2.2 Principles of Taxation Law

Legality — no tax without legislation (Article 115's principle: no tax except by law). The Supreme Court has held that a tax the Act does not impose cannot be created by putting it in a regulation's schedule, and that levies founded only on executive order are unlawful. Ability to pay — equity's legal echo: the better-off pay more (vertical equity); equals pay equally (horizontal equity). Certainty and prospectivity — a tax law speaks from its commencement; the Court's settled line is that tax laws do not operate retrospectively unless the legislature says so expressly. Equality before the tax law — Article 18's equal protection extends to taxpayers: classifications among taxpayers must bear a rational nexus to the tax's purpose. Strict construction — charging provisions are read strictly; ambiguity is resolved in the taxpayer's favour (the contra fiscum tendency), while relief and exemption provisions are read liberally so the relief can be enjoyed. Due process — notice, hearing, reasons and appeal (the administrative-law guarantees) around assessment and penalty. Reasonableness, not confiscation — the rate and base must be justifiable; the Court has quashed levies whose design was unreasonable in principle (the cinema-seat-basis case).