LEX LOCALIS - JOURNAL OF LOCAL SELF-GOVERNMENT
Vol. 14, No. 3, pp. 511-520, July 2016
Taxes on Communal Waste in the Czech Republic,
Poland and Slovakia
13
MICHAL RADVAN
ABSTRACT Waste management at the municipal level in almost all
European countries is financed by local taxes, usually by special
charges, sometimes by the property tax. This article deals with these
possibilities. The main goal of this paper is to confirm or refute the
hypothesis that there should be one local tax (charge) and its revenue
should be used for communal waste management. To achieve this
goal, a critical analysis of existing legal regulation of taxes and/or
charges on communal waste and a comparison of existing tax /
charge schemes concerning communal waste in the Czech Republic,
Slovakia, and Poland is used. Synthesis of the gained knowledge
especially in the area of taxpayers, correction components and rates
allows introducing the optimal system of legal regulation of
communal waste taxation.
KEYWORDS: • communal waste • tax • charge • Poland • Slovakia •
Czech Republic
CORRESPONDENCE ADDRESS: Michal Radvan, Ph.D., Associate Professor, Masaryk
University, Faculty of Law, Veveří 158/70, 611 80 Brno, Czech Republic, email:
radvan@mail.muni.cz.
DOI 10.4335/14.3.511-520(2016)
ISSN 1581-5374 Print/1855-363X Online © 2016 Lex localis (Maribor, Graz, Trieste, Split)
Available online at http://journal.lex-localis.press.
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1 Introduction
One of the tasks of municipalities is to provide services for its inhabitants. The
portfolio of these services should be rather wide so that these inhabitants are
satisfied and want to stay living at the territory of the municipality. All inhabitants
are willing to have a connection to the infrastructure (gas, water, sewerage,
electricity). This infrastructure is in many cities owned by the municipality itself,
and the users are expected to pay charges or better prices for these services. In
other countries (incl. the Czech Republic), the infrastructure is owned by private
companies (even often owned by the municipality), and users pay regular price.
Other services provided by the municipality like constructions and maintenance of
pavements and roads, public lighting, playgrounds, kindergartens and schools,
public transportation, etc. are “for free”. At least according to the opinion of major
population. But municipality must have enough money to cover the expenses. The
most common financial source is then property tax.
And how is communal waste management financed? Should it be funded via
property tax? The answer is not general, not only in the Czech Republic. There
can be a special public payment for the waste management, or it is possible to
increase the property tax and not to collect any payment for the communal waste.
Of course, it is possible to use money from the centrally collected taxes (PIT and
CIT, VAT) or state dotations, too. But at this moment it is not possible to talk
about local taxes and usually communal waste management is financed from the
local taxes revenue.
The main goal of this article is to confirm or refute the hypothesis that there
should be one local tax (charge) and its revenue should be used for communal
waste management. To achieve this goal, several scientific methods are to be used:
critical analyses of existing legal regulation of taxes and/or charges on communal
waste, comparison of existing tax / charge schemes concerning communal waste
in the Czech Republic, Slovakia, and Poland, and if there are more options,
comparison of these individual taxes and charges, and synthesis of the gained
knowledge to confirm or refute the hypothesis and introduce the optimal system of
legal regulation of communal waste taxation.
The level of existing scientific literature dealing with this issue is rather limited:
there are several textbooks on tax law in national languages describing communal
waste taxation (Mastalski, 2015; Babčák, 2010; Radvan, 2008), and a few articles
in conference proceedings (Radvan, 2013), but they are very descriptive, too.
Moreover, the Polish regulation is quite new and there is a limited number of
publications dealing with this topic at all (for example Popławski, 2012;
Popławski, 2013). Scientific articles in prestigious journals are rather focused on
the economic perspectives, but not legal (for example Mikušová, Nemec,
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Soukopová, 2014; Soukopová, Vaceková, 2015; Nemec, Soukopová, Mikušová,
2015).
2 Types of Taxes on Communal Waste
Talking about taxes sensu largo, we can distinguish between taxes sensu stricto
and charges. The tax sensu stricto means an obligatory amount defined by an act
with a laid down rate which is more or less regularly collected from the incomes
of economic subjects to the public budgets on the irrecoverable principle. On the
other hand, the charge is an obligatory irrecoverable amount defined by an act and
collected by the State or other public corporations for certain legal acts. In contrast
to taxes, this amount is irregular (ad hoc) and the charge payor is eligible to ask
for some consideration. To tell the truth, the difference between “tax” and
“charge” is really more theoretical than practical. For example in a lot of
municipalities the “dog charge” is in fact the “dog tax”: the holders of dogs (the
taxpayers) do not get any plastic bags for the excrements, municipality does not
install waste baskets, does not clean pedestrians and roads, etc. On the other hand,
the “road tax” is rather “road charge” because the whole revenue must be invested
by the State Fund of Transport Infrastructure to modernization of existing roads
and building new ones.
In all the compared countries, there is a constitutional principle (rule) that taxes
(sensu largo; used in this way in the following text) can be imposed only by acts,
not just by ordinances of municipalities or ministries. While in Poland this
principle is set directly in the Polish Constitution (art. 217) and in Slovakia in the
Slovakian Constitution (art. 59/2), in the Czech Republic the principle nullum
tributum sine lege is included in the Charter of Fundamental Rights and Freedoms
(art. 11/5), what is the part of the Czech Constitution sensu largo, together with
the constitution sensu stricto.
In Poland and in Slovakia, there is just one possible tax sensu largo connected
with communal waste. In both countries this public payment is called charge on
waste; in Slovakia specifically on communal waste. The Polish charge is regulated
by the Act on Maintaining Cleanliness and Order in Municipalities, in Slovakia
the legal regulation could be found in the Act on Local Taxes and Local Fees for
Municipal Waste and Minor Construction Waste. We can conclude that in both
countries (similar to most of the European countries, with the exemption of
Sweden and Netherlands – Taxes in Europe Database) the charges on communal
waste are local taxes according to the definition that the local tax is a financial
levy, determined to municipal budget that can be influenced (talking about tax
base, tax rates or one of the correction elements) by the municipality; it is not
crucial whether the taxpayer obtains from the municipality any consideration or if
it is a regular or a single levy – local taxes include both the tax sensu stricto and
the charge (Radvan, 2013). For both Polish and Slovak municipalities the charges
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on communal waste are obligatory, i.e. municipalities do not have any discretion
to decide whether they want to collect this charge or not, they must collect the
charge and in the bylaws they have to set special conditions, especially the charge
rates. This practice was confirmed even by the decision of the Polish
constitutional Court.1
From this point of view, the situation in the Czech Republic is very different. The
Czech law includes three possibilities for the municipalities to collect money to
provide communal waste management. Approximately 80 % of municipalities are
using charge on the operation of the system for picking, collection, transport,
sorting, recovery and disposal of municipal waste as a local charge, i.e. local
charge (tax) on communal waste (hereinafter “local charge”), regulated by the
Local Tax Act. Charge on communal waste according to the Waste Act (as well
local tax according to above mentioned characteristics, hereinafter “waste act
charge”) is being used in 19 % of municipalities and the rest prefers contract
between municipality and the persons producing communal waste or has no
charge on communal waste at all (Drahovzal, 2009).2
And in fact, there is the
fourth possibility: not to collect anything. A very low number of municipalities
(Teplice, Nová Paka) are not collecting any sources from the inhabitants for waste
management (Drahovzal, 2009). Such a solution could be economically clever:
while any charge on communal waste must be administered (and payed) by the
municipality itself, other taxes are administered by the central tax offices. For
example in case of immovable property tax, the municipality has several options
to increase the basic tax rate and tax itself (even five times more than the legal
regulation sets), and there are several municipalities not collecting any charges on
communal waste and their waste management is financed from the increased
property tax. The contract system is not very clever solution, especially if we take
into account existing opinions of experts working with Ombudsman´s office
(Matějková, Pešková, Kubíková, Svobodová, 2010: 75) and courts3
that it is not
possible to combine the above mentioned three types of communal waste taxation.
If we accept these opinions, it would mean that the contract system is completely
obsolete, as according to the civil law principles there is a freedom to enter into
contract. And for sure there will never be a situation in which all the inhabitants of
a particular municipality enter into a communal waste management contract with
the municipality. Conversely, the combination of local charge or waste act charge
seems to be very effective solution to force people to behave more ecologically:
those who want to sort the waste could sign the contract, while the others will pay
the charge according to general bylaws applicable on the rest of the population in
the municipality. In this situation, the charge on communal waste could have not
only fiscal function, but regulative and stimulation effects, too. Of course, the
combination of the local charge and the waste act charge is not possible because of
different structural components. Both charges have their pros and cons, as
described in following chapter.
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3 Taxpayers
The legislators have many options to set forth who shall pay the waste tax /
charge, i.e. who the taxpayers will be. The Slovakian waste charge is very similar
to Czech local charge as it is paid by each natural person with a permanent or
temporary residence at the territory of the municipality.4
Such a solution would be
quite clever on the condition that people are really living and producing their
waste at the territory of the municipality where they officially and formally reside.
But in practice it is not true, because of personal (work, school, hospital, etc.) or
official reasons (jail, etc.). That is why both the Czech and Slovak laws increase
the list of taxpayers: in the Czech Republic the charge is paid also by all natural
persons who own a building designated for individual recreation, an apartment or
a house, where does not live any person paying the charge, i.e. the tax shall also be
paid for rented houses and apartments, and for cottages and other buildings for
individual recreation, even just as an amount equivalent to the fee for one natural
person. In Slovakia, the charge must be paid by the user of any flat, house, garden,
orchard, vineyard, and permanent grass growth as well (Babčák, 2010: 327).
Additionally the Slovakian charge shall be paid by the legal persons and
entrepreneurs, too, while in the Czech Republic these subjects producing waste are
obliged to enter into the contract with any company providing the garbage
collection. The Polish regulation is the strictest one: the duty to pay the charge
applies to all the owners, tenants or users of real estate at the territory of the
municipality, and it can be collected from the owners of other structures, where
the waste if produced, if municipality sets so in bylaw (Popławski, 2012;
Popławski, 2013; Klatka). Czech waste act charge is similar to the Polish charge:
the taxpayer is every person producing communal waste.
According to the Slovakian regulation, municipal bylaw may set that the charge is
collected by the payor – the owner of the real estate. In this situation, the payor is
the guarantor of the tax. Even there is a possibility to make a contract between the
taxpayer and the payor that the charge will be paid to the municipality directly by
the taxpayer, the payor is still the guarantor and if the taxpayer does not fulfil
his/her tax obligation, the guarantor will be asked to pay the charge. The Czech
regulation of local charge is fairer: it only offers to pay the charge for all or
selected taxpayers living in same household by one person (announcing the names
and other data to the municipality), but if this person pays only for him/herself, the
other persons are responsible for their tax debts (Radvan, 2012: 127). The Polish
municipalities have a right to set a special rate of the charge for the household
(Popławski, 2013; Klatka).
One of the most problematic issues concerning taxes in general is the tax duty of
children. Neither the Polish nor the Slovak regulations solve this topic. The
general Czech tax regulation in the Tax Code does not deal with this issue, too.
But because of many problems especially with the waste charges (Radvan, 2012:
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113-114), the Local Charges Act sets that if there are any tax arrears of the
underage taxpayer who has not acquired full legal capacity, the charge obligation
passes to the legal representative or the guardian of the taxpayer.
To conclude the taxpayer issues, the most problematic situation seems to be in the
Czech Republic. As there are two possible charges on communal waste, it is up to
the municipality to choose the better one according to the local conditions. That is
why the capital city of Prague chose the waste act charge, because there are many
individuals working there, but they have permanent residence in some other
municipality. The main problem in charge administration in Prague is to find the
payers – persons producing communal waste. On the other hand, the second
largest city, Brno, has chosen local charge, because it is very easy to find all the
taxpayers thanks to existing public registries of individuals and real estate. But in
practise, it may happen that an individual must pay twice (this person has a
permanent residence in Brno but actually lives, works and produces waste in
Prague) or does not pay at all (if s/he has a permanent residence in Prague and
lives in Brno). From this points of view the Polish and the Slovakian regulation is
fairer: it is paid for the produced communal waste. If fairness is to be achieved in
the Czech Republic, then only in case of local charge the municipality can
guarantee exemptions from taxation in bylaw (for example if the taxpayer prove
s/he paid the charge in other municipality, he is exempted to pay at the
municipality of his/her residence). Of course, the solution could be found in the
Parliament, if the Czech Republic adopts just one possibility of communal waste
taxation. Such a solution would unify not only the subject of tax, but other related
issues (responsibility of underage persons for their tax debts, even this rule should
be set in the general Tax Code because of other taxes like property taxes or
income taxes), too.
4 Correction Components
By looking at the compared regulations, the most general is the Slovakian one as
the municipality can reduce or waive the charge in the bylaw or during the tax
proceedings and there are no other conditions set in the act (Babčák, 2010: 328).
On the other hand, Czech municipalities using the waste act charge have no
possibilities for corrections. In case of the Czech local charge, the basic list of
exemptions is set in the act. Children placed in social facilities and persons placed
in homes for people with disabilities, homes for the elderly, and sheltered housing
are exempted from taxation. Moreover, the municipality has a right to set more
exemptions in the bylaw. The most common are exemptions for persons living
long-term abroad, in prison, or in the hospital for the chronically ill. Such
exemptions are clever as these people are not producing the waste at the territory
of the municipality. Much more problematic from this point of view are
exemption for underage persons. During the tax proceedings, it is possible to
waive the local charge.
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Neither in Slovakia nor in the Czech Republic the regulative function of waste
charges is taken into serious account. There are just a few municipalities
exempting at least partly from the waste charge those who are sorting their waste.
Of course such an exemption is complicating the charge administration, but as an
economic and ecological tool it is very useful (Radvan, 2012:. 119-120). The
Polish legislator was aware of this fact and the only compared regulation with the
lower rates for those sorting the waste is the Polish one, even Klatka states that the
costs of sorted waste management are higher (Klatka).
5 Rates
The constructions of the charge calculation could be quite easy. This is the
position of Slovakia and the Czech Republic. In Slovakia, the quantity or daily
rates are used, depending on the usage of quantitative collection in the
municipality. The act sets minimal and maximal rates (0,0033 – 0,0531 EUR/litter
of waste or 0,0066 – 0,1659 EUR/kg of waste, or 0,0006 – 0,1059 EUR/day); the
concrete rates are set in bylaws (Babčák, 2010: 328). The Czech Local Charges
Act sets only maximal rates. The local charge rate has two parts: the first one is
250 CZK for a person per year at maximum, the second one must respect real
expenses of the municipality in the area of municipal garbage and can be 750 CZK
for a person per year at maximum. It means 1000 CZK for a person per year at
maximum. The municipality must account for expenses for one person and the
concrete rate for a calendar year in the bylaw. The Czech waste act charge does
not have any maximal rate and it is up to the municipality what the concrete rate in
the bylaw for the calendar year is.
The Polish regulation is extremely complicated (Popławski, 2012; Klatka). Each
municipality must adopt its bylaw setting the method of charging and charge rates.
There are three possible methods for the real estate where people are living:
number of persons living in the real estate, the quantity of used water, or the area
of the real estate. Each method has pros and cons, for example it is not possible to
verify the real number of persons living in the real estate (similar to the Czech
waste act charge), some of the water used might have been for irrigation, there is
no relation between the area of real estate and the quantity of waste, etc.). If
nobody is living in the real estate, the tax base is the number of dustbins. The rates
are influenced by the number of inhabitants of the municipality, the quantity of
waste, the cost of waste management, and seasonality of waste production. The
maximal charge rates are 2 % of the average monthly disposable income (for the
method using the number of persons), 0,7 % of average monthly disposable
income for m3 of water consumed, 0,08 % of average monthly disposable income
for m2 of real estate, or 5,6 % of average monthly disposable income for the
household. If the waste is not sorted, the maximal rates are doubled.
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The conditions of payments (when to pay, hoe to pay, etc.) must be set in all cases
(all compared states and all compared charges) in the bylaw. Even the taxable
period is formally one calendar year in all countries and charges, the real tax
period is month in Poland and the Czech Republic, and one day in Slovakia.
6 Conclusion
Effective system of waste taxation is conditio sine qua non for effective waste
management at the municipal level as in all the compared countries and in all
European countries the municipality (or state is small countries) is the owner of
the communal waste. Not to collect any waste tax sensu largo seems to be
economic clever solution if there is any possibility for the municipality to replace
it with some other revenues, for example with multiplying coefficients for the
centrally collected property tax in the Czech Republic, or with the shares of
centrally collected taxes (PIT, CIT, or VAT). But communal waste management is
one of the tasks of local self-government and it should be financed from local
sources, moreover if there are any legal possibilities to influence the tax according
to the level of waste sorting. People are motivated to be more ecological. In this
moment, it is possible to think about a contract system, but according to the civil
law principles there is a freedom to enter into contract and municipality has no
power to force all the inhabitants or persons producing communal waste (incl.
children) to enter into the contract. The contract system could be used as a
supplement to general communal waste taxation system: for example the ones
who sort the waste are exempted from general taxation regulated by law and
bylaw.
All the systems compared in Poland, Slovakia and the Czech Republic have their
pros and cons. The same conclusion applies for all three systems in the Czech
Republic. Because it is legally possible to pay twice or not at all for the communal
waste in this country, one of the conclusions of this article is that it is reasonable
to have only one system of communal waste taxation. And it should be obligatory
public payment with minimal rates (like in Slovakia) according to the arguments
in previous paragraph. The taxpayer should be identified according to his/her
permanent residence as it is the only instrument assuring that each person
producing communal waste pays just ones. I believe that it is not a fair system
especially if people can live somewhere else, but for the tax administrators this is
the only effective way to find the taxpayer because of existing registries. Second
payments in other municipalities (because of summer houses, rented apartments
and houses, running business) are not excluded. The responsibility of underage
persons for their tax debts should be set in the general Tax Codes because of other
taxes like property taxes or income taxes, not only for the waste taxation.
The number of correction components should be minimalized as each correction
component means higher administrative costs. Of course it is good to motivate
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people to behave more ecologically, to sort the waste to respect regulative and
stimulation function of taxes. But referring to the principles of effectiveness and
economy in tax administration, the way is not to adopt correction components in
taxes (especially if the taxes are quite low) but to create favorable conditions other
than a tax like installation of containers for recycling close to home, information
campaign about the suitability of waste sorting and sorting options, etc.).
According to the above mentioned arguments, the hypothesis stated in the
introduction that there should be one local tax (charge) and its revenue should be
used for communal waste management was confirmed.
Notes
1
See the decision of the Polish Constitutional Court no. K 17/12.
2
Czech Ministry of Finance does not have any statistics concerning these ratios.
3
See the decision of the Czech Highest Administrative Court no. 2 Afs 107/2007-168.
4
See the decision of the Czech Highest Administrative Court no. 5 Afs 175/2006-116.
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