Lecture given at the VI Annual Congress on Business Taxation, June 24, 2022.
Much is said and written about tax equity and justice at the time of tax collection. Two articles of our Constitution establish these principles as fundamental for the validity of taxes imposed by Congress. Sadly, neither one nor the other is really respected in the rulings of the Constitutional Court.
Throughout the history of the Constitutional Court, that is, from 1986 to date, taxes have been challenged for different reasons without these arguments being fully understood or resolved in reality by this high court.
Within the rulings – said as errors – most important of our constitutional jurisprudence we can mention that taxes such as:
- IUSI,
- IETAAP or ISO,
- Income Tax Withholdings,
- Consumption taxes
Among the list of those that have been constitutionally discussed and have obtained rulings demeriting such actions.
A brief analysis of any of them clearly exposes the constitutional, theoretical and practical flaws suffered by these tax laws. The IUSI is a tax in perpetuity on assets that do not necessarily represent “disposable” wealth. It is paid for living on what is owned, without any connection with the “subjective aptitude to be a taxpayer of tax obligations”, as taxpaying capacity is usually defined.
In taxes such as IETAAP or ISO, past wealth is taxed, without any attention to the economic situation of the taxpayer today.
Withholdings, which doctrinally are an institution of payments on account, result here in a set of definitive payments that have little or no relation with the real and not fictitious capacity – in the words of the Constitutional Court itself – to face tax debts.
And the catalog of consumption taxes, which in some cases has been considered unconstitutional, has been left in force in several cases due to arguments such as “the interests of the Treasury” or technicalities far from the economic reality of the impact of the tax on the consumer, which is also a neglected element of tax justice and equity.
It is not uncommon to speak of “the duties of the State” to justify the levying of taxes. However, the principle of tax equity and fairness is the culminating point of contributive capacity. When taxes are structured according to the principle of contributive capacity is when we achieve equity and justice in the taxpayer. Abandoning this principle, therefore, is constitutionally prohibited, although the constitutional courts tend to defend their fiefdoms and their salaries, allowing them with whimsical arguments. Nevertheless, equity and justice have a fiscal side. It is not enough to structure taxes and the tax system in accordance with equity and justice, but it is also necessary to structure the tax system in accordance with equity and justice.
Tax equity and fairness
The subject of tax equity and fairness has been little addressed, I believe, in the academic literature. Perhaps it is easier to find studies and analyses on what has been called “tax morality”, which is nothing more than a term to frame the sense of compliance with tax obligations. A term with which I do not agree, since taxes, in general, always have immoral origins and must undergo a legal and ethical process to legitimize them.
To quote Victor Mauricio Castañeda Rodríguez[1] “The decision to pay taxes is not only economic, so that the probability that an individual will be audited or the amount of penalties imposed when he evades are not the only factors to be taken into account to explain his degree of tax compliance (Torgler and Schaltegger, 2005). In fact, authors such as Cullis, Jones and Savoia (2012) indicate that a taxpayer is more likely to accept the tax burden that by law corresponds to him when his fellow citizens also comply with their tax obligations, although the reverse is also true, i.e., an agent could justify evasion if he establishes that in his community this is a common practice (Frey and Torgler, 2007).”
In Guatemala we are used to hearing the message that “the rich do not pay taxes” and with that, from what the cited authors indicate, it is justified that the “not so rich” pay. However, this situation is not correct, given that a tiny group of some 6,000-7,000 NITs represent 85-90% of the country’s total tax collection. However, the business of the rulers is, precisely, in allowing this scheme of injustice in taxation.
The Political Constitution of the Republic calls to contribute to public spending, which should be, individually speaking, according to the contributive capacity. That is to say, according to their subjective aptitude to face such burdens.
That said, we quote Castañeda Rodríguez in the same article: “Although tax morality evokes a referent or a duty to be, compliance in the payment of taxes depends on them being established in a clear and transparent process, which is why “evasion is morally permissible for those who are not convinced about the legitimacy of the government” (Bagus et al., 2011, p. 382, free translation). In short, evasion is not only the effect of a failure on the part of the tax administration to set controls or punitive measures, which suggests to the evader a low expected economic cost of incurring in such action, but also of other aspects, such as the perception that the common citizen has about the way the ruler exercises his power, which may be in favor of the general interest or of some groups in particular.” (Emphasis added).
This second part, the perception that the common citizen has about the way the ruler exercises his power is the main cause to justify the non-payment. Which, from my personal point of view is totally appropriate, justified and necessary. I explain.
The government of a country is called upon to perform certain essential public services. Such public services are not, as erroneously conceptualized in these times, services to the public such as energy, telephony, education, ports and others. Public services are those that fulfill a true function in terms of the common good. That is, the good of all at the same time: the protection of life, property and freedom of people. Thus, the true public services are the protective services such as police and fire departments; the courts, mainly those dealing with unfulfilled contracts and interpersonal relationships; the defense systems against invasions. These are the services that are not exhausted when a citizen makes use of them.
Murray Rothbar wrote “The extolled “public sector” poses situations that are even worse than the horse-drawn carriages of our hypothetical example. For most of the resources consumed by the maw of government have never been seen, let alone used by consumers, who could at least ride in the horse-drawn carriages. In the private sector, a company’s productivity is measured by how much consumers voluntarily spend on its products. But in the public sector, government “productivity” is measured – mirabile dictu – by the amount of what the government itself spends. In the early constructions of national income statistics, statisticians confronted the fact that government activities, unlike those of individuals and firms, could not be estimated by the voluntary payments of the public, because such payments were either imperceptible or nonexistent. Presuming, without evidence, that government must be as productive as any other entity, they determined to use its expenditures as a measure of its productivity. Thus, not only are government expenditures as useful as private ones, but all the government requires to increase its “productivity” is to increase its bureaucracy. Hiring more bureaucrats is the way to see public sector productivity rise! This is, indeed, an easy and happy mode of social magic for our dazzled citizens.
The truth is exactly contrary to popular assumptions. Far from adding to the satisfaction of the private sector, the public sector can only maintain itself at its expense. It lives by necessity parasitically from the private economy.”[2] (Emphasis added).
That is why, the discussion must be about equity and tax justice. That is the use of the resources they coercively take from us. Measuring government spending as a measure of the “size” of the state is really the wrong measure, since government spending, as Rothbard points out is a measure of what the public sector costs those of us who actually produce. Thus, asking for a growth of “government” measured as growth in the percentage of GDP that the government collects and spends is useless as a measure of real justice and equity, mainly because government spending bears little relation to the standard of living of citizens.
We can graphically illustrate the fact that government spending is increasing with the attached meme:
Tax equity and fairness refer to the use of tax resources in those governmental activities that benefit all. The realization of infrastructure works is one of the quite controversial issues that may illustrate the point in the best possible way.
Let’s take Guatemala City. The construction of an overpass can be seen as a positive step for the Municipality and the Ministry of Communications to allocate public funds. Now, the overpass is a supposed solution to traffic within the municipality. Let’s analyze:
Who benefits?
What is the economic level of those who benefit?
Probably, the overpass will be a solution that benefits a small group of the population: those who travel through the area. The payment comes from the whole municipality and probably from the whole country, if the whole country paid its taxes. Does it help the neighbor of Santa Elena Petén in any way? Obviously not. But 10% of the VAT that he paid came to the municipalities and a percentage of that came to the Municipality of Guatemala.
In Guatemala City, an overpass helps those who have their own vehicle. That is to say, it helps those who use their own vehicles, so we are in a social stratum that is much better off than those who use public transportation. What would be the most appropriate investment with municipal resources? In number of beneficiaries, public transportation.
That is why the use of resources is something that should be analyzed from the perspective of equity and fiscal justice. That is to say, whoever pays taxes, like the neighbor of Santa Elena Petén, should not subsidize a well-to-do person from Guatemala City. Nor should the use of resources be directed to small groups of people, but to much more general public services.
Some roads in the country are trade transportation routes. Routes that are used daily by trucks, but few “normal” citizens. It would be fiscally much fairer if those roads were toll roads and the maintenance and construction costs were paid by those who use them, not by general fees – taxes – paid by those who may never see that asphalt in their lives.
Of course, in Guatemala the problem is much more drastic than putting resources into the right services. The problem is that government growth is focused on salaries, not on the quality or the investment -which has a return, even if it is social- of taxes.
Véase como la brecha entre funcionamiento e inversión de los recursos del gobierno crece conforme pasa el tiempo. El gobierno de Portillo eleva grandemente la brecha, se reduce con Berger a los niveles de Arzú; lo incrementa nuevamente el gobierno de Colom y luego crece sostenidamente desde el gobierno de Pérez Molina. Todos los gobiernos del siglo XXI, salvo Berger, fueron en mayor o menor grado, de corte populista; aunque el actual considero pasará a la historia como un gobierno de corte “ineptitudista”, pero altamente cleptómano.
Actitudes de la Administración Tributaria
Si bien la Administración Tributaria carece de funciones de dirección de la política fiscal del Estado, se le han visto argumentos en esta dirección cuando el Congreso le pide opiniones sobre proyectos de ley en materia tributaria y en algunas resoluciones administrativas.
Respecto a los proyectos de ley, simplemente se opone a propuestas de desgravación o acomodo de normas para beneficios tributarios o modificaciones que expulsan normas injustas. La función de la Administración Tributaria, por encima de hacer cumplir las leyes tributarias, es cumplir con la Constitución. De tal manera, por ejemplo, al proponer eliminar un impuesto específico o instaurar alguna política fiscal más favorable, esgrime el argumento de “el gasto tributario”, sin considerar siquiera el posible efecto económico positivo de un crecimiento de la economía.
En cuanto a las resoluciones, se ha visto que la Administración Tributaria deniega solicitudes para calificar como agente de retención del IVA argumentando que perdería cierta cantidad de recaudación del IVA por las retenciones que le realizan a dicho contribuyente y eso va en contra de los intereses del fisco.
Claramente los principios de equidad y justicia tributaria bajo ninguna perspectiva consideran los “intereses” del fisco. Esto porque el “fisco” no tiene intereses y tampoco derechos. Tiene deberes: cumplir con la ley y, sobre todo, con la constitución. Ya el hecho de pretender catalogar como “recaudación” el monto de IVA retenido es un error enorme, pues es una cuenta por pagar del Estado de Guatemala. El IVA retenido no es recaudación y no deberá ser considerado como tal bajo ningún aspecto. Permitir esta distorsión es saltarse todo el sistema constitucional y legal que rige la tributación en Guatemala. Luego que SAT pretenda que ese argumento sea válido, cuando la retención del IVA es una aberración que afecta de manera directa la capacidad contributiva del contribuyente retenido, misma que nace de la neutralidad del IVA, por lo que quiebra esa neutralidad y convierte al IVA en un impuesto confiscatorio, es decir, inequitativo e injusto, hace que SAT cometa exacciones inconstitucionales al aplicar de esa manera la norma.
Obviamente el primer culpable es el Congreso, pero la facultad discrecional de SAT para calificar nuevos agentes de retención del IVA está para evitar que la aplicación abusiva de la norma, por lo que SAT se convierte en responsable directo de aplicación inconstitucional de dichas normas.
De tal manera, vemos que las aplicaciones de las normas, fuera de los parámetros de equidad y justicia, son violatorios de todo tipo de principios constitucionales. Es más, la argumentación esgrimida por SAT en esas resoluciones administrativas no tiene ningún fundamento técnico, legal o económico, sino que simplemente es el uso de poderes discrecionales en forma abusiva e ilegal.
Conclusión
El hecho que los principios estén constitucionalmente contemplados no implica que los poderes públicos los obedezcan. Una aplicación pobre de dichos principios por los tribunales constitucionales abre la puerta a aplicaciones mucho más abusivas con el correr del tiempo.
[1] La equidad del sistema tributario y su relación con la moral tributaria. Un estudio para América Latina, Castañeda Rodríguez, V.M., Investigación Económica, 2017, 76(299), pp. 125–152.
[2] Murray N. Rothbar, Este artículo es tomado de Economic Controversies, capítulo 21 (2011). Apareció originalmente en New Individualist Review (Verano, 1961): 3–7, publicado en https://mises.org/es/library/la-falacia-del-sector-publico