Anupama Nair
www.mediaeyenews.com
The development of tax law as a complete, general system is a recent phenomenon. One reason for this is that no general system of taxation existed in any country before the middle of the 19th century. In traditional, essentially agricultural societies, government revenues were mainly from non-tax sources like tribute, income from the royal domains, and land rent or, to a lesser extent, from taxes on various objects like land taxes, tolls, customs, and excises. Levies on income or capital were not considered an ordinary means for financing a government.
The British system of income taxation, is one of the oldest in the world, and originated in the Act of 1799 as a momentary means for meeting the increasing financial burden of the Napoleonic Wars with France. The cause of relatively recent development of tax law is that the burden of taxation and the problem of definite limits to the taxing power of public authority became substantial only with the widening of the concept of the proper sphere of government that has accompanied the growing intervention of modern states in economic, social, cultural, and other matters.
The limits to the right of the public authority to impose taxes are set by the power that is qualified to do so under Constitutional Law. In a democratic country, this power is with the Legislature, not the Executive or the Judiciary. The constitutions of some countries may allow the Executive to impose temporary pseudo-legislative measures in time of emergency, however, and under certain circumstances the Executive may be given power to alter provisions within limits set by the legislature. The legality of taxation has been asserted by constitutional texts in many countries, like the United States, France, Brazil, and Sweden. In Great Britain, however, where there was no written constitution, taxation is also a privilege of the legislature.
The historical origins of the principle are similar to those of political liberty and representative government i.e., the right of the citizens as in the words of the ‘Declaration of the Rights of Man and the Citizen proclaimed’ in the French Revolution, in August 1789. Some other examples may be found in the English Bill of Rights of 1689 and the rule “no taxation without representation” laid down in the Declaration of Independence of the United States in 1776.
Under this principle all that is necessary is that the rights of the tax administration and the corresponding obligations of the taxpayer be specified in the law, i.e., in the text adopted by the People’s Representatives. The implementation of the tax laws is generally regulated by the executive power (the government or the tax bureau).
There have been many encroachments on the principle of the legality of taxation, sometimes the base or the rate of taxation is determined by government decree rather than by law. The encroachment of the Executive power on the territory reserved to the legislature in matters of taxation is generally explained by the need to make tax policy more flexible. Vital amendments may be required by sudden changes in the economic situation, changes that is so sudden that recourse to relatively slow parliamentary procedure would take too long. A compromise may be reached between the orthodox doctrine of the legality of taxes and the need, under special circumstances, to amend texts on taxation almost immediately, by modifying the text through a decree or an order of the executive and ratifying it by the legislative power as soon as possible thereafter.
Taxes are generally not levied retroactively, except in special circumstances. One example of retroactive taxation was the taxation of wartime benefits in some European countries by legislation enacted in 1945 when the Second World War was over. A common limitation on the taxing power is the requirement that all citizens be treated alike. This requirement is specified in the U.S. Constitution. A similar provision in Constitutions of other countries is that all citizens are equal and that no privileges can be granted in tax matters. The rule is often violated through the influence of pressure groups, However, it is also difficult to enforce and to interpret un-ambiguously. In countries in which local governments are under the control of the national government, a local tax can be annulled by the central authority on the ground that it violates the national constitution if it transgresses the rule of uniformity and equality of taxpayers.
Aside from the foregoing constitutional, traditional, or political limitations, there is no restraint on the taxing power of the legislative body. Once enacted by the legislature, a tax cannot be judicially restrained. There is no way of mounting a legal attack upon a tax law on the ground that it is arbitrary or unjust, but the application of the law must be correct.
