Constitutional Limits to the Institution of Consumption Taxes

Abstract

The purpose of this article is to demonstrate that the constitutional limits imposed on the institution of IBS and CBS by means of a complementary law cover not only those that are expressed in the constitutional language, but also those that are implicit in the content of constitutional provisions and those that are presupposed or implied by it. To cope with this task, the formal constitutional limits are reconstructed in the first part of this article and, in the second, the material constitutional limits. The examination of the formal limits allows us to conclude that the complementary law establishing the IBS and CBS cannot alter general rules of Tax Law established in a uniform manner for all federal entities and for all taxes. The investigation of the material limits leads to the conclusion that the IBS and CBS can only be levied on legal transactions habitually practiced by individuals or legal entities, resulting from the exercise of economic activity, practiced with the purpose of allocating goods or services for consumption and inserted in general in an economic cycle involving several stages that go from its production to its consumption, as long as they are not covered by the ordinary private competences of other federal entities.