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25.03
2014

Modification of the excise rates for tobacco products without the approval of the Government – unconstitutional

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On 25 March 2014 the Constitutional Court delivered its judgment on the constitutionality of some provisions of the Annex No. 1 of the Title IV of the Tax Code, as amended by Law No. 324 of 23 December 2013 on changing and amending certain legislative acts (Complaint No. 20a/2014).

 

Circumstances of the case

 

At the origin of the case lies the application submitted to the Constitutional Court on 19 March 2014 by the MPs, Messrs Mihai Ghimpu, Valeriu Munteanu, Gheorghe Brega and Mrs. Corina Fusu.

 

Following the changes made in the content of the Annex No. 1 of the Title IV of the Tax Code, by the Law No. 324 of 23 December 2013, the excise rate for filter cigarettes containing tobacco, indicated at the price heading “240220", was increased from “45 MDL + 24%” to “75 MDL + 24%” per unit (1000 pieces), although the Government, in the approved draft law, has requested an increase of “50 MDL + 31%”. 

 

The authors of the application alleged, in particular, that by the manner of adopting the challenged provisions was violated the procedure of working out the national public budget, which is contrary to Article 131 para. (4) and (6) of the Constitution.

 

The Constitutional Court ruled on the application in the following composition:

 

Mr Alexandru TĂNASE, President,

Mr Aurel BĂIEŞU,

Mr Igor DOLEA,

Mr Victor POPA,

Mr Petru RĂILEAN, judges

 

Conclusions of the Court

 

Hearing the reasoning of the parties and examining the case files, the Court held that, under Article 131 para. (4) of the Constitution, any legislative initiative or amendment, which entails the increase or the decrease of the budgetary revenues or loans, as well as the increase or curtail of the budgetary expenditures shall be adopted only following an approval of the Government.

 

The Court noted that the draft law submitted by the Government, whereby was established the financial-budgetary policy, provided a modification by increasing the excise rate for filter cigarettes containing tobacco from the price heading "240220" in a different formula than the one adopted by the legislature, being provided the increase both of the fixed component and the component expressed as a percentage rate ("50 MDL + 31%").

 

The Court held that the challenged amendments were adopted by Parliament without the prior approval of the Government. Also, the Government Decision No. 1051 of 24 December 2013 on the draft law of the state budget for the year 2014, whereby was accepted the increase of revenues and expenditures of the state budget for the year 2014, was adopted post-factum, and from the provisions of the Article 131 para. (4) of the Constitution it can be deduced unambiguously that the approval of the Government is to precede the adoption in the final reading of the draft laws with budgetary impact.

 

The Court reiterated that, the need to obtain prior approval of the Government for the adoption of any legislative initiative or amendment that implies the increase or decrease of the budget revenues is determined by the complexity of the budgetary process as a whole and, respectively, by the responsibility of the Government to carry out the state budget.

 

Simultaneously, the Court emphasized that the lack of a prior consent of the Government on the amendments that are determining the increase or decrease of the budgetary revenues and expenditures represents an omission. The Court found that this omission has occurred as a result of the failure to carry out the provisions of the Article 131 para. (4) of the Constitution.

 

Judgment of the Court

 

Starting from the reasoning invoked above, the Constitutional Court:

 

-       declared admissible the application of the MPs, Messrs Mihai Ghimpu, Valeriu Munteanu, Gheorghe Brega and Mrs. Corina Fusu on the constitutionality of certain financial provisions on the excise rates for tobacco products;

-       declared unconstitutional  the excise rate of “75 MDL + 24%” of the price heading “240220” of the Annex No. 1 of the Title IV of the Tax Code No. 1163-XIII of 24 April 1997, as amended by Law No. 324 of 23 December 2013 on changing and amending certain legislative acts;

-       until the legal framework will be supplemented with provisions regarding the amount of the excises for filter cigarettes containing tobacco referred at the price heading “240220” of the Annex No. 1 of the Title IV of the Tax Code No. 1163-XIII of 24 April 1997, are to be applied the provisions preceding the amendments adopted by the Law No. 324 of 23 December 2013 on changing and amending certain legislative acts;

 

 

The Judgment of the Constitutional Court is final, cannot be appealed, shall enter into force on the date of passing, and shall be published in the Official Gazette of the Republic of Moldova.

 
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