The right to property 

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Chapter 3: The right to property

 Introduction

Prior to 1994 parliament was supreme in South Africa and laws that were enacted by parliament could not be invalidated by the courts.50 This meant that all laws, regardless of whether they were unjustifiable or unreasonable, had to be enforced. The legitimacy of the enacted laws could not be challenged as there was no supreme Constitution against which legislation could be tested. The right to property prior to 1994 was enforced through reliance on common law which was Roman- Dutch law.51 In effect the protection or enforcement of the right to property was not primarily drawn from legislation.
There was a change in our law in 1994 when the Interim Constitution came into effect. The right to property was deemed worthy to be enshrined in the Interim Constitution.52 Subsequent to its inclusion in the Interim Constitution it was then incorporated in the final Constitution of the Republic of South Africa.53 The right to property is contained in the Bill of rights which form chapter 2 of the Constitution. It is a fundamental human right that is enshrined in the Constitution. The right to property includes a taxpayer’s right to be protected from State interference with the taxpayer’s property.54 Instead of parliamentary sovereignty, South Africa has a supreme Constitution which mandates that law and conduct that is not consistent with it must be declared invalid.55 It follows that when enacting legislation, parliament must align such legislation with the supreme law of the land.
Legislation that relates to the collection of revenue has a significant role in the proper functioning of the country, however such legislation is not above the Constitution and it must be aligned with the Constitution.56 Therefore, in a constitutionality enquiry, fiscal legislation stands at an equal footing with any other legislation and has to conform to the norms and standards that are set by the Constitution. This chapter provides a discussion of the right to property as enshrined in the Constitution. Furthermore, this chapter will examine the relationship between the right to property and the enactment of taxation legislation with retroactive effect. This research will also analyse the manner in which the conflicting interests between those of the taxpayers and the state can be balanced. Lastly, this chapter will provide a discussion of the limitation clause in the Constitution and will also discuss the relevance of this section when dealing with the right to property.

The right to property explained

The right to property is a fundamental right that is protected in terms of section 25 of the Constitution. No uniform definition of property has been developed yet by either the courts, the legislature or the academics. The Constitution also does not provide a definition of the property that is protected under section 25. The closest that section 25 gets to shedding light on the meaning of property is the statement in section 25(4) (b) to the effect that property is not limited to land. According to Currie and de Waal there are a number of different meanings that can be ascribed to property and it is a concept that is almost impossible to define with absolute precision.57
In Shoprite Checkers (Pty) Ltd v MEC for Economic Development the Applicant approached the Constitutional Court for a confirmatory order. The Eastern Cape Division had made a declaration of invalidity against some provisions of the Eastern Cape Liquor Act and the Applicant approached the Constitutional Court to confirm that order of invalidity.58 The Constitutional court expressed concern about the lack of common ground on how property is perceived and that this may pose a threat to the South African constitutional dispensation.59 Having made this statement, the court did not attempt to provide a definition for property in order to remedy the identified problem area. The Constitutional Court then held that grocer’s wine licenses constitute property under section 25 of the Constitution thereby indicating that the enquiry into whether an interest is property will be dealt with on its own merits.60
In the First National Bank case the Constitutional Court held that it would be judicially unwise to even attempt to give an all-inclusive definition of property considering the level of the South African constitutional jurisprudence.61 This view of the court allows for flexibility in the law as it means that the courts can properly apply their discretion instead of being limited by a rigid definition. However, this approach is flawed because it perpetuates uncertainty in the law which is not a desirable result for taxpayers. Badenhorst expressed the view that an interest or a right should be regarded as property in the constitutional context if it is a concrete asset that has been acquired by the holder under normal law.62 However, according to Croome a taxpayer’s entitlement to certain benefits or rights constitutes property in the constitutional context.63 The view expressed by Croome is more preferable in that it takes into account the evolving nature of property and does not only limit it to tangible assets.64
The absence of a comprehensive definition for property is an issue that the litigants have to struggle through and one that either the judiciary or the legislature have to address. Solace can be found in the knowledge that the judiciary will deal with a contention that a certain interest constitutes constitutional property on a case by case basis. In light of the above, especially the views expressed by Croome and the court in the Shoprite case, money belonging to the taxpayer will constitute property that is worth protection. This is based on the entitlement that the taxpayer has on the money and other rights that attach to such entitlement.

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Deprivation of property

The Constitution provides that; “No one may be deprived of property except in terms of the law of general application and no law may permit arbitrary deprivation of property.65
The Constitution only allows deprivation of property if it is in terms of the law of general application. Ordinarily, retroactive fiscal legislation is drafted in a manner that makes it applicable generally and it would thus be permitted if found to be a deprivation in so far as it is not arbitrary. Whether a person has been deprived of property will depend on the extent of the interference with the rights to the property that is afforded protection by the Constitution.66 This statement expresses the view that not all interference by the State with the property of the taxpayer will amount to a deprivation of property. For example, legislation that requires a taxpayer to pay tax upon conclusion of a certain act will have a lesser probability of constituting a deprivation of property where it is made to operate from present to the future. However, where fiscal legislation is imposed with retroactive effect and has the effect of creating financial obligations for the taxpayer, such legislation leads to a deprivation of property as the extent of the interference is major. This is also because the taxpayer is obliged to comply with the legislation while it is in effect. It appears from what has been stated above that deprivation of property amounts to a limitation or complete confiscation of the taxpayer’s rights to the taxpayer’s property.
According to Croome, the payment of tax constitutes a deprivation of property because payment of tax is not optional but is mandated by the law.67 In addition thereto, there are penalties that may be imposed should a taxpayer fail to effect payment of tax. The payment of tax as a result of a retroactive fiscal provision would therefore be a clearer deprivation of property as the taxpayer would have to pay tax that was not even payable at the time when a certain transaction was entered into. Croome goes further and argues that the introduction of taxation legislation with retroactive effect amounts to a deprivation of property because it leads to the seizure of the property to which the taxpayer is entitled based on legislation that was not in operation when the past even happened.68
Furthermore, the Tax Administration Act provides that an obligation to pay tax and the right of SARS to receive payment of tax will not be suspended as a result of an objection by the taxpayer to payment.69 Therefore, the taxpayers cannot retain their property whilst challenging retroactive fiscal laws. In addition, failure to comply with tax Acts is a criminal offence in terms of the Tax Administration Act.70 The taxpayers are therefore compelled by legislation to comply with fiscal legislation regardless of whether it is operating prospectively or retroactively. This further supports the contention that retroactive fiscal legislation amounts to a deprivation of property.

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Arbitrary deprivation of property

The government determines the methods and levels of taxation based on the economic growth, the rate of inflation and shortfall in the budget.71 The measures undertaken by the government to collect revenue, which are mostly in the form of legislation, are subject to the Constitution which is the supreme law of the land.72 The Constitution prohibits arbitrary deprivation of property therefore, once it has been established that legislation constitutes a deprivation of property, the next step is to determine if the legislation is arbitrary in nature.73 The meaning of ‘arbitrary’ like other terms that are contained in section 25 of the Constitution is not defined in the Constitution. Reliance is therefore placed on the legal scholars and ultimately the courts to give meaning to this concept.

Chapter 1: Background 
1.1 Introduction
1.2 Problem Statement
1.3 Purpose of the research .
1.4 Research Questions
1.5 Research objectives
1.6 Limitations and Assumptions
1.7 Methodology
1.8 Chapter Exposition
Chapter 2: The rule of law 
2.1 Introduction
2.2 Background.
2.3 Certainty
2.4 The legislature
2.5 The role of the judiciary
2.6 Conclusion
Chapter 3: The right to property 
3.1 Introduction
3.2 The limitations clause
3.3 Conclusion
CHAPTER 4: Foreign law 
4.1 Introduction
4.2 United States of America
4.3 The United Kingdom
4.4 Australia
4.5 Conclusion
Chapter 5: Conclusion 
6. BIBLIOGRAPHY
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