Niles Elber Addresses Taxpayer Rights and the Rule of Law at International Conference on Taxpayer Rights

Trust is unlikely to exist in the absence of the rule of law, yet rule of law is not included in many constitutions. It is, however, incorporated in United Nations’ conventions on human rights, and incorporated by reference in the terms of
reference recently approved by the United Nations Economic and Social Committee as a framework on internal tax cooperation. Moreover, the rule of law is more than “legality” – for example, a law may specify it applies retroactively, but retroactivity violates rule of law principles including certainty. Rule of law requires not only legal certainty but also legal remedies. Legal remedies do not exist in a vacuum in society, so what role does discretion play in promoting trust in tax agency action? Is discretion a way to address the specific circumstances of taxpayers, whereby taxpayers will perceive a tax system as more fair and responsive, or is it abused and viewed as arbitrary and capricious, thereby promoting distrust? And what role does proportionality play in building trust, particularly in the context of penalties.