Favorability Principle of the Substantive Rule on Tax Matters. Train Wreck Between the Constitutional Court and the State Council

Abstract

In special tax administrative law, the substantive

rule refers to the structural elements of tax: taxpayer,

tax collector, taxable event, basis of assessment, and the

rate. The favorability principle of the substantive rule on

tax matters, regarding period taxes, is understood as the

application of substantive rules that reduce or eliminate tax

burdens, favoring the taxpayer in the same period the rule

became effective. The way paragraph three of article 338 of

the Constitution is redacted, when interpreted under the

light of paragraph two of article 363 of the Constitution

creates confusions or quandaries regarding the application

of this principle. The purpose of this article is to clarify

the case law line of the Constitutional Court and the State

Council as to carry out a comparative analysis of the application

of the favorability principle of substantive rule on

tax law. The case law line of each one of these two Corporations

was built using the methodology proposed by Diego

Eduardo López-Medina, which is based on the formulation

of a guiding question. In this case, that would be: Does the

favorability principle of substantive rule apply on tax matters?

With two sides for an answer —yes and no— and to

this end we took the period between 1993 to 2014, we tracked

the rulings of both corporation and identified the most

recent ruling, called Archimedes' ruling. Then, by means

of citations in the ruling, we detected other rulings referring to the same topic until we tracked down the founding

ruling of the line: between the two extremes —the Archimedes'

ruling and the founding ruling— all other rulings

were chronologically organized. After that, we observed the

result obtained, which may be a coherent or a chaotic line

(López-Medina, 2000, pp. 142-147). In the case of the State

Council we found 18 rulings and for the case of the Constitutional

Court, 15 rulings. This article presents the case

law line of the Constitutional Court and the State Council

alongside the findings, conclusions, and recommendations

on the topic.