Key Benefits:
FINANCING FOR 2003
The Constitutional Council was seized, under the conditions provided for in Article 61, paragraph 2, of the Constitution, of the Financial Law for 2003,
Jean-Pierre, Jean-Pierre
Jean-Pierre, Jean-Pierre, Jean-François
The Constitutional Council,
Considering the Constitution;
In light of amended Order No. 58-1067 of 7 November 1958 on the Organic Law on the Constitutional Council, including Chapter II of Title II of the said Order;
Having regard to Order No. 59-2 of 2 January 1959, as amended by the Organic Law on Financial Laws;
Having regard to Organic Law No. 2001-692 of 1 August 2001 on Financial Laws, including Articles 14, 32, 65 and 67;
Considering the general tax code;
Considering the code of construction and housing;
Considering the Public Health Code;
Considering the general code of territorial authorities;
Considering the environmental code;
Having regard to Act No. 92-666 of 16 July 1992 on the Share Savings Plan;
Considering article 44 of Act No. 98-1266 of 30 December 1998 on the Financial Law for 1999;
In view of the Government ' s observations, recorded on 24 December 2002;
The rapporteur was heard;
1. Considering that the authors of the two referees to the Constitutional Council the Financial Law for 2003 by denouncing its lack of sincerity; that the members of the first referees in particular, in whole or in part, contest articles 4, 8, 11, 27, 29, 80, 88 and 108; that senators criticize articles 27, 28, 57 and 88;
On the sincerity of the Financial Law:
2. Considering that, in order to challenge the sincerity of the bill referred to, the appellants argue that "the revenue evaluations and the estimates of expenditures it contains do not take into account the economic information available at the time of the preparation of the budget proposal or those available during the budgetary debate in Parliament"; that, in their view, the Government would have made a manifest, certain and voluntary error, not allowing Parliament to exercise its prerogatives, and leading to misleading the outlines of the budgetary balance; that, in addition, the announcement by the Government, during parliamentary debates, of the placing, from the beginning of the year, of credits that could be subsequently cancelled would be indicative of the absence of instigation
3. Considering that, pursuant to Article 32 of the above-mentioned Organic Law of 1 August 2001, made applicable as of 1 January 2002 by its Article 65: "Financial laws truly present all the resources and expenses of the State. Their sincerity is appreciated in the light of the available information and forecasts that can reasonably result from it"; that, with respect to the financial law of the year, sincerity is characterized by the lack of intent to distort the broad lines of balance;
4. Considering, in the first place, that it is not clear from the elements submitted to the Constitutional Council that the revenue assessments for 2003 taken into account in the equilibrium article are in the face of a manifest error, taking into account the hazards inherent in their assessment and the uncertainties regarding the evolution of the economy in 2003; that furthermore, the alleged error in the choice of economic assumptions would lead, according to the tax claimants themselves, to
5. Considering, in the second place, that the vote by Parliament, in the finance law, of the ceilings relating to the major categories of expenses and the appropriations made available to the ministers does not, for the latter, impose an obligation to spend all the appropriations set out in the appropriations; that the authorities of expenditure granted do not hinder the prerogatives that the Government holds from Article 20 of the Constitution in respect of the enforcement of the financial law; that the article 14 A credit that has become irrelevant may be cancelled by a decree taken under the same conditions."It was, therefore, lawful for the Government to provide for a small fraction of the appropriations to be placed in reserve at the beginning of the fiscal year in order to prevent a possible deterioration of the balance of the budget; that by informing Parliament of this intention, it has respected the principle of sincerity;
6. Considering, in the third place, that the explanations given to Parliament by the Government on the other management measures envisaged in the course of the year, including on the foreseeable amounts of deferable credits, do not reflect the instigation of the forecast of expenditures;
7. Considering, however, that if, during the 2003 fiscal year, the broad lines of the balance of the financial law were significantly different from the forecast, it would be up to the Government to submit to Parliament a bill of rectificative finance;
8. Considering, finally, that Parliament should be informed in due course of the measures of "budget regulation" implemented; that in particular, in accordance with the provisions of I and III of Article 14 of the above-mentioned Organic Law of 1 August 2001, applicable as of 1 January 2002, the competent committees of the National Assembly and the Senate shall be informed of any decree of cancellation before its publication and of "any act, regardless of its nature,
9. Considering that, subject to the above observations, grievances arising from the absence of sincerity of the referred law must be dismissed;
On the procedure for adopting certain articles:
With respect to the amendment of Article 11:
10. Considering that the appellants argue that section 11, from a senatorial amendment adopted on first reading, was introduced into the Finance Act in ignorance of sections 39 and 44 of the Constitution; that they further argue that such an adoption procedure, by allowing "the discussion or adoption of amendments that would be declared inadmissible before the National Assembly", would ignore Article 40 of the Constitution and Article 42 of the above-mentioned Ordinance of 2 January 1959;
11. Considering, first of all, that, under the first paragraph of Article 44 of the Constitution: "The members of Parliament and the Government have the right to amend"; that, if the second paragraph of Article 39 provides that "the bills of finances (...) are first submitted to the National Assembly", it is not the result that financial measures cannot be submitted by senators by amendment; that is the case of Article 11;
12. Considering, secondly, that it is the responsibility of both the Government and the competent bodies of the assemblies, in accordance with the procedures set out in the regulations specific to each assembly, to ensure compliance with the rules of admissibility of the amendments filed by members of Parliament in financial matters; that in the present case, the amendment to which the article criticized did not see its admissibility contested, pursuant to Article 40 of the Constitution or Article 42 of the order referred to on 2 January 1959, during the parliamentary proceedings; that, since the issue of the admissibility of the amendment has not been raised, it cannot be directly invoked before the Constitutional Council; that, in any case, the contested amendment has the effect of increasing State revenues in 2003;
13. Considering that it is the result of all the foregoing that the grievances relating to the adoption procedure of Article 11 cannot be received;
With respect to section 57:
14. Considering that, according to Senators who made the second referral, the Government would have ignored section 39 of the Constitution by placing, for the first time before the Senate, an amendment amending the tax revenue assessments taken into account in the balance item;
15. Considering that it is the result of the second paragraph of Article 39 of the Constitution that entirely new financial measures cannot be submitted by the Government for the first time before the Senate;
16. Considering that the amendment in question was submitted by coordination with a measure first submitted to the National Assembly in the context of the discussion of the draft Corrigendum Finance Bill for 2002; limited to a small-scale rectification of the 2003 revenue evaluations of two taxes; that, therefore, the amendment in question did not introduce a fully new financial measure; that the grievance arising from an irregularity in the adoption procedure of section 57 must therefore be rejected;
On Article 4:
17. Considering that Article 4 of the referred law, which amends Article 11 150-0 D of the General Tax Code, extends the term of imputation of losses on transfers of securities and social rights mentioned in Article 150-0 A of the same code, as well as, by reference, the duration of imputation of losses resulting from certain operations carried out in France in the futures markets;
18. Considering that the appellants argue that by not applying this new measure or the losses suffered on the products referred to in Article 150 sexies, or on those suffered in the foreign futures markets and falling under Article 6(1), the legislator introduced a breach of equality between taxpayers who, in their view, would be placed in a situation identical to the subject matter of the law;
19. Considering that it is up to the legislator, when establishing an imposition, to freely determine its base and rate, subject to compliance with the principles and rules of constitutional value; that the principle of equality does not hinder that, for reasons of general interest, the legislator, through the granting of tax benefits, imposes measures to encourage the development of economic and financial activities by applying objectives
20. Considering that the criticized measure tends to encourage individuals, despite the decline that has affected the markets of financial instruments, to direct their savings to these markets, so as to promote the economy; that it was permissible for the legislator, in view of this objective of general interest, to exclude from the benefit of this measure the products mentioned in Article 150 sexies, which are not related to bond borrowings or shares; that it was also permissible for the legislator to exclude, subject to international conventions, losses resulting from transactions carried out on a market in term abroad;
21. Considering that it follows that Article 4 of the referred law is not contrary to the Constitution;
On Article 8:
22. Considering that Article 8 amends Article 199 sexdecies of the General Tax Code by bringing from 6,900 to 7,400 euros for 2002 and to 10,000 euros as of January 1, 2003 the ceiling of the expenditures taken into account for the calculation of the reduction in income tax granted for the employment of an employee at home; that, according to the requesting members of Parliament, the legislator would have misunderstood the principle of equality before the public expense by refraining from modulating the amount of the tax reduction on the basis of the taxpayer's marital situation and his family expenses; that the raising of the ceiling would result in conferring "a disproportionate benefit to singles and concubins in relation to married couples";
23. Considering that, under Article 13 of the Declaration of Human and Citizen Rights of 1789: "For the maintenance of public force, and for administrative expenses, a common contribution is essential: it must also be distributed among all citizens, because of their faculties"; that under Article 34 of the Constitution, it is up to the legislator to determine, in accordance with the constitutional principles and taking into account the
24. Considering, moreover, that the principle of equality is not an obstacle to the fact that the legislature enacts incentives by granting tax benefits on the grounds of general interest;
25. Considering, as it appears from the parliamentary work that led to the adoption of the bill referred to, as from those at the origin of the institution, in 1991, of the tax reduction for the employment of an employee at home, that this reduction aims to combat unemployment by developing employment at home; that it also tends to combat undeclared employment; that it also improves the quality of life of families by promoting the home maintenance of older persons, the accommodation of disabled persons, the family home care of young children, the school support and the household assistance;
26. Considering that the tax reduction is "50 per cent of the amount of expenses actually incurred", within the limits of a statutory limit; the legislator, by raising the ceiling of eligible expenditures to this tax advantage to 10,000 euros, has heard a broadening of the impact of this measure in order to better meet the general interest it has assigned; that the existence of a single expenditure ceiling does not misunderstand the matrimonial situation of the beneficiaries or the expenses of their homes; that, as a result, section 8 of the deferred law does not result in a breakdown of equality before public office;
On Article 11:
With regard to grievances arising from the achievement of equality:
27. Considering that Article 11 of the referred law is intended to bring the tax system closer to the rental real estate investment to that of securities investments, in order to support the activity of the rental real estate sector and to develop French financial markets;
28. Considering that, for this purpose, it allows companies of listed real estate investments to opt for the exemption of corporate tax on the fraction of their profit from the rental or sale of immovables; that under section 208 C inserted in the general code of taxes by section 11, the entry into the new regime will result in the immediate taxation of the surplus-values the 6.5-rates
29. Considering that the appellants argue that in several respects this article would undermine the principle of equality;
30. Considering that the principle of equality is not opposed to the fact that the legislator rules differently from the different situations, nor does it derogate from equality for reasons of general interest, provided that, in both cases, the difference in treatment resulting from it is directly related to the subject matter of the law that establishes it;
31. Considering that, in the first place, it is criticized for the new mechanism to create a breach of equality between civil societies subject to "tax transparency" by Article 8 of the General Tax Code and the companies receiving the criticized article, which submits to tax, in the hands of the shareholders, the only profits distributed; that, in addition, the shareholders of the real estate companies beneficiaries of section 11 will be exempted from income tax if their securities are placed in a stock savings plan, whereas this possibility is not open to associates of partnership;
32. Considering that, in the light of the subject-matter of the disputed provisions, real estate civil societies are in a different situation from the companies to which Article 11 applies, which publicly use capital market savings; that it was therefore permissible for the legislator to subject each other to a different tax treatment without prejudice to equality between companies or partners;
33. Considering, secondly, that the appellants denounce "the very advantageous conditions that have been set to mitigate the tax consequences of the option open to listed real estate companies" upon their entry into the new regime; that they question in this regard the rate used for the taxation of the latent surplus-values of the companies as well as the non-taxation of these surplus-values in the hands of the partners;
34. Considering that, in view of the general interest of the legislator, it was permissible for the legislature to define as it did the fiscal terms of the exercise of the option, which do not in any way support the state of the charges out of proportion with the intended incentive effect;
With respect to other grievances against section 11:
35. Considering that the appellants argue that by not defining the obligation of the companies concerned to have as a "principle object" a real estate activity, or the terms and conditions of the control of compliance with that obligation, the legislator would remain below its jurisdiction;
36. Considering that the legislator has appropriately designated eligible companies; that it was permissible for it not to exclude from the new regime real estate companies carrying out miscellaneous activities, in particular for the purposes of the management of their available funds; that the profits derived from these miscellaneous activities remain taxed on corporations under the conditions of common law; that the share of the exempted profits of corporate taxes is determined by the II of the new tax section that, therefore, should be excluded from a lack of understanding of Article 34 of the Constitution;
37. Considering, finally, that article 11 does not affect the right to property;
38. Considering that it is the result of all the foregoing that grievances against the provisions of Article 11 must be dismissed;
On Article 27:
39. Considering that Article 27 of the deferred law eliminates the right of licence paid by the debiters of beverages; that, for this purpose, the 1st of the I of this article repeals articles 1568 to 1572 of the general code of taxes; that the 2nd draws the consequences of this deletion by amending the drafting of article 1699 of the same code, concerning the regime of recovery, of perception and repression common to the tax on shows and the right of licence of the debiters of beverages; that in return of this total amount, the 23 euros that, for 2003, the III increases the balance of the allocation of accommodation between urban solidarity and rural solidarity;
With regard to the second part of Article 27:
40. Considering that, pursuant to article 1699 of the General Code of Taxes, in the drafting of the law referred as in its earlier drafting, the offences of the law relating to the tax on spectacles are "repressed in terms of the terms and under the benefit of the security rights provided for the taxes referred to in Part III of Book I"; that, according to the requesting members, the provisions of Article 1791 of the General Code of Taxes, to which it is referred, in particular, infringe on the principle of proportionality of penalties; that they request "to this extent" to the Constitutional Council to declare Article 27 of the law referred to contrary to the Constitution;
41. Considering that compliance with the Constitution of the terms of a law promulgated can only be usefully challenged when examining legislation that amends, supplements or affects its domain;
42. Considering that article 27, paragraph 2, of the I, has no other purpose but to delete, in article 1699 of the General Code of Taxes, any reference to the right of licence of the Beverage Debiters; only in respect of the provisions of article 1699, relating to the tax on shows, the new wording is limited strictly to reproduce those that were in force on the date of adoption of the Act referred to; that the conditions under which compliance with the Constitution of Article 1791 of the General Tax Code could be usefully discussed are not met in this case;
With respect to Article 27 II and III:
43. Considering that, according to the requesting senators, compensation for the deletion of the right of licence of the debiters of beverages by a total endowment to the communes would impede the free administration of these communities, provided that this compensation will not benefit all private communes from the proceeds of the deleted fees; that equality would also be broken between the permanently deprived communes of the proceeds of the tax deleted and those that will benefit from the compensation;
44. Considering that if, under Article 72 of the Constitution, territorial authorities "have freely administered by elected councils", each of them does so "in the conditions provided for by the law"; that Article 34 of the Constitution reserves to the legislator the determination of the fundamental principles of free administration of local authorities, their powers and their resources, as well as the setting of the rules concerning the attitude, the rate and the modalities of recovery of taxation of all kinds; that, however, the rules laid down by the law on the basis of these provisions could not have the effect of restricting the tax resources of the territorial authorities to the point of obstructing their free administration;
45. Considering that the deletion of the right of licence of the debiters of beverages by the deferred law meets an objective of simplification of indirect taxation; that, depending on the size of the municipality and the category of the licence, the amount of that right varies from 3.8 to 306 euros; therefore, in view of the small amount of the sums involved, by establishing in favour of the municipalities a comprehensive compensation, the legislator has not ignored the principle of free administration of the territorial authorities or equality between municipalities;
46. Considering that it is the result of the foregoing that the grievances against section 27 of the deferred law can only be dismissed;
On the 2nd of Article 29 III:
47. Considering that the III of Article 29 determines, for the revenues of the State, the modalities for neutralizing the effects of France Télécom's subjugation to local direct taxation under the conditions of common law; that 1 of the III provides, for this purpose, the reduction, in competition with the losses suffered by the State, of the amounts paid by the State to the territorial authorities under the "compensation of the elimination of the share of wages of the professional tax" established by Article 44 of the Financial Law for 1999; that, according to the 2 of the III of Article 29, where the amount of this payment "is, in 2003, less than the amount of the decrease to be effected under the 1, the balance shall be taken, for the benefit of the general budget of the State, of the proceeds of the land tax on the built properties, of the land tax on the unbuilt properties, of the housing tax and of the professional tax collected for the benefit of these municipalities and establishments";
48. Considering that the appellants state that the latter provision would introduce a new tax for the benefit of the State; that the proceeds of the said taxation would, in their opinion, be subject to a "compensation with the operations to which the State's perception of local revenues is given"; that consequently, the proceeds of this taxation would not be traced into the general budget, in disregard of the principle of universality referred to the order
49. Considering, first of all, that under the first paragraph of article 18 of the above-mentioned order of 2 January 1959: "It is made a recipe for the full amount of products, without contraction between revenues and expenses. All revenues for all expenses, all revenues and all expenses are charged to a single account, entitled General Budget;
50. Considering that there is in fact a lack of awareness of these provisions, as long as the new revenues of the State resulting from the 2 of the III of Article 29 will be traced to the line on "other direct taxes collected through the issuance of roles" of the general budget;
51. Considering, in the second place, that the grievance also in fact lapses from a negative incompetence of the legislator, as soon as the legislator has heard the removal provided for in 2 of III of Article 29 to the terms already applicable to the cost of plate and recovery on the proceeds of local direct taxes;
On Article 80:
52. Considering that Article L. 315-4 of the Construction and Housing Code provides that "The beneficiaries of a housing savings loan shall receive from the State a savings premium, the amount of which is fixed taking into account their savings effort"; that Article 80 I of the deferred law supplements this provision by specifying that the savings premium is received "on completion of the loan"; that its II makes this provision applicable
53. Considering that, according to the referral of members of Parliament, the legislator would have broken equality by retaining for the benefit of the older account holders an advantage to which the account holders opened from 12 December 2002 will not be entitled;
54. Considering that it appears from the parliamentary work leading to the adoption of the bill referred to above that by substituting the payment of the savings premium to the effective realization of a real estate loan, the criticized provision tends to restore to this aid of the State its vocation to encourage the acquisition, renovation or construction of a housing; in doing so, it was up to the legislator not to excessively harm the economy of previously concluded contracts; that, in this regard, the date provided by the legislator for the entry into force of this measure does not create a differential treatment contrary to the Constitution;
On Article 88:
55. Considering that section 88 of the referred law inserts in the environmental code a new article L. 541-10-1, the first paragraph of which is so written: "As of January 1, 2004, any person or agency that makes available to the public, distributes for his or her own account or distributes in the boxes to the letters or on the public channel of the printed advertisements not sent or of the free newspapers shall
56. Considering that the appellants argue that, by the exceptions it contains, the new tax would be contrary to the principle of equality; that they in particular contest the exemption granted to the free newspapers of classified ads; that in addition, in their view, the legislator would not have exhausted its jurisdiction;
57. Considering that it is permissible for the legislator, for the purpose of general interest that is attached to the protection of the environment, to take charge by persons making prints available to the public the cost of collecting and recycling such prints; However, by providing, as it has done in this case, to exclude from the scope of Article 88 a large number of prints that could increase the volume of waste, the legislator has established a difference of treatment that is not directly related to the objective that it has assigned; that it follows that Article 88 ignores the principle of equality;
On Article 108:
58. Considering that 1° of Article 298 bis of the General Code of Taxes provides that in respect of value-added tax, are subject to the simplified regime of agriculture, agricultural operators whose activities are, by their nature or importance, assimilable to those exercised by industrialists or merchants, even if these transactions constitute the extension of the normal agricultural activity; that Article 108 of the Law referred to as full that, by this addition, the legislator has heard refer to the constant interpretation of section 298 bis of the general tax code that the administration has specified in its instructions; therefore, article 108 does not contain any ambiguity and is, therefore, not contrary to the requirement of clarity arising from article 34 of the Constitution;
In the place of certain provisions in the Financial Law:
59. Considering that the Senators Grievors are grieving in section 28 of the referred law to be foreign to the area of financial laws, as defined in section 1 of the above-mentioned order of January 2, 1959; that this section, which supplements section L. 3332-14 of the Public Health Code, is intended to derogate from the rules for the transfer of licences for the debits of beverages;
60. Considering, moreover, that sections 91 to 95 of the above-mentioned Act relate to the distribution among territorial authorities of the overall operating staffing; that section 99 merely complements the distribution rules of part of the products of the National Equalization Fund established by section 1648 B bis of the General Tax Code;
61. Considering that these provisions do not concern the determination of the resources and expenses of the State; that they are not intended to organize the information and control of Parliament on the management of public finances or to impose monetary responsibilities on public service officials; that they do not create or transform employment within the meaning of the fifth paragraph of section 1 of the above-mentioned order of January 2, 1959; in the end, they do not have the nature of tax provisions; Thus, articles 28, 91 to 95 and 99 of the law referred to above are foreign to the field of financial laws; that it follows from there that these articles were adopted according to a procedure contrary to the Constitution;
62. Considering that there is no need for the Constitutional Council to raise, on its own, any other matter of conformity with the Constitution,
Decides:
Sections 28, 88, 91 to 95 and 99 of the Financial Law for 2003 are declared contrary to the Constitution.
This decision will be published in the Official Journal of the French Republic.
Deliberated by the Constitutional Council in its meeting of 27 December 2002, where MM was sitting. Yves Guéna, President, Michel Ameller, Jean-Claude Colliard, Olivier Dutheillet de Lamothe, Pierre Joxe, Pierre Mazeaud, Mmes Monique Pelletier, Dominique Schnapper and Simone Veil.
The president,
Yves Guéna
