Case nº U-IP/3820/2009 of November 17, 2009.

Resolution Date:November 17, 2009
Issuing Organization:Constitutional Court
SUMMARY

I. The request to review the conformity with the Constitution of Article 1 para. 1, Article 3 and Article 5 para. 1 of the Special Tax on Salaries, Pensions and Other Receipts Act (Narodne novine, No. 94/09) is hereby refused.

 
FREE EXCERPT

The Constitutional Court of the Republic of Croatia, composed of Jasna Omejec, President of the Court, and Judges Mato Arlović, Marko Babić, Snježana Bagić, Slavica Banić, Mario Jelušić, Davor Krapac, Ivan Matija, Antun Palarić, Aldo Radolović, Duška Šarin, Miroslav Šeparović and Nevenka Šernhorst, deciding on a request to review the conformity of a law with the Constitution and proposals to institute proceedings to review the conformity of a law with the Constitution, at its session held on 17 November 2009, rendered the following

DECISION and RULING

I. The request to review the conformity with the Constitution of Article 1 para. 1, Article 3 and Article 5 para. 1 of the Special Tax on Salaries, Pensions and Other Receipts Act (Narodne novine, No. 94/09) is hereby refused.

II. The proposals to institute proceedings to review the conformity with the Constitution of the Special Tax on Salaries, Pensions and Other Receipts Act (Narodne novine, No. 94/09) are hereby not accepted.

III. The Constitutional Court finds that the Special Tax on Salaries, Pensions and Other Receipts Act (Narodne novine, No. 94/09) has been in conformity with Article 14 of the Constitution since the day when it entered into force (1 August 2009), this conformity being the legal effect of the entry into force of the Special Tax on Receipts from Independent Activities and Other Receipts Act (Narodne novine, No. 119/09).

IV. The Government of the Republic of Croatia shall within its constitutional powers:

a) in the period up to 31 December 2010 monitor and continuously examine the further necessity for a special tax of the kind introduced by the Special Tax on Salaries, Pensions and Other Receipts Act (Narodne novine, No. 94/09), and

b) propose to the Croatian Parliament the adjustment of the special tax depending on a decrease in the intensity of the economic crisis in the Republic of Croatia in the period up to 31 December 2010, or its repeal even before this time.

V. In the case in point IV b) of this pronouncement, taxation equality must be ensured of all the taxpayers under the Special Tax on Receipts from Independent Activities and Other Receipts Act (Narodne novine, No. 94/09) and the taxpayers under the Special Tax on Salaries, Pensions and Other Receipts Act (Narodne novine, No. 94/09).

VI. This decision and ruling shall be published in Narodne novine.

Statement of reasons

1.- The President of the Republic of Croatia, Stjepan Mesić (hereinafter: the presenter of the request), under Article 35 indent 3 of the Constitutional Act on the Constitutional Court of the Republic of Croatia (Narodne novine, Nos. 99/99, 29/02 and 49/02 – consolidated wording, hereinafter: Constitutional Act), presented to the Constitutional Court of the Republic of Croatia a request to review the conformity of Article 1 para. 1, Article 3 and Article 5 para. 1 of the Special Tax on Salaries, Pensions and Other Receipts Act (Narodne novine, No. 94/09; hereinafter: Special Tax Act) with the Constitution of the Republic of Croatia.

2.- By 1 October 2009, 35,441 natural and legal persons (hereinafter: the proponents) submitted proposals for the Constitutional Court to institute proceedings to review the conformity of particular provisions of the Special Tax Act or the Special Tax Act in its entirety with the Constitution. The separate appendix I to this ruling, which is considered its composite part, contains the data on these proponents

The separate appendix II, which is also considered a composite part of this ruling, will contain the data on the proponents who submitted their proposals after 1 October 2009. The separate appendix II will be published in Narodne novine and on the webpage of the Constitutional Court (www.usud.hr) after the Constitutional Court has processed the data on the proponents.

The day when the special appendix I and the special appendix II are published in Narodne novine, the official gazette of the Republic of Croatia, shall be deemed the day when this decision and ruling are delivered to each proponent listed in one or the other appendix.

A. PROCEEDINGS BEFORE THE CONSTITUTIONAL COURT

3.- The proceedings of reviewing the conformity of the Special Tax Act with the Constitution were instituted on 6 August 2009, when the presenter’s request was filed with the Constitutional Court (Article 35 indent 3 of the Constitutional Act).

In the proceedings of constitutional review the Constitutional Court requested:

- the declaration and the working materials of the Croatian Parliament, which passed the Special Tax Act,

- the declaration of the Government of the Republic of Croatia, which proposed the Special Tax Act, and the working materials in writing and the accompanying documents that the Government of the Republic of Croatia prepared for the consultative session held on 23 October 2009 (see point 3.1 of the statement of reasons for this decision and ruling),

- written opinions of the Constitutional Court’s expert advisors on the request of the presenter and the proposals of the proponents which challenged the conformity of the Special Tax Act with the Constitution.

The working materials of the Croatian Parliament that were submitted to the Constitutional Court contain:

a) The proposal of the Special Tax on Salaries, Pensions and Other Receipts Act, with the Final Proposal of the Act, the summary procedures, the first and second reading, the proposal of the act, P.Z. no. 414, which the Government submitted to the Speaker of the Parliament in an enactment of 24 July 2009.

b) A sound recording of the debate on the Proposal of the Special Tax on Salaries, Pensions and Other Receipts Act, with the Final Proposal of the Act, summary procedures, first and second reading, P.Z. no. 414.

c) The report of the Committee for Legislation on the Proposal of the Special Tax on Salaries, Pensions and Other Receipts Act, with the Final Proposal of the Act, summary procedures, first and second reading, no. 414.

d) The report of the Committee for Labour and Social Partnership on the Proposal of the Special Tax on Salaries, Pensions and Other Receipts Act, with the Final Proposal of the Act, summary procedures, first and second reading, no. 414.

e) The report of the Committee for Local and Regional Self-Government on the Proposal of the Special Tax on Salaries, Pensions and Other Receipts Act, with the Final Proposal of the Act, summary procedures, first and second reading, no. 414.

f) The report of the Committee for Finances and the Government Budget on the Proposal of the Special Tax on Salaries, Pensions and Other Receipts Act, with the Final Proposal of the Act, summary procedures, first and second reading, no. 414.

g) Amendments of the Government of the Republic of Croatia to the Proposal of the Special Tax on Salaries, Pensions and Other Receipts Act, with the Final Proposal of the Act, summary procedures, first and second reading, no. 414.

h) Amendments of the member Silvan Hrelja to the Proposal of the Special Tax on Salaries, Pensions and Other Receipts Act, with the Final Proposal of the Act, summary procedures, first and second reading, no. 414.

i) Amendments of the Deputy Club of the Croatian Democratic Alliance of Slavonia and Baranja (HDSSB) to the Proposal of the Special Tax on Salaries, Pensions and Other Receipts Act, with the Final Proposal of the Act, summary procedures, first and second reading, no. 414.

3.- 1. Under Article 49 para. 1 of the Constitutional Act, on 23 October 2009 the Constitutional Court held a consultative session on the disputed Special Tax Act. The session was held in the debating hall of the Constitutional Court, and the participants were representatives of the presenter of the request, invited proponents, representatives of the Government of the Republic of Croatia and invited experts from the fields of constitutional law, financial law, social policy and political philosophy. The consultative session was sound-recorded. The sound recording of the session is a composite part of the file of this case.

3.- 2. In these proceedings of constitutional review the Constitutional Court also convened ad hoc consultative working meetings about some specific issues connected with certain aspects of the disputed Special Tax Act, with expert advisors of the Constitutional Court from the Labour and Social Law Department and European Public Law Department of the Faculty of Law of Zagreb University.

3.- 3. In these proceedings the Constitutional Court availed itself of the Venice Forum, a special programme of the Commission for Democracy Through Law of the Council of Europe (the Venice Commission), through which it requested data on the corresponding measures that the Council of Europe member states took because of the global economic and financial crisis, and which are comparable with the legal measure whose constitutionality is being challenged in these proceedings.

By 10 November 2009 the Constitutional Court received the declarations of 21 member states of the Council of Europe (Austria, Bulgaria, Czech Republic, Estonia, France, Georgia, Germany, Ireland, Latvia, Lithuania, Luxemburg, Macedonia, Monaco, Netherlands, Poland, Portugal, Rumania, Slovakia, Slovenia, Spain and Turkey) and also of Belarus, Brazil and the Republic of South Africa.

3.- 4. In these proceedings of constitutional review the Constitutional Court used the relevant case-law of the European Court of Human Rights in Strasbourg (hereinafter: the European Court) and the case-law of the Federal Constitutional Court of the Federal Republic of Germany, which is of universal importance for illuminating tax-policy issues in a social state, i.e., for illuminating the legislator’s obligations in the application of the principles of equality and equity in taxation.

3.- 5. The facts, statistical and other data, statements, replies, opinions, stands, assessments and proposals contained in the documents mentioned above are presented in the relevant parts of this decision and ruling in the...

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