Abstract

With its judgment on Tübingen’s municipal tax on packaging for take-away food and drinks, the Federal Administrative Court (FAC) has put a spotlight on an often neglected issue of German constitutional law: the interpretation of the word ‘local’ in the competence to enact excise taxes under Art. 105 para. 2a sentence 1 Basic Law. One of the main issues of the case was whether the tax is sufficiently “local” because it would also apply to a coffee-to-go in a paper cup, which, after all, could be used outside Tübingen. Different from the lower court, the FAC found Tübingen’s tax on packaging to be lawful. Thereby, the FAC reinvigorated a debate on the interpretation of the requirement of locality for municipal taxes which had stalled after a judgment by the Federal Constitutional Court (FCC) in the 1960ies. As was recently observed by Michael Droege, the interpretation of this requirement is largely disconnected from the evolution of municipal competences in general under Art. 28 para. 2 sentence Basic Law. The article proposes to reconnect both constitutional norms by interpreting the word “local” in Art. 105 para. 2a sentence 1 Basic Law just as in Art. 28 para. 2 sentence 1 Basic Law as far as steering taxes are concerned.

This argument proceeds in five steps. After first introducing the legislative history of Art. 105 para. 2a Basic law and its basic concepts, section 2 turns to the requirement of locality. Although doctrine has not changed much after a seminal decision by the FCC in 1963, the section argues that the FAC recent judgment has gone beyond prior case-law. However, the FAC has – unconvincingly – tried to base this finding within the existing framework. Against this backdrop, section 3 proposes a different foundation for the FAC finding by reconnecting the interpretation of Art. 105 para. 2a sentence 1 Basic Law with the general competence of municipalities for all “local affairs” under Art. 28 para. 2 sentence 1 Basic Law. At least for steering taxes, the interpretation of “local” in the latter norm is also useful to interpret the requirement of locality under Art. 105 Basic Law. Yet, proposals to expand the interpretation of this requirement have met criticism of opening the flood gate for all kinds of municipal taxes. Therefore, section 4 engages with possible dangers of broadening the interpretation of the Art. 105 Basic Law. Given the other restrictions for local excise taxes, the article finds however that the danger of a substantial rise in municipal taxes is minimal. Rather, given the ultimate aim of a tax on packaging, the interpretation suggested provides municipalties with enough leeway to face the challenges of climate change, as section 5 argues.