141. Pre-1997 Net Worth Tax Held Constitutional

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Article no. 76 explained a controversy surrounding assessment and collection of the net worth tax for periods prior to 1997. A ruling by the Federal Constitutional Court dated 30 March 1998 (BB 1998, 1044) has now put an end to the controversy. The court refused to hear a case brought by a taxpayer challenging the validity of assessment notices issued in June 1997 for the assessment periods 1993 and 1995.

In June 1995, the Federal Constitutional Court had ruled that the net worth tax would become unenforceable as of 31 December 1996 unless timely amended to bring its provisions into line with various constitutional requirements. The government wished to repeal the net worth tax entirely but could not muster the necessary votes in the Federal Council and so decided to let the law lapse under the terms of the June 1995 court ruling.

In refusing to hear the taxpayer's case, the Federal Constitutional Court stated that the deadline specified for amendment of the net worth tax in its June 1995 ruling referred to the time as of which the net worth tax must accrue, not the date by which administrative action to assess and collect the tax need be taken. Otherwise, the court said, the net worth tax for years prior to 1997 would be paid by certain taxpayers and not by others according to the speed with which the tax authorities worked and a variety of other accidental factors. This would violate the principle of equal taxation.

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