Tax Law and Political Sanctions

By: André Elali

In Tax law the expression political sanctions corresponds to restrictions or prohibitions imposed on the taxpayer as an indirect way of obliging the taxpayer to pay the tribute, such as the ban on the establishment, the seizure of goods, the special supervision regime, among others

The State holds lawful instruments to constitute and collect the tax credit. This model is subject to the rule of law's own power of taxation. Measures that go beyond this model and are characterized as abuse of power are incompatible with the tax system. They are considered political sanctions, that is, disproportionate and illegal means of exercising state power.

Although it is peaceful in doctrine and jurisprudence, there is still in practice the use of tax rules to embarrass the taxpayer. It is far more common than imagined to use inadequate means to restrict taxpayer rights, including violating pillars of the economic order such as the right to free enterprise and free competition. Despite being a summary matter, the judiciary is still obliged to intervene in daily and successive cases of abuse.

For decades, the Federal Supreme Court has reaffirmed that indirect means of tax collection are inconsistent with the Constitution. In the case of General Repercussion, which must guide interpretation on the basis of proportionality, the Court stated as follows:

ARE 914045 RG / MG - MINERALS GENERAL
General Repercussion in Extraordinary Appeal
Rapporteur: Min. EDSON FACHIN
Judgment: 10/15/2015
Judging Body: Full Court - Electronic

Publication

ELECTRONIC JUDGMENT

GENERAL REPERCUSSION - MERIT

DJe-232 DIVULG 11-11-2015 PUBLIC 19-11-2015

Part (s)

RECEIVER (S): MINERAL STATE

PROC. (A / S) (ES): ADVOCATE GENERAL OF THE STATE OF MINAS GENERAL

RECDO (A / S): FLÁVIO LÚCIO MOREIRA VIANNA

ADV. (A / S): MARIA CLEUSA ANDRADE AND OTHER (A / S)

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EXTRAORDINARY APPEAL WITH HARMFUL. GENERAL REPERCUSSION. REAFFIRMATION OF JURISPRUDENCE. TAX LAW AND CIVIL PROCEDURAL LAW. PLENARY RESERVATION CLAUSE. ART 97 OF THE FEDERAL CONSTITUTION. JURISPRUDENCE OF THE FULL COURT OF THE STF. RESTRICTIONS IMPOSED BY THE STATE. FREE EXERCISE OF ECONOMIC OR PROFESSIONAL ACTIVITY. INDIRECT COLLECTION OF TAXES.

1. The peaceful jurisprudence of this Court, now reaffirmed in the general repercussion, considers that it is unnecessary to submit a judicial demand to the plenary reservation rule in the event that the judicial decision is based on jurisprudence of the Plenary of the Supreme Court or Summary of this Court, pursuant to arts. 97 of the Federal Constitution, and 481, sole paragraph, of the CPC.

2. The Federal Court of Justice has repeatedly understood that it is unconstitutional a restriction imposed by the State on the free exercise of economic or professional activity, as long as they are used as a means of indirect tax collection. 3. An interlocutory appeal against the extraordinary appeal, acknowledging the unconstitutionality, incidental and with the effects of the general repercussion, of item III of paragraph 1 of article 219 of Law 6.763 / 75 of the State of Minas Gerais.

Decision

] The Court, by majority, considered the matter constitutional, after the defeat of Minister Marco Aurélio. Ministers Gilmar Mendes and Rosa Weber did not speak. The Court, by majority, acknowledged the general repercussion of the constitutional question raised after the defeat of Minister Marco Aurélio. Ministers Gilmar Mendes and Rosa Weber did not speak. On the merits, by majority, reaffirmed the prevailing jurisprudence on the matter, the ministers Marco Aurélio and Roberto Barroso overdue. Ministers Gilmar Mendes and Rosa Weber did not speak. Minister EDSON FACHIN Rapporteur

It is necessary to reflect that in violating economic freedom, the State attacks its own taxation model, which depends on its inseparable relationship with the market, that is, with economic activities.

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André Elali

Partner
PhD in Public Law from UFPE, Master from Presbyterian University Mackenzie (SP). Postdoctoral Internship at the University of Lisbon (Portugal). He is Assistant Professor at the Department of Public Law at UFRN and Visiting Scholar at Max-Planck-Institüt für Steuerrecht (Munich, Germany) and Queen Mary University of London (United Kingdom). Author and coordinator of dozens of books in the tax and regulatory area.

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