a)  Hungary / b)  Constitutional Court / c) / d)  08-04-1998 / e)  10/1998 / f) / g)  Magyar Közlöny (Official Gazette), 30/1998 / h) .
Keywords of the systematic thesaurus:
General Principles - Rule of law.
Institutions - Public finances - Taxation - Principles.
Fundamental Rights - Equality - Scope of application - Public burdens.
Fundamental Rights - Civil and political rights - Non-retrospective effect of law - Taxation law.
Fundamental Rights - Civil and political rights - Rights in respect of taxation.
Keywords of the alphabetical index:
Taxation, public purpose taxes, dedication by taxpayer / Property, church, favourable tax treatment.
The Constitutional Court held to be constitutional Act CXXVI of 1996 on the use of a specified amount of personal income tax for public purposes in accordance with the taxpayer's instruction (hereinafter: the Act), which regulates the procedure enabling private individuals to utilise the right to instruct in a statement that a portion of the tax paid be transferred to a designated beneficiary to be used for public purposes.
The petitioners in their submissions initiated an ex post facto review of some provisions of the Act and of the Act as a whole. According to them, Article 1 of the Act, under which not every citizen, but only private individuals who pay tax, can give instructions for the transfer of a portion of the tax, violates the principle of the rule of law as guaranteed by Article 2.1 of the Constitution. The petitioners also contend that numerous provisions of the Act include unconstitutional distinctions (discrimination, as termed by Article 70/A of the Constitution) and that some provisions are against Article 70/I of the Constitution, according to which every citizen of Hungary bears the obligation to contribute to rates and taxes in accordance with their income and wealth.
The petitioners assert an infringement on the principle of non-retrospective effect of law, in that the beneficiary can only be a social organisation which - among other requirements - has been registered by the courts at least three years prior to the first day of the year in which the individual's statement of instruction takes place. According to one petition, the Act unconstitutionally applies different regulations concerning churches.
Finally the petitioners contend that the fact that an incorrect or illegible tax identification number on the statement of instruction shall render the statement of the taxpayer invalid and that there is no possibility for the individuals to follow the path of their contributions to the beneficiaries is unconstitutional.
In the instant case, the Constitutional Court held that the right of the taxpayer to use a specified amount of personal income tax for public purposes differs from the deductions which reduce the amount of tax base when the individual contributes to financing a public aim in such a way that in the former case the law imposes further conditions concerning the beneficiaries. The contributions given for the beneficiaries by the individuals reduce the amount of the tax base prior to paying the tax. Therefore the Court did not hold the challenged provision unconstitutional.
According to the Court, the petitioners' assertion that the Act differentiates unconstitutionally between social organisations, since it stipulates that individuals can offer 1 per cent of the amount of the tax they should pay for only those organisations which have been registered by the courts for at least three years prior to the first day of the year in which the individual's statement of instruction takes place, is unfounded. The aim of this legal regulation is to exclude those organisations from being beneficiaries which were established obviously only because of this tax allowance. As concerns the legal provisions on churches, the Court did not hold to be unconstitutional the fact that the Act deals with churches separately from other social organisations. The Court recalled one of its previous decisions no. 4/1993 (II. 12.) (Bulletin 1993/1, page 16 [HUN- 1993-1-002]), in which the Court rejected the petitioners' contention of unconstitutionality of the natural restitution of church property, which leads to discrimination in favour of churches and other civic organisations, ruling that churches cannot be comparable with other social organisations.
As concerns the petitioners' latest request, the Court stated that since the tax authority shall proceed according to the provisions of the Act on the Rules of Taxation and, if this Act does not stipulate otherwise, according to the Act on the General Rules of State Administrative Procedure, the taxpayer has the possibility of a legal remedy against the decision of the tax authority. The Court declared it to be a constitutional requirement when applying Article 7.1 of the Act that the tax authority proceed according to the relevant provisions of the Act on the General Rules of State Administrative Procedure.
Supplementary information:
One of the judges attached a dissenting opinion in which the judge pointed out that the Constitutional Court should have declared null and void the challenged Act as a whole, since the State in this case gives the possibility of deciding upon using public monies for an arbitrarily chosen part of the constituents, i.e. the taxpayers. The judge referred to the practice of Italy, where the taxpayer can decide not on the use of 8 pro mille of his/her personal income tax, but on the use of 8 pro mille of the total amount of the personal income tax collected. The Hungarian solution, however, does not contain even this minimum democratic requirement.