Constitutional complaint in tax matters. A new way of protection against defective laws
On August 3, 2017, the Law of Ukraine “On Constitutional Court of Ukraine” as of July 13, 2017 entered into force. Generally, an adoption of such a Law is the result of the amendments to the Constitution of Ukraine as of June 02, 2016, which are the core of the current judicial reform in Ukraine.
One of the main novels, set out in the mentioned Law (as well as in the amendments to the Constitution of Ukraine), is the institute of constitutional complaint. Such institute grants the people with the real opportunity to cancel the law, which does not correspond to the Constitution of Ukraine by means of submission of the respective complaint to the Constitutional Court of Ukraine.
In view of the quality of current tax legislation, we believe that the institute of constitutional complaint could provide positive influence upon Ukrainian taxation system and, as a result, upon the whole investment attractiveness.
It is worth mentioning that by this time, access to the Constitutional Court of Ukraine in order to recognize the law as unconstitutional, have been provided to the short list of the state authorities. As a result, ordinary citizens have been cancelled from the process of the judicial “cleaning” of the defective laws.
In view of that, on practice, the Constitutional Court of Ukraine was not very active in the sphere of tax legislation. For example, provisions of the Tax Code of Ukraine have been reviewed by the Constitutional Court of Ukraine only twice since its adoption in 2011. If to compare recent situation in Ukraine in this sphere, it is worth mentioning that, for example, even the Russian Federation tax legislation has been the subject of direct review by their Constitutional Court dozens of times since 2011 (including, via the mechanism of constitutional complaint).
At the same time, there are definitely many more questions with respect to the constitutionality of the Ukrainian tax rules. For example, provisions related to the local “vehicle tax” could be reviewed by the Constitutional Court on their correspondence with Constitution. According to the Tax Code of Ukraine, “vehicle tax” is defined as a local tax, which, according to article 143 of the Constitution of Ukraine, should be established by the local councils. However, on practice, such tax (all of its elements: tax rate, object of taxation, etc.) is fully established directly in the Tax Code by the Ukrainian parliament. And the taxpayers are, technically, obliged to pay it even if there is no special decision of the respective local council.
If to comment on the text of the mentioned Law, then we should note that there are some technical questions regarding its interpretation. For example, the procedure of access to the Constitutional Court, as it is set out in the new law, in some way is similar to the procedure of access to the European Court of Human Rights (ECHR) – both courts may consider the respective case only if all domestic remedies are exhausted by the applicant.
In this regard, there is a question whether the Constitutional Court will use the admissibility approaches, used by ECHR. For instance, criteria of the exhaustion of domestic remedies are interpreted by the ECHR in a rather wide manner, but not only as formal obligation to get the final decision of the national court. According to ECHR, such exhaustion means also the obligation of the applicant to raise the disputable question before the domestic courts and the obligation to provide them with the respective arguments.
From perspective of constitutional complaint in Ukraine, mentioned ECHR’s approach could mean that the applicants will get the access to the Constitutional Court of Ukraine only if they raise the question of the unconstitutionality of the law which is still on the level of courts of general jurisdiction.
However, notwithstanding some technical issues related to the new Law, we believe that, at this stage, the main task of the legal community, as well as of the Ukrainian citizens, is to show for the Ukrainian authorities that there is real demand for changes in the legislative sphere. To show that Constitution of Ukraine with its principles is not just a declaration, but the basic law, which everyone should comply with. And, respectively, to raise a question of constitutionality of those law, which seems to be defective.