On the rule of law and democracy: Policy rules and principles in Dutch taxation

The rule of law is a hotly debated topic. Does it include fundamental rights and values like equal citizenship? Is there an inherent connection to democracy? This article addresses these questions in the context of policy rules issued by a tax administration. Which conception of the (state under the) rule of law accommodates policy rules that are rendered binding by judicially recognised and developed principles of proper administrative behaviour?
Policy rules issued serve to provide a uniform application of the law and as such promote equal treatment of and certainty for taxpayers. This kind of general guidance is often crucial for taxpayers who have to navigate highly complex tax systems. The Dutch Supreme Court invoked a particular principle of proper administrative behaviour, the principle of legitimate expectations, to “elevate” the legal status of policy rules. In later years the courts recognised and further developed other principles of proper administrative behaviour - which in exceptional circumstances may even require a tax administration not to apply particular legislation. It is argued that a substantive rather than a formal conception of the rule of law accommodates policy rules that are rendered binding by legal principles. These principles originate in a public sense of appropriateness, which makes them democratic to a certain extent. Equal citizenship requires the fair treatment of persons, the fair exercise of power and responsive implementation of tax legislation. Taxpayers’ dignity justifies the requirement that sometimes the right to equal concern and respect should prevail over the right to equal treatment.