Events
The applicants are engaged in the business of camp management on the immovable properties they own. The square metre unit value of the applicants’ immovable property for property tax purposes was 393.54 TL in 2017. Upon the Appraisal Commission’s (Commission) determination of the minimum land and land square metre unit value for 2018 as 780 TL for the neighbourhood where the applicants’ immovables are located, the applicants filed a lawsuit before the tax court. While the proceedings were ongoing, the provisional Article 23 added to the Law No. 1319 by Article 35 of the Law No. 7061 entered into force. According to the aforementioned article, in the event that the minimum land and land square metre unit values assessed by the commissions for 2018 in the general assessment period of 2017 exceed more than 50% of the unit values applied for 2017, 50% more than the minimum land and land square metre unit values applied for 2017 will be taken as basis in the calculation of the building and land tax values for 2018. Thereupon, the tax court decided that it was not necessary to make a decision on the case, which was no longer relevant.
The regional administrative court cancelled the decision of the tax court and decided to send the case file to the tax court for a decision on the merits. Thereupon, the tax court started the retrial, conducted discovery and expert examination and, based on the expert report, cancelled the part of the Commission’s decision regarding the applicants’ immovable property, since the report determined the unit value of the immovable property as 600 TL per square metre. The parties appealed against this decision; the regional administrative court rejected the applicants’ appeal without examining it, partially accepted the municipality’s appeal and dismissed the case with regard to the part of the tax court’s decision corresponding to the 600 TL square metre unit value of the Commission’s decision.
Allegations
The applicants claimed that their right to property was violated due to the high determination of the minimum land and land square metre unit values based on property tax.
Assessment of the Court
According to Articles 1 and 12 of the Property Tax Law No. 1319, buildings, land and land within the borders of Turkey are subject to building and land tax. Pursuant to Articles 3 and 13 of the aforementioned Law, building and land tax is paid by the owner of the building and land, the usufructuary, if any, and if neither of them are present, by those who dispose of the building or land as if they were the owner.
Pursuant to Articles 11 and 21 of the aforementioned Law, building and land taxes are levied annually by the relevant municipality once every four years in January and February of the budget year following the year in which the valuation procedures are carried out, based on the tax value. Taxes levied in this way are deemed to have been accrued on the date of levy. In the years following the assessment and accrual, the building and land tax calculated on the tax value shall be deemed to have been accrued for that year as of the beginning of each budget year.
Article 29 of the Law No. 1319 Pursuant to Article 29 of the Law No. 1319, the tax value of land and land is determined by the commissions according to the provisions of the Tax Procedure Law No. 213 dated 4/1/1961 on the determination of the minimum unit value “for each neighbourhood for land and for each village for unparcelled land that will be considered as land, according to the unit values appraised in terms of streets, avenues or different regions in terms of value (streets, avenues or different ones in terms of value in touristic regions will be determined by the relevant governors), and for each province or district for land, according to the type of land (barren, base, wetland)”. The tax value of buildings is calculated based on the normal construction costs per square metre and the value of the land. The tax value is re-assessed every four years and for the following three years, it is calculated by increasing the previous year’s tax value by half of the revaluation rate determined for the same year in accordance with the provisions of Law No. 213.
It is clear that taxation of the property owned by individuals is convenient and necessary in terms of achieving the purpose of providing the financing needed for municipal services. Accordingly, the main issue to be discussed is the proportionality of the interference.
In terms of proportionality, it must first be assessed whether the applicants were given the opportunity to effectively put forward their claims and defences against the minimum land and land square metre unit values for property tax assessed for their immovable properties. The applicants filed a lawsuit against the Commission’s decision and appealed against the decision rejecting the lawsuit. It is understood that the applicants had the opportunity to effectively present all their claims and defences during the proceedings.
In the concrete case, the applicants stated during the proceedings that their business aimed for a sustainable ecological system and was designed and licensed within this framework, but argued that the Commission and the expert did not take this feature of the business into account. The applicants complained that, although the income from the camping business was low, their business was considered equivalent to the villas adjacent to the seafront and generating high income. Finally, the Applicants claimed that the assessed tax value was so high as to lead to the ruin of the business.
In the first paragraph of Article 73 of the Constitution, it is stated that “Everyone is obliged to pay taxes according to his financial capacity in order to meet public expenditures.” Thus, in addition to other principles, taxation must be in line with the taxpayer’s financial capacity. Taxation according to financial power is also a requirement of the principle of proportionality. It is clear that the wealth of a person is an indicator of financial power. Therefore, levying property tax on the immovables included in the wealth of the person does not, in principle, contradict the principle of taxation according to financial power. However, the emergence of a tax burden disproportionate to the value of the immovable property may violate the principle of taxation according to financial power, and thus the principle of proportionality. Failure to accurately determine the real value of the taxable wealth (immovable property) may lead to a tax burden disproportionate to the wealth of the person.
Determination of the value of the immovable subject to property tax is a highly technical and specialised subject. Therefore, the jurisdiction of the Constitutional Court in complaints regarding the determination of the value of immovable property is extremely limited. In this regard, the competent and authorised courts are in a better position than the Constitutional Court. Unless there are very strong reasons, the Constitutional Court’s departure from the conclusions of the courts of first instance is incompatible with the purpose of the individual application.
In the concrete case, it cannot be understood from the scope of the individual application file which issues were effective in the Commission’s decision. In the report prepared by the expert committee as a result of the expert examination conducted by the tax court, it is seen that the factors that positively and negatively affect the value of the immovables are taken into consideration. In this context, the factors that positively affect the value of the immovable property are the fact that it is located in the tourism region and close to the sea, that it has infrastructure services and that it is located in a flat location and is easy to access; and the factors that negatively affect the value of the immovable property are the low level of development, the lack of development that has increased its value in the last ten years and the fact that the construction in the nearby immovable properties has not reached the desired level. The tax court also stated that it relied on the findings in the report by including the square metre unit values of the immovable properties located close to the immovable properties.
The main claim of the applicants throughout the proceedings was that the use of the immovable property was not taken into account in determining its value. In their petitions submitted to the courts of first instance during the proceedings, the applicants argued that the income obtained from camping operations was significantly lower than that obtained from coastal tourism, and accordingly, the value of the immovable property used in camping operations was lower than that used in coastal tourism; they presented the grounds for this claim to the courts of first instance. The applicants’ allegations that the intended use and income of the immovable property could affect its market value were not far from seriousness. Whether it is possible for the applicants to use the immovable property for a purpose other than camping – which, according to their own statements, generates lower income – is also important, but this does not change the fact that the applicants’ claim affects the merits of the dispute. For this reason, it is considered that this claim of the applicants, which seems to be sufficiently justified, should be investigated and met.
However, in the expert report taken as a basis for the judgement of the tax court, no assessment was made as to whether the use and income status of the immovable property affected its fair value, and it is not understood that this was taken into consideration in the concrete case. The issue in question was also evaluated in the tax court judgement. Although the court decision referred to the minimum square metre unit values assessed for some immovable properties close to the applicants’ immovable properties, it did not include any information on the usage status of the immovable properties in question. In this case, it could not be concluded that the expert report taken as a basis for the judgement correctly determined the square metre unit value of the immovable property tax.
As a result, considering that it is not clarified whether the fact that the applicants’ immovable properties are used for camp management affects the fair value, thus the minimum square metre unit value based on the property tax, it is concluded that the interference to the right to property through taxation of wealth is not in accordance with the principle of taxation according to financial power, and therefore does not meet the proportionality condition.
The Constitutional Court decided that the right to property was violated for the reasons explained.
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