Mon, Oct 20, 2008 page8

• Ruling on gift tax has implications

  • By Maurice Chang 張宏誠
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  A few days ago the Constitutional Court handed down Interpretation No. 647 regarding the constitutionality of Article 20, section 1, paragraph 6 of the Estate and Gift Tax Act (遺產與贈與稅法).

  The issue was whether the law is contrary to Article 7 of the Constitution — the principle of equality — in discriminating on the basis of the existence or absence of lawful, or de jure, marital relations and whether married and unmarried couples should be exempt from paying gift tax.

  The court held that the purpose of the distinction is to preserve the institution of marriage, allowing “a husband and wife” to enjoy a good basis for maintaining their marital relationship when living together in a family situation with common domestic bookkeeping, and avoid bickering over petty financial matters that could disrupt domestic harmony and spoil the emotional relationship of a married couple.

  In drawing a distinction based on the existence or absence of a lawful marriage, therefore, there is a rational connection between the means of the statute — exemption of married couples from gift tax — and its purpose: upholding the institution of marriage. On this basis, the court held that the clause in question complies with the principle of equality and is therefore constitutional.

  In the reasoning section of its interpretation, the court coyly suggests that, in the interests of the principle of free choice in marriage, the law could be amended to cover de facto marital relations, too.

  While this suggestion is in keeping with the social reality in many countries, including Taiwan, it leaves room for dispute in legal cases that invoke the decision.

  If, as the interpretation states, the clause is constitutional because it is there to uphold the institution of marriage, then the dividing line is to be drawn according to the existence or absence of de jure marital relations and no kind of de facto marital relationship is protected under the Constitution.

  At the same time, however, the interpretation hints in its reasoning that the legislature should move in the direction of providing such protection.

  In making this suggestion, however, the justices of the Constitutional Court overlook the fact that what the interpretation calls those who “subjectively wish to live together as if married, and objectively do live together as such” does not include only what the justices call “partners of the opposite sex,” but holds true of domestic partners of the same sex.

  I believe the justices were aware of this ethical contradiction and for this reason intentionally used the words “unmarried partners of the opposite sex” in the latter part of the interpretation.

  The rationale would be that, under the institution of marriage as it stands, the only parties that can form a marital relationship — be it de jure or de facto — are couples consisting of one man and one woman, and that such a couple, if unmarried, is “similar” to one that is legally married and could therefore be afforded an appropriate degree of legal protection following amendments to the law.

  However, if the justices draw a line between opposite-sex and same-sex couples — classifying couples according to gender or sexual orientation to discriminate between who does and does not have to pay gift tax — how will they, in the future, explain the rational connection between the means (exemption from gift tax for opposite-sex couples) and purpose (upholding the de jure institution of marriage) that they suggest be maintained in future amendments to the law?

  What will be done about other rights and protections that apply only in the case of marriage? If protection is given to de facto partnerships, how can it be claimed that the law is there to “uphold the institution of marriage?”

  As rights that originally applied exclusively to married couples disappear one by one, how will the institution of marriage be upheld?

  Maurice Chang is a doctoral candidate at the Faculty of Law of the Universita degli Studi di Milano in Italy.

  TRANSLATED BY JULIAN CLEGG
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