Case News
The TCC delivers its Judgment 112-Hsien-Pan-19 (2023)
TAIPEI, December 15, 2023 — The Taiwan Constitutional Court (TCC) delivered its Judgment of the "Case on the Land Value Tax for Vacant Lots Reserved per Building Codes" on December 8, 2023.
Principal Facts, Issues, and Procedure of the Case
Exemption of land value tax or agricultural land tax may apply to private land used for free public passage during the period of use under First Sentence, Article 9 of the Land Tax Reduction and Exemption Regulations (hereinafter the "LTRER"). However, the following proviso of said article excluded tax exemptions for vacant lots reserved per the requirement of building codes. A question is raised as to whether this differential treatment (even when vacant lots were used for free public passage) violates the principle of equality.
There are four petitioners/petitioning parties in this case, all of whom were requested by their local taxation bureau to pay or pay up land value taxes for the vacant lots of their building bases. The petitioners disagreed with the taxation bureaus and filed for administrative appeals respectively, arguing that their vacant lots should have tax exemptions under First Sentence, Article 9 of the LTRER since they were also used for free public passage. Their administrative appeals and subsequent litigations were dismissed finally. The petitioners lodged for constitutional review, arguing that the proviso of Article 9 of the LTRER violated the principle of equality, the principle of taxation under the law (taxation by law), and the principle of the ability to pay. Petitioner IV also filed for constitutional review on his final court decision. Their cases were consolidated.
Judgment 112-Hsien-Pan-19 (2023) was announced on December 7, 2023. Justice Jui-Ming HUANG wrote this Judgment. Justice Hui-Chin YANG filed an opinion dissenting in part.
Decision of the Court
The TCC upheld the constitutionality of the proviso of Article 9 of the LTRER. The TCC stressed that the tax exemption in Article 9 of the LTRER serves the purpose of awarding and promoting landowners for providing their private lands for free public passage, which is an act that does not benefit the landowner. The TCC point out that vacant lots required by building codes (for each building base) serve various purposes such as lighting and fire safety. By reserving vacant lot(s), the landowner, in turn, gets to enjoy the benefits of constructing on the building base. The TCC applied rational basis review and ruled the differential treatment between the two rationally related to its purpose of tax fairness, thus not in violation of the principle of equality.
The TCC dismissed Petitioner IV's petition to review his final court decision concerning the same issue.
In its ruling, the TCC proposed supplementarily that the competent authority should set up some extent of tax reductions for passages set on building bases that exceed the area of building-code-required vacant lots.
Notes:
- Full texts of the Judgment and Opinions are available on the TCC website here (Traditional Chinese). An English summary of this Judgment will be available later on the TCC English website.
- The TCC's Case News is prepared by the Department of Clerks for the Constitutional Court (Judicial Yuan) for information only and does not bind the Court.
- In case of any conflict of meaning between the Traditional Chinese version and the translated English version, the Traditional Chinese version shall prevail.