High Court of Justice 35810-08-25 Union of Representatives v. Knesset of Israel - part 36

Judge Ruth Ronen:

1. I agree with the conclusion of my colleague the judge Grosskopf in his detailed opinion, and I would like to add a few short comments in relation to some of the issues discussed in it.
2. My colleague is of the opinion that the time is ripe to decide whether legislation imposing tax (hereinafter: Tax Law or Tax Legislation) violates the constitutional right to property, in light of the existing dispute on this issue in case law and legal literature. An answer to this question is required for the purpose of clarifying the first stage of the constitutional examination, in which the court examines whether the relevant tax law violates the constitutional right to property.  A determination that tax legislation never violates the right to property means that the court will not be able to pass tax laws under constitutional judicial review (unless it is alleged to infringe on a constitutional right other than the right to property).  If, on the other hand, it is determined that tax laws always violate the constitutional right to property, this means that the court will be required to examine the relevant tax law in the framework of the second stage of the constitutional examination whenever a petition is filed in this regard.
3. According to my colleague's approach, there is no room in this context to accept any of the absolute positions - i.e., the position that tax legislation always violates the right to property; and the position that tax legislation never constitutes an infringement of the right to property. My colleague is of the opinion that an interim approach should be adopted, according to which tax legislation will be considered to infringe on the constitutional right to property only if the tax in question is not a "good tax" (paragraphs 43-46 of his opinion).

As for how to examine whether tax is a "good" tax, my colleague proposed an open list of five "suspicious categories" that when there is a real concern about their existence, tax legislation should be recognized as violating the constitutional right to property.  In this context, he enumerated the following categories: tax legislation that involves significant infringement of taxpayers' vested property rights; tax legislation that involves significant harm to important public interests; retroactive tax legislation; imposing a tax that is inherently unequal; and tax legislation that ostensibly contradicts economic logic.

4. In my opinion, insofar as a decision on the above question is required, it must be determined that tax laws always violate the right to property; However, the burden that will be imposed to justify them in the framework of the second stage of the constitutional examination will be light, and the court's intervention in such laws will be unusual and very rare.
5. I will clarify things. First, like my colleague - I too do not believe that tax legislation never violates the constitutional right to property of taxpayers.  The intuitive answer to the question of whether tax laws harm private property is probably yes.  This is in light of the fact that by virtue of tax laws, the authority takes money that would otherwise belong to the taxpayer, and transfers it to it.  The fact that the tax laws are intended to benefit the public as a whole, including the taxpayers themselves, does not mean that the imposition of a tax does not infringe on the taxpayers' constitutional right to property, but only that this infringement is important, necessary and justified.  This is similar to other violations of basic rights that exist frequently and the justification involved in them is indisputable (for example, the possibility of depriving a person who has committed a serious criminal offense, etc.).

Moreover, Section 1(a) Basic Law: The State Economy states that "Taxes, mandatory loans and other mandatory payments shall not be imposed, and their rates shall not be changed, except by law or in accordance therewith; The same applies to fees".  From this provision of the law, it can be learned that the legislature took seriously the powers given to the state to tax its citizens, and determined that this power is given to the state only by law or in accordance with it.  It therefore appears that the legislature's approach is that tax laws violate the rights of taxpayers - in a manner that requires explicit authorization in the law or pursuant to it in order to do so (compare paragraph 3 to the opinion of my colleague Justice A.  Stein).

6. The question that must therefore be examined is whether it should be determined that all tax laws violate the constitutional right to property; or - as my colleague suggested - that only tax laws with certain characteristics violate this right. This is in line with the existence of a sub-stage in the first stage of the constitutional examination in which the relevant tax law will be examined in all its circumstances; And only if it is found that this is a "suspicious" law, which imposes a "bad" tax, will there be room to examine it in the framework of the second stage of the constitutional examination.  Otherwise, there will be no room for examination of the law in the framework of the second stage, and it will be determined that the law does not infringe the right to property.
7. First of all, it should be noted that the question of the scope of the spread of constitutional rights and the scope of judicial review that derives from it is an important question that has been dealt with more than once in the legal literature (including recently, see: Noam Sohlberg and Omri Goldwyn, "A Few Who Hold the Majority: On the Scope of the Interpretation of Constitutional Rights" Mishpatim 55 (forthcoming); David Enoch and Barak Medina, "A Few Who Hold Less and Less: A Response to Noam Sohlberg and Omri Goldwin's Article on the Scope of the Interpretation of Constitutional Rights" Mishpatim 57 (to be published); Alon Harel, "The Multiple Who Holds the Majority: On the Scope of the Interpretation of Constitutional Rights" Mishpatim 57 (forthcoming)). The dilemma that exists in this context is between an overly broad definition of constitutional rights - which, according to some authors, "dilutes" their meaning (as indicated by Sohlberg and Goldwin's article); and the argument that limiting the scope of the spread of constitutional rights reduces the possibility of judicial review of the authority's actions that ostensibly violate these rights (as emerges from Enoch and Medina's article).

8. I do not believe that it is necessary to address this dispute in the framework of this judgment. Indeed, the question of the scope of the deployment of a constitutional right may be important in relation to other constitutional rights, when it is possible to determine a defined and limited scope of distribution to one right or another.  Thus, for example, it is theoretically possible to define the constitutional right to freedom of expression as a right that does not include expressions that constitute incitement from the outset.  Such a ruling means that a constitutional petition filed against a law prohibiting incitement will not pass the first stage of constitutional examination (at least in relation to the claim of infringement of freedom of expression), since according to it, incitement is not included in this constitutional right.

However, my colleague's proposal is different.  My colleague does not propose to exclude from the constitutional right a distinct category of property or even of tax laws.  My colleague proposes to examine on their merits all the tax laws that are claimed to be unconstitutional, only in order to determine whether the tax law in question is one that violates the property right or not.  Indeed, my colleague tried to give signs in the tax laws that could be determined to infringe on the right to property.  However, these signs leave a lot of room for discretion.  Thus, it is not clear for the sake of the example when the infringement of the property rights of taxpayers will be considered significant; when the harm to public interests will be considered significant; And when will the tax be considered to be one that harms economic logic? In all of these issues, disagreements are of course liable to arise between the petitioners' positions and the state's positions - disputes that will require preliminary clarification in the framework of the first stage of the constitutional examination - of the aforementioned questions.

9. Moreover, these questions may overlap with the proportionality tests used in the second stage of constitutional review. In other words, some of the questions that my colleague believes should be examined in the framework of deciding whether the tax is a "good tax" (in order to determine whether its imposition violates the constitutional right to property), are questions that if it were determined that the tax violates the constitutional right to property, they would in any case be examined in the framework of the second stage of the constitutional examination, the stage of examining the proportionality of the violation of the right.
10. Therefore, I am of the opinion that from a practical point of view there is no significant difference between the manner of conduct of my colleague (who, as stated, believes that judicial review in the second stage of the constitutional examination will be conducted only in those cases in which it is determined from the outset that the relevant law is not a "good tax law"), and my own position.

In other words, the examination that my colleague proposes to carry out in the first stage leads to a result whereby the court will examine each tax law on its own merits, in order to determine whether it is a law that has a constitutional ground for intervention or not.  I do not believe that there is a tax law that, according to my colleague, will be found in the first stage of the constitutional examination as a "good tax", while in my view - it will not meet the second stage of the examination, in which the law is examined in the tests of proportionality.  The result of my friend's and mine's course of action therefore leads to the same result.

11. Indeed, the distinction as to whether a particular examination is conducted within the framework of the first or second stage of the constitutional examination may have significance in terms of the burden of persuasion. Thus, while there is no dispute that the person who claims a violation of a constitutional right has the burden at the first stage to prove that a constitutional right has been violated; Thus, more than once the position has been expressed (although it seems that the case law has sides here and there in this context), that in the second stage - at least with regard to some of its components - the burden is on the state (or the public authority) to convince that the infringement of the right was done lawfully and meets the tests of the limitation clause (see and compare: High Court of Justice 4343/19 Yes to the Elderly - for the Advancement of the Rights of the Elderly v.  Knesset of Israel, Paragraph 11 of the opinion of Deputy President   Hendel [Nevo] (March 16, 2022); High Court of Justice 3390/16 Adalah - The Legal Center for Arab Minority Rights in Israel v.  Knesset, para.  48 [Nevo] (July 8, 2021); High Court of Justice 7146/12 Adam v.  Knesset, IsrSC 66(1) 717, 805-806 (2013);High Court of Justice 10662/04 Hassan v.  National Insurance Institute, IsrSC 65(1) 782, 824 (2012); High Court of Justice 6942/19 Chabano v.  Minister of the Interior, paragraphs 19-22 of the opinion of Justice N.  Sohlberg [Nevo] (July 12, 2023) (hereinafter: the Chabano case)).

However, even if the distinction between the examination at the first stage and the examination in the second stage has an impact on the burden of persuasion, I do not believe that this is sufficient to accept the manner of examination proposed by my colleague.  This is because I believe that this matter can be addressed by establishing lenient rules in relation to the burden imposed on the state to persuade that a certain tax law is constitutional.  In other words, the fact that tax laws are bound by reality and are intended as a rule to finance the state's expenses will be reflected in terms of a significant reduction in the burden of persuasion that will be imposed on the state in order to prove that the relevant tax law meets the tests of proportionality.  The extent of the court's intervention in such laws is in any case minimal, and this will be the case even if it is determined that the examination of them will be conducted in the second stage of the constitutional review and not at its first stage.  The aforementioned is also consistent with the deep-rooted rule that the legislature's discretion is particularly broad when it comes to economic legislation (see: High Court of Justice 3964/23 The Movement for Quality Government in Israel v.  The Knesset, paragraphs 115-116[Nevo] (‏31.7.2025‏)‏‏; High Court of Justice 6304/09 Lehav - Chamber of Self-Employed and Business Organizations in Israel v.  Attorney General, paragraph 113[Nevo] (‏2.9.2010‏); ‏‏High Court of Justice 4947/03 Be'er Sheva Municipality v.  Government of Israel, paragraph 8[Nevo] ‏(‏10.5.2006‏)‏‏).