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Constitutional complaint against duties collected for the Forestry Sales Fund / Timber Promotion Fund successful
Press Release No. 57/2009 of 05 June 2009
Order of 12 May 2009
2 BvR 743/01
Just as the German farming and food industry is promoted (see Press Release No. 10/2009 of 3 February 2009), the German forestry and timber industry is also promoted pursuant to the Timber Promotion Fund Act (Holzabsatzfondsgesetz - HAfG) or, up to the end of 1998, the Forestry Sales Fund Act (Forstabsatzfondsgesetz - FAfG). An institution under public law with its registered place of business in Bonn, the Forestry Sales Fund (Forstabsatzfonds), which was succeeded by the Timber Promotion Fund (Holzabsatzfonds), was charged with the promotion of the sale and use of products of the German forestry industry and the timber industry through the penetration and cultivation of markets in Germany and abroad with the use of modern means and methods. Duties were channelled to the Fund to achieve this purpose. These duties were collected from enterprises in the forestry industry and, later, also from enterprises in the timber industry. No duties were levied on foreign imports of untreated timber. According to the annual report of the Timber Promotion Fund, its spending totalled approximately €14.1 million in the year 2007. Of that amount, approximately €13.5 million was used for marketing activities. With its assessment notice dated 21 June 1996, the federal agency that was the defendant in the initial proceedings levied Forestry Sales Fund duties in the amount of DM 3,036.50 on the complainant for the second half of the year 1995 pursuant to § 10.1 FAfG. The objection raised against the notice of assessment and the action brought thereafter were unsuccessful; the complainant's motion for leave to appeal was denied. In his constitutional complaint, the complainant asserts that the duties constitute special levies that are prohibited under the Basic Law (Grundgesetz - GG).
The Second Senate of the Federal Constitutional Court decided that the provisions of the Forestry Sales Fund Act governing the collection of duties and their successor provisions in the Timber Promotion Fund Act are incompatible with the Basic Law and void and violate the fundamental right of the complainant under Article 12.1 in conjunction with Article 105 and Article 110 of the Basic Law. The duties constitute special levies that are prohibited since the German timber and forestry industry lacks the responsibility for providing funding in this respect.
In essence, the decision is based on the following considerations:
According to established case-law of the Federal Constitutional Court (see most recently the judgment of the Second Senate of 3 February 2009 - 2 BvL 54/06 -, marginal nos.97 et seq.- Press Release No. 10/2009 of 3 February 2009), limits to the imposition of non-tax levies, and in particular to the imposition of special levies for providing funding that the legislature imposes in the exercise of its vested authority outside the scope of provisions pertaining to fiscal activities by the Länder (Article 104a et seq. GG) in compliance with the general rules contained in Article 70 et seq. GG, follow from the limitative and protective function of the provisions pertaining to such fiscal activities.
Because the German forest industry lacks any responsibility for providing funding, duties paid to the Forestry Sales Fund represent constitutionally impermissible special levies. As in the case of the duties paid under the Agricultural Marketing Fund Act (Absatzfondsgesetz), duties under the Forestry Sales Fund Act, which were subsequently removed from the Agricultural Marketing Fund Act, but remained structurally unchanged, lack sufficient justifying consistency in terms of the purpose of the Act, factual proximity, group homogeneity and responsibility for providing funding. At issue are not special levies that are based on the notion of causality involved in the assignment of special burdens to those liable to make payment and can be justified on the basis of responsibility for the ramifications of the circumstances or conduct of a specific group. In fact, promotional measures are at issue that are carried out compulsorily and the group of those liable to make payment is called upon to finance them only by reason of a benefit that the legislature has imputed to this group. The enterprises liable to make payment create no need that they could readily be held responsible for satisfying. Indeed, the government intervenes in the structure of the economic order by means of promotional measures grounded in economic policy on the basis of the Forestry Sales Fund Act and assigns responsibility for the funding required only because of this intervention to the enterprises burdened with the duty to make payment. This financial burden for the assumption of responsibilities by the government that substitutes a decision from above for entrepreneurial activity on the part of individuals constitutes from the point of view of those liable to make payment not only a special burden in addition to that of taxation which requires justification, but also curtailment of the entrepreneurial freedom protected by Article 12.1 GG which in that respect also requires special justification.
Disadvantages at the level of international competition that must be averted are neither advanced nor are any evident. In view of the fact that the foreign trade deficit was already moderate when the Forestry Sales Act took effect in the year 1990, it was from the very beginning not possible to discern any significant impairment or disadvantages to be averted at the level of transnational competition. For that reason, the question as to whether the positive development that it has since been possible to ascertain was also due to the activities of the Forestry Sales Fund need not be addressed. There is also no evidence of any other industry-specific disadvantages that could justify imposition of a compulsory duty.
The unconstitutionality of the duty in the form of a special levy pursuant to § 10 FAfG renders void §§ 2.1 to 2.3, §§ 10.1 to 10.4, § 11 and § 12 FAfG and the corresponding provisions of the Timber Promotion Fund Act. As regards the conduct of administrative activities, the only aspects that remain meaningful in practice are the currently applicable provisions governing the establishment of the Forestry Sales Fund or, as the case may be, Timber Promotion Fund as an independent institution under public law and its governing bodies and finances as well as the provisions relating to oversight by the Federal Ministry of Food, Agriculture and Consumer Protection (Bundesministerium für Ernährung, Landwirtschaft und Verbraucherschutz - BMELV), the auditing authority of Germany's Supreme Audit Institution (Bundesrechnungshof - BRH) and the provision governing exemption from taxation as well as the provision according to which the Timber Promotion Fund must reimburse the Federal Agency for Agriculture and Food (Bundesanstalt für Landwirtschaft und Ernährung - BLE) for personnel and other expenses incurred to collect the duties in the past.