive -> law has effect on the date it was made known, not the day it is passed, for example to avoid people changing their income or employment status between law announced and law passed

Question 18

Tax principle: Progressiveness

Answer 18

Progressive tax rate -> the more you earn, the more you pay in taxes