The contribution of economic operators in the gambling field at the National Cultural Fund

By Teodora Luca
Lawyer, C.A. LUCA Mihai Catalin

The beginning of November marked a new fiscal obligation imposed on gambling organizers, this time regulated in the form of a mandatory contribution to the National Cultural Fund.

The dispositions art. 21 of Ordinance no. 51/1998 regarding the improvement of the system of non-reimbursable financing of cultural projects, amended and supplemented by Law 286/2022 probate of Government Emergency Ordinance no. 83/2022 for the amendment and completion of Government Ordinance no. 51/1998 regarding the improvement of the financing system of programs, projects and cultural actions, as well as for the amendment of the Government’s Emergency Ordinance no. 42/2019 regarding the establishment of financial measures to support the implementation of the National Cultural Program “Timişoara – European Capital of Culture in 2023”.

The National Cultural Fund is an economic-financial instrument intended to support and realizes cultural projects, whose own income comes from the following contributions:
t) a share of 0.5% of the revenues made by economic operators in the field of gambling, including for activities organized in the online environment.

From the first reading, the normative act raises a series of problems, starting with the definition of the categories of companies in charge of which the payment obligation is established until the determination of the basis of calculation. Until the methodological norms are adopted, which we hope will clarify these first questions, our interest is to understand to what extent these norms are in accordance with the constitutional principles.

The Constitution of Romania establishes through the provisions of art. 1 paragraph (5) the principle of legal security, the principle of legality and predictability.
Regarding the provisions of art. 1 paragraph (5) of the Constitution, according to which “in Romania, compliance with the Constitution, its supremacy and laws is mandatory”, The Constitutional Court has found repeatedly that it includes certain requirements related to the principle of legality, ensuring the uniform interpretation of the law, the quality of the law (to which the clarity, precision, predictability and accessibility of the law are subsumed), by the principle of legal security that enshrines the legal security of the person and of legal relations, a concept that is defined as a complex of guarantees of the nature or with constitutional valences inherent in the rule of law, in the consideration of which the legislator has the constitutional obligation to ensure both a natural stability of law, as well as the exploitation of fundamental rights and freedoms under optimal conditions (in this sense, see Decision no. 454 of July 4, 2018, published in the Official Gazette of Romania, Part I, no. 836 of October 1, 2018, paragraph 68).

Regarding the same principle, the Court of Justice of the European Union held that one of the fundamental elements of the supremacy of law is the principle of security of legal relationships (Judgment of June 6, 2005, pronounced in the Androne Case against Romania, paragraph 44, or Judgment of October 7, 2009, pronounced in the Stanca Popescu Case against Romania, paragraph 99).
At the same time, the European Court of Human Rights ruled that, once the state adopts a solution, it must be implemented with reasonable clarity and consistency in order to avoid as much as possible legal uncertainty and uncertainty for the legal subjects targeted by the measures to implement this solution (The judgment of December 1, 2005, pronounced in the Case of Păduraru against Romania, paragraph 92, or the Judgment of December 6, 2007, pronounced in the Case of Beian against Romania, paragraph 33).

By Decision no. 139 of March 13, 2019, published in the Official Gazette of Romania, Part I, no. 336 of May 3, 2019, paragraph 85, the Constitutional Court emphasized that this constitutional principle, interpreted in conjunction with the other principles subsumed under the rule of law, regulated by art. 1 paragraph (3) of the Constitution requires that both procedural and substantive requirements to be respected within the legislation.

Regarding the legislative technical norms, The Court, in its jurisprudence, held that although they have no constitutional value, through their regulation, the legislator imposed a series of mandatory criteria for the adoption of any normative act, whose compliance is necessary to ensure the systematization, unification and coordination of legislation, as well as the appropriate content and legal form for each normative act. Thus, compliance with these rules competes to ensuring a legislation that respects the principle of security of legal relations, and the regulation adopted by not respecting the norms of legislative technique causes the emergence of situations of incoherence and instability, contrary to the principle of security of legal relations in its component related to the clarity, precision and predictability of the law (see in this regard Decision no. 232 of July 5, 2001, published in the Official Gazette of Romania, Part I, no. 727 of November 15, 2001).
Imposing new rules and obligations without the regulation of a term of entry into force of the new rules and a legislative solution for the transitory situation, which allow the addressees of the rule to respond to the new legislative requirements, represents a lack of predictability and a violation of the constitutional requirements under the aspect of the principle of legal security and the principle of legitimate trust that impose the limitation of the possibilities to modify the legal rules and the stability of the rules established by them.

According to the provisions of art. 21 para. 1 letter t) of OG 51/1998, the mandatory contributions established for gambling organizers (operators that carry out activity in the field of gambling), represent own revenues of the National Cultural Fund.

National Cultural Fund however, it is an economic-financial instrument and not an entity with legal personality, therefore, its ability to have rights and assume obligations to generate its own income cannot be questioned, regardless of whether they are constituted by mandatory contributions of certain categories of economic agents, sponsorships, donations, legacies or other liberalities.
Moreover, the provisions of art.18 of the O.G. 51/1998 unequivocally establish that the economic-financial instrument for financing cultural projects (the National Cultural Fund) is managed by the Administration of the National Cultural Fund, a public institution with legal personality, which is organized and functions under the Ministry of Culture.
In other words, the National Cultural Fund is a financial instrument (budget) at the disposal of the Administration of the National Cultural Fund, a public institution financed from its own revenues and from subsidies granted from the state budget, which is responsible for its administration.

In the contents of Decision 310/2021, examining the exception of unconstitutionality of the provisions of art. 21 of O.G. 51/1998, the Constitutional Court found, in turn, that the provisions of Government Ordinance no. 51/1998 prescribe that financing of the Administration of the National Cultural Fund – public institution with legal personality, which is organized and operates under the Ministry of Culture and Religion, is made from own revenues and from subsidies granted from the state budget [art. 1 paragraph (2) lit. a) and art. 18 para. (2)].

Although the exception of unconstitutionality was rejected (by referring to the provisions of art. 56 of the Constitution), the Court’s conclusion is valuable, in our opinion, confirming the inconsistency and uncertainty of the legal norm (the Court itself finding that the beneficiary of the funds is different from the one expressly prescribed by the normative text.

The confusion regarding the nature of the receipts to the National Cultural Fund, originating from the mandatory contributions of some categories of economic agents (and, implicitly, the confusion regarding the beneficiary of these funds) is deepened in the content of the Methodological Norms regarding the establishment, payment and management of the amounts that constitute the National Cultural Fund, approved by Order of the Minister of Culture and National Heritage no. 2,066/2011, which establish that the payment obligation is executed on the account of the National Cultural Fund Administration.
Therefore, it appears obvious that, although the law establishes that they are own revenues of the National Cultural Fund, given that this notion does not define a legal person capable of having rights and obligations and, therefore, cannot be entitled to obtain own revenues , the beneficiary of the amounts is the Administration of the National Cultural Fund, the public institution in charge of managing this budget.

As regards the persons covered by the legal norm (art. 21 par. 1 letter t) of O.G. 51/1998) notified with the exception of unconstitutionality of the provisions of art. 21 of O.G. 51/1998, the Constitutional Court (in the context of Decision no. 310/2021) defined the mandatory contributions provided for some categories of economic agents under art. 21 of O.G. 51/1998 as parafiscal taxes.
The Constitutional Court also ruled on the legal issue invoked by the author of the exception of unconstitutionality, respectively on parafiscal taxes. In its jurisprudence (see, mutatis mutandis, Decision no. 495 of July 4, 2017, published in the Official Gazette of Romania, Part I, no. 784 of October 3, 2017, paragraphs 33-38), the Court ruled that the specificity of parafiscal taxes consists in the fact that, like taxes, they are mandatory, being established by law, but, unlike taxes and fiscal fees, they are constituted as extra-budgetary revenues of some legal entities under public or private law.
They have the same origin as taxes, but although they follow a similar legal regime, their purpose is partly different. In fact, the normative act establishing the parafiscal taxes is, as a rule, the work of the central public authority (law or government ordinance), but it is possible that such taxes are also established by the local public administration authority (by decisions of the local councils). Also, the parafiscal taxes are tracked and collected either through the tax administrations or directly by the legally designated beneficiaries, in whose accounts they are concentrated. The techniques and procedure by which parafiscal taxes are collected and collected are very close to those used in fiscal matters. Due to these particularities, parafiscal taxes are considered to be true “dismemberments” of taxes and fiscal charges. The difference lies in the fact that, while taxes are collected with the dual purpose of imposing a certain conduct in the social-economic environment and to be able to cover the general and common needs of society, parafiscal taxes are collected only from individuals and/or legal entities that are expressly covered by the legal regulations that established those taxes,exclusively for the purpose of ensuring complementary incomes, at the disposal of the legal beneficiaries of these funds.

A first conclusion that emerges from the analysis of the Constitutional Court is that, although the central and local public authorities have the right to establish parafiscal taxes, in establishing them, the constitutional requirements regarding the determination of the subjects covered by the legal norm must be respected.
From this perspective, it is essential that in the activity of legislating taxes (parafiscal), the legislator has in minded the regulatory limits imposed by the constitutional text.
In the jurisprudence of the Constitutional Court, the fact has been consistently stated that “one of the characteristics of the tax is that the person who pays the monetary contribution as tax benefit from the provision of a service. In contrast to the tax, in the case of taxes the benefit is direct, thus, the one who pays the tax will immediately enjoy the payment made, receiving the requested service.” (Admission decision no. 448/2013, published in M. Of. no. 5 of January 7, 2014).

By Decision no. 141 of December 14, 1994, published in the Official Gazette of Romania, Part I, no. 353 of December 21, 1994, the Court ruled that, “in principle, a tax is justified in a provision of a public authority”. Decision no. 176 of May 6, 2003, published in the Official Gazette of Romania, Part I, no. 400 of June 9, 2003, is in the same sense, by which the Court held that, “in accordance with the general principles of taxation, any fee established for natural or legal persons must be followed by a service or work performed directly and immediately by public agencies or institutions”. It is undeniable that, according to art. 56 para. (1) of the Constitution, citizens have the obligation to contribute, through taxes and fees, to public expenses, but, in accordance with the provisions of para. (2) of the same article, the legal taxation system must ensure the fair placement of fiscal burdens. In the same sense, by Decision no. 3 of January 6, 1994, published in the Official Gazette of Romania, Part I, no. 145 of June 8, 1994, the Court ruled that […] taxation must not only be legal, but also proportional, reasonable, fair and not differentiate taxes according to the criterion of groups or categories of citizens”. It follows that, in the conditions where there would be an obvious disproportion between the tax owed and the public service actually provided, the tax was not established in consideration of the consideration owed by the economic operator, public institution or public service, which would be contrary to art. 56 para. (2) of the Constitution, according to which “The legal taxation system must ensure the fair placement of fiscal burdens”(Decision of the Constitutional Court no. 1,202 of October 5, 2010, published in the Official Gazette of Romania, Part I, no. 743 of November 8, 2010, states in the same sense). Thus, the Court finds that the interpretation and application of the criticized legal provisions in the sense that the obligation to pay fees for public broadcasting and television services rests with all legal entities regardless of whether or not they are beneficiaries of the related public service, so regardless of whether or not there is a consideration of the public institution in question, come to disregard the provisions of art. 56 para. (2) from the Constitution.

Mutatis mutandis, the imposition on economic agents of an additional tax without any economic justification (respectively without being followed by any consideration from the public authorities) represents a violation of the provisions of art. 56 para. 2 of the Constitution.

The inclusion of economic agents that carry out activity in the field of gambling in the category of payers of the contribution to the National Cultural Fund (along with other categories of legal persons that carry out activity in the cultural field or that aim to use some assets from the cultural heritage) produces legal insecurity and uncertainty in what as regards the fiscal burden, in clear disagreement with the requirements contained in art. 1 paragraph 5 of the Constitution.

This interpretation is also strengthened by perspective the reasons considered by the initiators of the amendment, who appreciated that the imposition of the contribution has rather a reparative and punitive role for these categories of traders (The continuous diversification of gambling is an ever-increasing threat to the cultural life of the communities. A contribution from the revenues made from them to the National Cultural Fund can facilitate the alternative offered by the cultural operators through the cultural projects, which are to be financed through the Administration of the National Cultural Fund).

Such a legislative solution defies the principle of tax equality and those of the fair application of the tax burden (the principle of equity), enshrined by art. 16 paragraph 1) and art. 56 paragraph 2) of the Constitution.

Beyond the fact that the basis of the legal text is exclusively the subjective assessment of the initiators, their conclusions not being retained as a result of any study carried out in compliance with scientific rigor, it is incomprehensible the reason for which the obligation is laid down for this category of economic agents, to whose activity is not carried out to the detriment or in spite of the cultural life of the communities; in addition, it can, of course, be influenced by a multitude of other factors and other types of activities, without this fact per se being a sufficient argument for the establishment of new taxes on those who carry them out.

Equality in front of the fiscal law it is based on the universality of participation in tax burdens, which is a specific principle of tax policy. According to the provisions of article 56 paragraph (1) of the Constitution, all citizens are obliged to contribute to public expenses. This obligation implies the idea of equality before the tax law, without any privilege or discrimination. Equality before the tax law implies that the state’s power to tax must always be exercised so that the tax burden is as equal as possible for all taxpayers.

Compared to the previously stated, in establishing the fiscal burden, including the parafiscal taxes, the legislator must have in mind objective criteria, which ensure the proportional and fair distribution of the obligations.
Obviously, the requirement was disregarded when art. 21 para. 1 of G.O. 51/1998, given that, apart from people who carry out activities with an impact on cultural heritage assets, a limited category of economic agents, including gambling organizers, have the obligation to pay to the National Cultural Fund, without could determine the impact of these activities on cultural life. By way of example, it cannot be determined objectively to what extent gambling activities prevent cultural activities, compared to public catering services (restaurants, bars), television services or trade activities.

Despite the objections of unconstitutionality that could be formulated, the obligation to pay the contribution is in force as of November 3, with the first payments becoming due in December of this year.
We can only hope that by the due date of the first payments, the Ministry of Culture will issue the methodological rules for implementing the new provisions, and the situation of these obligations will become simpler, at least from the point of view of interpreting the legal text.

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