High Class Entertainment Facility EnhancedAssessmentCase

[11-1 KCCR 158, 98Hun-Ka11, etc.,(consolidated), March 25, 1999]

A.Background of the Case

In this case, the Court invalidated the Local Tax Act provisionsthat imposed enhanced property taxes on "high class entertainmentfacilities" and enhanced land taxes on "land used for luxurious pur-poses" on the ground that they violated the principle ofstatutorytaxationand the ban on blanket delegation.

The complainant sought annulment of the enhanced taxes imposed on his properties in a court and requested constitutional review, whichthe presiding courts granted.

The Constitutional court had already invalidated Article 112 (2)of the former Local Tax Act that imposed acquisition taxes enhanced75% above the normal rate on "high class dwelling and entertain-ment facilities designated by presidential decrees" on the ground thatthe statutory phrase constitutes blanket delegation.1)

B.Summary of the Decision

The Court invalidated the Local Tax Act provisions in the fol- lowing majority opinion of seven justices:

Article 188 (1) (ⅱ) (B) of the Local Tax Act heightens the prop-erty tax rate to 5% for "high class entertainment facilities" andArticle 234-16 (3) (ⅱ) of the same Act heightens the comprehensiveland tax rate to 5% for "land used for luxurious purposes."2)Thequoted statutory phrases are too abstract and vague to predict theirsubject matters. The legislative history and purposes of the Act donot permit reasonable and objective prediction of the extensions of such concepts as "high class entertainment facilities" or "luxuriousproperties". There is a danger of arbitrary interpretation and admin-istration of the provisions by the administrative body imposing the taxes. Hence violation of the principle ofstatutory taxationunderArticles 38 and 59 of the Constitution.

Also, the enhancement applies to those 'high class entertainmentfacilities' and 'land used for luxurious purposes' that are 'designatedby

presidential decrees.' Despite the centrality of the two conceptsto the elements of taxation, Articles 188 (3) and 234-15 (2) (ⅴ) leavetheir extensions undefined to 'presidential decrees', thereby leaving theenhanced taxation to administrative whim. The legislative purposes, other Local Tax Act provisions and other related statutes do not fa-cilitate the prediction, either. Hence violation of the ban against blan-ket delegation of legislation in Article 75 of the Constitution.

Justices Chung Kyung-sik and Lee Young-mo concurred with themajority that the provisions are unconstitutional, but advocated for adecision of nonconformity that would allow the National Assemblywith legislative-formative power to revise the luxury taxes compre- hensively and systematically in conjunction with other tax or related laws.