Public Charges and Economic Freedom: A Constitutional Analysis
Article 19 N° 20: Equality Before Public Charges
It refers to any charge or requirement unilaterally imposed by the state on individuals for the general interest of society, affecting either their property, taxes, or freedom. This definition distinguishes two types of public charges: those affecting property (real public charges) and those affecting personal freedom. Examples of real public charges include taxes, contributions, and fees. These may involve monetary compensation from the State, while personal public burdens, such as military service, affect personal liberties.
Constitutional Guarantees of Public Office
These guarantees include:
Equal Distribution
Charges should be imposed equally on all those in the same situation. However, equality in law is not always achieved statistically. True equality is based on reason, justice, and the common good, proportional to the ends pursued. Unconstitutional taxes can be challenged. The Constitution directs the legislature to establish distributive modes, such as proportional and progressive taxes. Proportional taxes have a fixed percentage rate, while progressive taxes increase with taxable income. Direct taxes affect earned income, while indirect taxes affect legal acts, often considered socially regressive.
Establishment by Law
Public charges should only be established by law to ensure legal certainty, as per Article 19 No 20 and Article 22. Charges not established by law can be challenged through legal actions.
Prohibition of Unfair Charges
Grossly unfair or disproportionate charges are prohibited. Taxes are unfair if they lack a foundation of justice and disproportionate if they exceed 50% of income. Such taxes are unconstitutional as they violate Article 19 No 20 and Article 19 No 26.
Prohibition of Assigned Taxes
Tax revenues should generally go to the national treasury, available to the President for meeting public needs. Exceptions occur when the legislature assigns taxes to a specific purpose, directing them to a special account. This is generally unconstitutional as it limits the President’s control over funds. However, exceptions exist for specific purposes, such as national defense or local development.
Tributes Involvement
Tributes set by the legislature for a specific purpose are generally unconstitutional, with exceptions for:
- Taxes in effect on a specific date until repealed.
- Tributes for national defense, such as a percentage of copper revenue for the Armed Forces.
- Tributes for local development, such as taxes on local goods or activities.
- Tributes for regional development, such as mining taxes for regional areas.
Equality of Economic Substance (Article 19 No 22)
The Constitution ensures no arbitrary discrimination in state treatment. It recognizes the need for state intervention to address economic disparities. Differential economic treatment is allowed if established by law and based on reason, justice, or the common good. This may include special benefits or charges for specific groups or areas.
Differential economic benefits can be direct (e.g., grants, loans) or indirect (e.g., tax reductions). Indirect benefits should be included in the annual budget to ensure transparency and allow comparison with long-term improvements.
The Right to Freely Develop Economic Activities (Article 19 No 21)
This right is integral to a market economy, with the private sector as the engine of economic development. However, it is not absolute and is subject to limitations:
Prohibitive Constraints
These are absolute prohibitions on activities that contravene morality, public order, or national security. The legislature determines these constraints, guided by the Constitution. If the legislature is silent, the courts may determine which activities are limited.
Regulatory or Functional Limitations
These limitations operate on permitted activities, requiring compliance with certain conditions or requirements for the common good. These limitations should be established by law. The Constitutional Court has ruled that regulations must be through legislation, not administrative decrees.
Economic freedom promotes private economic activities, with the state acting to supplement or correct deficiencies. The state can create public enterprises or participate in private companies, but this must be authorized by law. When the state acts in business, it must adhere to the same legal standards as the private sector, unless specific laws allow otherwise.