On the whole, rule of law in taxation underwrites the concept of reservation of law
(Vorbehalt des Gesetzes), a right-protecting mechanism which suggests any infringement on people’s rights from state power sine legem be invalid for the lack of democratic legitimacy.
Furthermore, the mechanism of reservation of law is not something only exist in the field of tax jurisprudence; rather, it is an issue also rampant in other fields of law as well.
Such issue could be taken as the question of whether the principle of rule of law (Prinzipien Rechtsstaatlichkeit)1 is capable enough to function as a means of human right protection or not.2 However, the mechanism for such protection is taken with a rather doubtful attitude towards its effectiveness. The following argument intends to start from on a teleological criticism.
1. teleological character of the traditional approach
Indeed, judging from the relations between the measures taken and the goals to be achieved, the idea of rule of law in taxation as a standard for constitutional review, without a doubt, does contribute to the protection of taxpayer’s human rights. That is to say, the premise for the exercise of state’s power to tax to impose taxes on people is to
1 In the field of constitutional law in Japan, it is called “Houchisyugi”(法治主義)
be in the name of law; without the consent of the people the legitimacy of taxation would no longer exist.
That is to say, upon discretion of the tax administration to decide whether certain events or facts could meet the threshold of being taxed or not, in order to prevent arbitrary judgments, discretions are turned over to the legislative sector. Hence, representatives of the people are expected to decide the requirements of the employment of tax power on their own; in the end, the administrative sector is left with merely the application of laws with the ever-decreasing space for discretion.
The reasoning in the above is somewhat teleological in a sense. However, the approach of the argumentation—the right-orientated approach—as well as the attempt to achieve the purpose of protecting human rights could be insufficient, not to mention its lacking in constitutionality. The reason for this, in a word, is that the focus of the approach tend to rest on the right of the people rather that that of taxpayers. That is to say, the protection of the right of the people does not center on taxpayers.
2. Criticizing the right-orientated protection mechanism
Generally speaking, by means of enumeration in the Constitution as basic right, the content and meaning of certain interest could thus be protected. However, such way of protection, even being able to protect rights, doesn’t equate the protection of
taxpayer’s rights. In addition, the legal-dogmatic (Rechtsdogmatik) approach of
interpretations of articles which often incurs criticism is an excellent example to observe the defect of such mechanism.
The following paragraphs intend to present the right-orientated argumentation in a three-stage analysis.
i. Step 1: contrasting position and confrontation in the relations between property rights and power to tax
First of all, it is necessary to limit the scope and set the limitations of the topic. Thus, it is important to make sure the object of the right-orientated mechanism is aimed for the prevention of power. Such power, to be more explicit, is the power to tax.
contrasting positions of tax power vis-à-vis property rights: each claiming its own legitimacy
Needless to say, tax power being a form of tax power, is entitled to the legitimacy of the state. However, in the case of the property rights of the people, holding inviolability character, also claims its own legitimacy. Therefore, when it comes to the state taxing away people’s property, the connection of the power to tax and people’s property rights turns into a contrasting so as to even a contradicting relation.
The contrasting position indicating the inequality of the relationship
What’s more, such contrasting relation, two sides having unbalanced forces, is thought to be in an unequaled situation, resulting in a need to protect the people’s side, that is, the protection of property rights.
In the Illustration, two arrows, each representing the interests of tax power and property rights, could be seen in the picture. The oblique-lined part of the arrow indicates the fact that the legitimacy of taxation remains unknown. Meanwhile, people, facing with the
infringement of tax power, is capable of defending the power is also unknown.
A confrontation has to be based on contrasting position
One thing to be emphasized is the fact that the genesis of the confrontation should always be on the premise that two different existing wills are located on a contrasting positions. For further explanation, the formation of the relation of confrontation relies on two confronting standpoints which are bound to exist. Such confronting
standpoints, in most cases represent different interests; sometimes even two
diametrically-opposed interests are in competition thus effects each other frequently.1
Illustration 4 Contrasting position and confrontation relation between property rights and the power to tax (First Layer)
ii. Step 2: a way to understand the relation between state and people
1 Incidentally, the term interest, infringement, defend, are used as general terms which can not be concretely defined.
Power to Tax Confrontation
Contrasting position
（drawn by author）
Property rights
The relation between state and people could actually be observed on the premise of the dichotomy of private and public sphere.
In the modern state, individual in the private sphere is centered on property rights. In turn, the exercising of one’s property right, is actually a kind of fulfillment, or a possible way to self-realization.
Illustration 5 Relation between state and people (Second Layer)
Individual－private sphere
State－public sphere
Power to Tax
Relations between individual and state
（drawn by author）
Property Rights
iii. Step 3: Relation between tax obligation and basic obligation: response in constitution
Both the tax obligation in the constitution and basic obligation in the constitution are somewhat interconnected. In addition, the former is a concretization o the latter. In terms of tax jurisprudent, the relation between the former and the latter, could be taken as a form-substance relation in terms of tax norms.
Moreover, the form and substance of tax norms, ideally speaking, are actually two sides of one same thing. A realization of such relationship, in the field of tax jurisprudence, is called the methodology of economic observation (wirtschaftliche betrachtungsweise).
Illustration 6 Relations of tax obligation and basic obligation in Constitution (Third Layer)
iv. Integrative view of the three layers
To combine all three layers from the above, three possible deductions are to be made in the following.
1. In the picture indicating the relation confrontation, the larger arrow with spotted coloring representing tax power expresses the need to review the legitimacy of
Tax obligation in Constitution
Basic obligation in Constitution
Form of tax norms
(value order of Constitution)
Substance of tax norms
(value judgment of Constitution)
value order in society
（drawn by author）
the tax power at a regular basis.
2. the relation between private and public sphere under the constitution is actually a linkage from the people to the state connected by the basic obligation.
3. In modern state, the basic obligation of the people is centered on the obligation to pay tax.
Illustration 7 A Panorama of Confrontation (Integration of the three layers)
Basic obligation in Constitution Tax obligation in Constitution
Power to Tax
Individual private sphere
Confrontation
Forms of Norm (value order in Constitution)
Substance of Norm (value judgment in Constitution)
（drawn by author）
Property Rights
State public sphere
In this illustration, the coloring of the arrow on the right hand side gradually turns darker as become closer to the center of the circle. Such illustration indicating the standard of the constitutionality of taxation gets more rigid as such power approaches the center of the private sphere. As for the square, the requirement of the constitutionality of the tax power is understood only within the framework of the constitution.
III. Reception of tax state theory and its reflections towards legal norms
The concept of tax state could trace back to the concept of German concept of
Steuerstaat. In reality, this concept is not only a technical term in public finance as
generally recognized; it could also be observed in the long history of tax jurisprudence (Steuerrechtswissenchaft). In addition, in the field of tax jurisprudence, the origin as well as the development of tax state has been discussed not alone among European countries, but even in Japan, various works could be noticed.1 Therefore, tax state is not at all a concept alien in the field of academics. Frequently appeared as the concept is, many things could still be overlooked, one of which is the obligation from the people to the state. The following discussion attempts to make connection between the elements
of tax state and the concept of rule of law in taxation.