Restricting the Legislative Power to Tax

In this contribution, we started with a description of the fundamental protection of individual rights that exist under Dutch national law and the agencies that have primary responsibility for protecting those rights. Next, we described the process for enacting tax legislation, including the intervention of the courts and the Council of State and intermediary organisations in the legislative process for tax law proposals. Then we analysed the independent taxing powers of decentralised authorities. With regard to the outline of the procedure to challenge tax laws that conflict with fundamental rights, it was shown that the taxpayer has a right to advance the challenge. He can do so without the support of the tax administration. The way in which the principle of equality restricts the legislative power to tax in the Netherlands was the subject of the rest of this paper. This fundamental principle is the most important judicial instrument to check seriously flawed tax legislation. The judiciary has the task to ensure the legislature's compliance with the principle of equality. Because of the (still) existing ban on constitutional review, Acts of Parliament are tested against Article 14 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (in conjunction with Article 1 of Protocol No. 1 to the Convention) and Article 26 of the International Covenant on Civil and Political Rights. As with regard to the method of judicial interpretation, the Dutch Supreme Court always demands an objective and reasonable justification for any inequality of treatment. This method to decide whether a tax statute violates the principle of equality is in conformity with the method applied by the European Court of Human Rights. As for testing tax law against the principle of equality, the Dutch Supreme Court acknowledges the primary (wide) margin of appreciation of the legislator. This holds for judging the equality of cases as well as for judging whether there is an objective and reasonable justification for any inequality of treatment. If the Court establishes a violation of the principle of equality, it acts very carefully. If no unambiguous resolution is available to eliminate the unjustified unequal treatment of equal cases, the Court leaves the choice to the legislator, which subsequently has to bring the legislation in line with the principle of equality in the short term. Our analysis of several issues concerning the principle of equality in Dutch tax law which the Court has dealt with show that the Dutch Supreme Court has 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. However, in our opinion, the room for deference by the Supreme Court to the policy views of the tax legislator should be more limited. To conclud