Constitutionality of bunker levies under German law

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Date produced: 18/06/2010

1. Would it be lawful to transfer taxes or other duties (Abgaben) that have been levied on international aviation and shipping or on financial transactions directly to an international fund spending on climate issues (“the Climate Fund”) rather than through the German treasury?

2, If such a direct transfer is unlawful, would it be possible to earmark the levied duties to be spent on environmental issues?

1. No direct transfer to the Climate Fund

The German budget is subject to the principle of completeness (sec. 110 para. 1 cl. 1 of the German Constitution). According to this principle, all public revenues of the German Federation (Bund), including taxes and special duties, must be contained and disclosed in the federal budget (Haushaltsplan). Consequently, it would be unlawful to deviate the federal budget by transferring tax revenues or revenues from special duties directly to the Climate Fund.

2. Earmarking of revenues

If the Government forms the financial transaction taxes and/or taxes on international aviation and shipping not as “typical taxes” but as special duties (Sonderabgaben), these special duties could not be earmarked for climate issues. Special duties require that the group at which the duty is targeted benefits directly from the kind of usage of the raised sums. This requirement would not be met if the beneficiary was not the banking, shipping or aviation industry but the Climate Fund.

By contrast, if the financial transaction taxes and/or taxes on international aviation and shipping were set up as taxes, the relevant tax revenues could be earmarked through their assignment as taxes for specific purposes (Zwecksteuern).

As a matter of principle all revenues of the state are to be considered as a consistent financing source (einheitliche Finanzierungsmasse) according to sec. 8 cl. 1 of the Federal Budget Code (Bundeshaushaltsordnung). This means that the revenues are generally not earmarked for specific purposes but may be spend for all public purposes regardless of their source. However, it is also admissible to earmark taxes for specific purposes subject to the condition that such an earmarking is stipulated by a specific act (e.g. an act on the Climate Fund) or by means of appropriation notice (Zweckbindungsvermerk) within the Federal Budget.

It should be noted, however, that the assignment of taxes for specific purposes may be terminated upon the annual replacement of the Budget Act (Haushaltsgesetz) or, if stipulated in a specific act, at any time when this specific act is repealed or amended.