Equality and Tax Law: A Matter of Principle

Nowadays, tax legislation provides fewer safeguards as regards general principles of justice such as legal certainty, equality, impartiality and neutrality. This article shows that the concept of checks and balances is indispensable in tax law. By reviewing tax legislation, the Netherlands Supreme Court functions as a check on the legislature. The Court has dealt with several issues concerning the principle of equality in Dutch tax law. This fundamental principle is the most important judicial instrument to check seriously flawed tax legislation. Thus, the case law of the tax division of the Netherlands Supreme Court is in line with the case law of the ECtHR. The judiciary has the task to ensure the legislature's compliance with the principle of equality. As for testing of tax law against the principle of equality, the Netherlands Supreme Court acknowledges the primary margin of appreciation of the legislator. This goes for judging the equality of cases as well as for judging whether there is an objective and reasonable justification for any inequality of treatment. Most courts, therefore, seldom 'overrule' the legislature. They generally leave the democratically legitimized legislature a wide margin of appreciation. If the Court does establish a violation of the principle of equality, it subsequently acts very carefully. When no unambiguous resolution is available to eliminate the unjustified unequal treatment of equal cases, the Court leaves the choice to the legislator, which has to bring the legislation in accordance with the principle of equality in the short term. The tax division of the Netherlands Supreme Court has, thus, made a valuable contribution to the constitutional system of checks and balances. The Court underlines the significance of the principle of equality for fair tax legislation. After all, each violation of the principle of equality damages the quality of the tax system.