Law 7/2022, of 8 April, has incorporated the obligation for all municipalities in Spain to approve a tax or a public non-tax financial contribution that adheres to the principle of “the polluter pays”. Below, we analyze some of the questions raised by this obligation.
Directive (EU) 2018/851 of the European Parliament and of the Council of 30 May 2018, which amended Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste, establishes that Member States must use economic instruments and other measures to provide incentives for the application of the waste hierarchy. It details (in an annex) a list of examples that would allow achieving this goal. Law 7/2022, of April 8, as established in its preamble, meets this requirement by obliging all municipalities to establish within three years (i.e., no later than April 10, 2025), a specific, differentiated, and non-deficit tax or, where appropriate, a public non-tax financial contribution, that allows the implementation of pay-as-you-throw systems.
The new waste tax regulated by Law 7/2022 has significant differences compared to its predecessor, with its main characteristic being the obligation to implement pay-as-you-throw systems and reflect the real, direct, or indirect cost of waste collection, transportation, and treatment operations (including the monitoring of these operations and post-closure maintenance and monitoring of landfills, as well as awareness and communication campaigns) and the revenues derived from the application of extended producer responsibility, the sale of materials, and energy.
Aside from doubts about whether European regulations really required the legislator to approve an internal regulation (such as Law 7/2022) that obliges all municipalities to establish the aforementioned taxes or public non-tax financial contributions, the wording of the regulation raises numerous questions that are expected to generate significant litigation in Spanish courts.
Although each case must be analyzed based on the regulations approved by the different municipalities (and the technical-economic reports that justify the quantification of the cost of the service provided), general preliminary questions arise that, in principle, are applicable to all ordinances, mainly related to (i) compliance by Law 7/2022 with Royal Legislative Decree 2/2004, of March 5, which approves the revised text of the Local Treasury Law (TRLHL) and, linked to the above, (ii) the need to respect the principle of equivalence.
Indeed, Article 11.3 of Law 7/2022 begins by referring to the TRLHL itself, and therefore, it can be assumed that the legislator’s intention was to configure a tax for the provision of public services in the terms provided in that revised text. However, it is noteworthy that, subsequently, in that same section, it is determined that the tax must be approved mandatorily by all municipalities and, furthermore, that it must be “non-deficit,” meaning that its collection can never be less than the direct and indirect cost of the services provided by the municipality.
In this regard, it is worth considering whether the fact that Law 7/2022 obliges municipalities to impose a tax constitutes a violation of the principle of local autonomy provided for in Article 137 of the Constitution and a contradiction, moreover, with what is provided in this regard in the TRLHL itself, given that it establishes that the imposition of such taxes is discretionary.
Secondly, considering that Article 24.2 of the TRLHL defines the principle of equivalence in the sense that “the amount of the fees for the provision of a service or the performance of an activity may not exceed, in total, the real or foreseeable cost of the service or activity in question or, failing that, the value of the benefit received,” and therefore, that the total collection of a fee should tend to cover the cost of the service (but without ever exceeding it), it is worth considering whether it is really feasible for local entities to precisely match the amount of the fee with the total cost of the service, which includes numerous direct and indirect services and costs; all of this, to the extent that this would be the only alternative to comply with the requirement provided in Law 7/2022 that the fee is non-deficit and, on the other hand, that the aforementioned principle of equivalence is not violated.
Aside from the above issues and the possible management problems that these fees may entail for large property holders, other questions arise related to the ordinances that each municipality will approve. The most relevant is how each of them will try to respect the principle of “the polluter pays” and, thus, reflect this principle, for example, concerning vacant homes and inactive premises or in cases where waste generation is lower than usual (for example, in parking lots). And all of this, with the corresponding obligation to justify it in the technical-economic report that supports the fee.
The above points, which are just a sample of the questions linked to this new tax, highlight that, with total certainty, the new waste taxes will generate significant litigation, and consequently, we must pay attention to the administrative and judicial pronouncements that may be issued until, presumably, the Supreme Court definitively assesses their compliance with the law.
