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Denial of legal advice and representation in matters regarding child benefit according to the Income Tax Act unconstitutional
Press Release No. 91/2008 of 30 October 2008
Order of 14 October 2008
1 BvR 2310/06
The complainant received a notice from the family allowance scheme that she was to refund surplus child benefit. She requested legal advice and representation for this according to the Act on Legal Advice and Representation for Citizens with Low Income (Beratungshilfegesetz - BerHG). The Local Court (Amtsgericht) did not comply with her request, but rejected it on grounds that matters regarding child benefit were allegedly attributed to the jurisdiction of the finance courts, and were hence said not to give rise to a right to legal advice and representation according to the clear wording of § 2 BerHG. According to this provision, legal advice and representation were granted in matters related to social law, but not to fiscal law.
The First Senate of the Federal Constitutional Court overturned this ruling of the Local Court by order of 14 October 2008, and found that § 2.2 BerHG is incompatible with Article 3.1 of the Basic Law (Grundgesetz - GG) insofar as the provision does not facilitate the granting of legal advice and representation also in matters related to fiscal law. For the transitional period until such time as a new constitutional provision is handed down by the legislature, for which it has various possibilities for a reform at its disposal, legal advice and representation is however in principle also to be granted in matters related to fiscal law insofar as the general statutory preconditions of § 1.2 BerHG apply thereto.
In essence, the ruling is based on the following considerations:
I. 1. The constitutional standard of equality of legal protection, derived from the principle of the social welfare state, from the principle of the rule of law and from the general principle of equality, has so far been applied solely in granting judicial legal protection. By this principle, in particular the non-constitutional courts' examination of the prospects for the success of the intended assertion or defence of rights was measured as a precondition for the grant of legal aid. Whether this also leads to an obligation to approximate the status of those without means to the moneyed for out-of-court legal protection was, by contrast, deliberately left open by the Federal Constitutional Court so far. The general principle of equality, in conjunction with the principle of the social welfare state and the principle of the rule of law, however requires that the legislature also takes the necessary precautions in the out-of-court field so that plaintiffs do not fail from the outset in asserting and safeguarding their rights due to a lack of income or to insufficient assets.
2. The consideration of the Federal Constitutional Court in respect of the right to equality of legal protection in the procedural field, namely that equal access to the law must be possible to all regardless of their income and assets, also applies mutatis mutandis to out-of-court advice. In view of the fact that the law permeates almost all areas of life, citizens rely on expert legal advice in many cases in order to be able to recognise and evaluate their rights and to decide whether they can assert them - where appropriate also in court - and with what prospects for success. Not different to facilitating access to the courts, Article 3.1 GG in conjunction with the principle of the social welfare state and the principle of the rule of law, and also in creating the legal framework to guarantee equality of the possibility to assert rights, does not require complete equality of those without means with the moneyed, but only that they be largely approximated. Here too, those without means only need to be equated with those among the prosperous who, in choosing to avail themselves of legal advice, also take into account and sensibly weigh up the costs incurred thereby. In particular, plaintiffs may be initially referred to other possibilities to acquire expert assistance in asserting their rights.
II. The legislature has considerable latitude when creating the legal framework to guarantee the possibility to defend rights. It may hence use different methods to regulate the equality of the possibility to assert rights of those who do not have sufficient assets with those who do. With the Act on Legal Advice and Representation for Citizens with Low Income (BerHG) of 18 June 1980, the legislature in principle did justice to the constitutional requirements to guarantee equality of the possibility to assert rights.
III. Having said that, the provision contained in § 2.2 BerHG, according to which legal advice and representation are only granted in the matters explicitly listed by legal fields, is not compatible with the general principle of equality. The exhaustive listing of matters amenable to legal advice and representation, including those of social law, but not of fiscal law, leads to unequal treatment of plaintiffs in matters amenable to legal advice and representation as against those in matters not covered by the list. The delimitation between matters of social law, which are amenable to legal advice, and representation and those of fiscal law, which are not, is orientated in line with the available legal channels. In matters regarding child benefit, this leads to there being no possibility to grant legal advice and representation insofar as - as in the vast majority of cases - it is a matter of child benefit according to the Income Tax Act because legal recourse to the finance courts is made available pursuant to § 33.1 no. 1 of the Rules of Procedure of the Finance Courts (Finanzgerichtsordnung - FGO). By contrast, legal advice and representation can in principle be granted in matters of child benefit according to the Federal Child Benefit Act (Bundeskindergeldgesetz), as well as otherwise in social-law matters. There is certainly no viable factual reason for this unequal treatment in the relationship between plaintiffs in the field of social law and those in the field of fiscal law, and certainly not for the concomitant unequal treatment between beneficiaries of fiscal-law and social-law child benefit.
1. By stating in § 2.2 sentence 1 no. 4 BerHG that legal advice and representation also covered matters "of social law", the legislature, by introducing the Act Amending the Act on Legal Advice and Representation for Citizens with Low Income and other Statutes (Gesetz zur Änderung des Beratungshilfegesetzes und anderer Gesetze) of 14 September 1994, renounced the conception of the legislature, namely to limit the factual area of application of the Act on Legal Advice and Representation for Citizens with Low Income that had been initially reasoned with the presumption that there was little demand for advice, and that it was easily available elsewhere in matters related to labour, social and fiscal law. The other advice available in matters related to social law is by no means inferior to that available in matters related to fiscal law.
2. The unequal treatment ascertained to the detriment of plaintiffs in fiscal law also cannot be factually justified with the occasionally submitted consideration alleging that being able to obtain legal advice at low rates in the field of fiscal and levy law was not an urgent problem for citizens with a low income. Payment obligations under fiscal law may also affect the needy within the meaning of the law on legal advice and representation, particularly also in matters related to child benefit, which is granted regardless of taxable income.
3. Removal of fiscal law in both general child benefit, and in child benefit under fiscal law in particular, from the factual area of application of legal advice and representation also cannot be justified by invoking the concept of a constitutionally permissible definition of typical facts and classification. These too must correctly implement the regulatory concept pursued by the legislature. The legislature however already renounced the originally intended regulatory concept, namely the concentration of public funds in areas in which the need for reasonably priced legal advice was particularly prominent, with the legal amendment in 1994.
IV. This ascertained violation of the principle of equality cannot be remedied by an interpretation in conformity with the constitution of § 2.2 sentence 1 no. 4 BerHG. For this reason, not only the interpretation of this provision favoured by the Local Court breaches Article 3.1 GG, but the indirectly impugned provision contained in § 2.2 BerHG itself is also incompatible with the Basic Law.