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CONSTITUTIONAL AND SUPRANATIONAL LIMITATIONS AND GUIDELINES ON TAXING POWERS – CASE OF CROATIA

The government of Croatia, as a relatively new state, has to deal with the whole range of issues. Some of these issues, and not the least important ones, were, and still are, the issues of taxation. Standard instrument to deal with them is, as in other democratic countries based on the rule of law, the tax law. The rule of law implies certain limitations to the government in all areas of its activities ; it is by all means true when it comes to taxation, too. One could expect that the key boundaries to taxing powers of the government should be found in the constitution. However, although Croatia has got written constitution, the provisions concerning taxation are very scarce and of a general nature, probably because the Croatian constitution has been designed as the modern, meaning short, one, and as a reaction to the constitutions (federal one and those of each federal state) of the former Yugoslavia, which were very long and detailed. However, this constitutional minimalism opened doors for other legal instruments to be employed when it comes to tax matters. The Parliament, only generally bound by the constitutional norm, felt (and still feels) free to arrange tax matters according, almost exclusively, to the will of the actual political majority. This situation is emphasised by the relatively low public interest in tax matters, probably because of their complex and expert-knowledge-needed nature, at least when they are still not practically implemented. However, "the legal tax surface" in Croatia is not entirely calm. The Constitutional Court, on the occasion of the constitutional law suits filed by individuals, has ruled in a few occasions concerning taxation, announcing some provisions in the tax acts non-constitutional, and there are some tax cases still pending before the Court. Furthermore, despite the lack of an expert tax knowledge among the general population, it is very interested in the consequences of the impact of taxation ; as described below, this factor presents one more (informal) limitation to the tax policy designing. Tax acts in force in Croatia contain provisions limiting the Croatian tax authorities in their actions. Namely, some provisions of those acts enable taxpayers to take legal actions (e.g., to appeal or to submit some other legal remedies) against administrative decisions in tax matters. Furthermore, Croatian administration control system includes the Administrative Court, as the last instance of that control. That Court deals with the growing number of tax cases. However, the idea of founding the whole independent branch of the courts authorized to judge solely in tax matters, while present in the Croatian tax expert community, is still far from being realised. Croatia is an EU candidate country, expecting to become a full member by the year 2010. The process of accession means adoption of the EU acquis communitaire. Although Croatia is still not the EU member country, it is in the middle of the process of that adoption, adjusting its law to the EU law (which means the changing and amending of the existing law, as well as adopting the necessary new ones). There is, of course, the EU law that refers to the taxation. It contains some provisions that imposes some obligations and limitations to the tax authorities of the member states ; that will, by all means, be something completely new for such Croatian authorities, and something they will have to use to. Especially interesting will be the practice of the European Court of Justice, since the impact of its rulings is something quite unusual for the Croatian tax law, as well as for the Croatian legal system as a whole. Last, but certainly not least, there are informal influences (i.e. limitations) on tax legislation. Government is, in its actions, bound not only by formal law in force, but also by the socio-economic situation as a whole. There are different social groups, with different interests, in every society, and Croatian society is not an exemption. Taxation means that state takes the part of the spending power from the individuals ; as such, taxation is an extremely sensible social issue, often imposing the question of winners and losers in the process. This is especially true in the societies not very rich, and in the dire economic times, both of which could easily be applied to the Croatian society in the moment. So the pressure of the demand for a fair taxation is felt in Croatia, too, directing government's tax moves the way that does not always corresponds with its genuine intentions.

constitutional limitations; supranational limitations; tax; Croatia

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