a) Hungary / b) Constitutional Court / c) / d) 28-01-2010 / e) 8/2010 / f) / g) Magyar Közlöny (Official Gazette), 2010/10 / h) .
Keywords of the Systematic Thesaurus:
General Principles - Certainty of the law.
Institutions - Public finances - Taxation - Principles.
Fundamental Rights - Civil and political rights - Rights in respect of taxation.
Keywords of the alphabetical index:
Tax, property / Property, real / Tax authority, powers.
A wealth tax was to provide the tax authority with a nearly unlimited right of appraisal and exemptions were to be solely based on the value of property, not taking into account the number of its owners.
I. Several petitioners, including the Parliamentary Commissioner for Civil Rights contested a wealth tax to be introduced in 2010 before the Constitutional Court. The legislation would have introduced a bracketed tax on wealth from the start of 2010.
The petitioners argued, inter alia, that Act no. LXXVIII of 2009 on the taxation of high-value property (the Act) guarantees the tax authority a practically unlimited right of appraisal. Therefore, any uncertainty in deciding the tax base is a serious encroachment on the demands of legal certainty. The tax also discriminates against large families. The exemption is solely based on the value of the property and does not take into account the number of its owners.
Under the Act, the tax rate would have been 0.25% up to 30 million HUF, 0.35% 30-50 million HUF, and 0.5% on above 50 million HUF. Homes valued at up to 30 million HUF which were occupied by their owners would have been exempt. There would be a 15 million HUF exemption on the value of a second property.
II. In its decision, the Court did not find the principle of property tax unconstitutional as such. However, it identified problems with the calculation of the value of homes subject to the tax. And the time at which this was done. The market price of real property as defined by the Act was uncertain, and therefore taxpayers would be unable to comply with the requirement to assess the market value of the properties they own.
The Court also held that the Act gave the tax authority broad powers to impose penalties, and so the responsibility of assessing the market value rested entirely with the taxpayers.
The Court also noted that the Act failed to take into account the income of taxpayers subject to the tax. This could put some of them into an impossible situation.
It accordingly ruled that the provisions of the Act relating to residential property created legal uncertainty and were unconstitutional. However, the provisions of the Act pertaining to high-performance passenger cars, boats and aircraft would remain in force.