B.C. Mexico
The Federal Executive Branch of Mexico filed an Action of Unconstitutionality against the Decree published in the Official Gazette of the state of Baja California that reforms articles that regulate the environmental tax in the local Finance Law.
The Federal Executive's arguments against the decree are based, on the one hand, on its unconstitutionality as a consequence of encroaching upon the exclusive powers of the Federal Legislative Branch (Congress of the Union), as established in Article 73 of the Political Constitution of the United Mexican States. This article establishes that legislation regarding hydrocarbons and special taxes related to gasoline and petroleum derivatives is the exclusive prerogative of Congress.
Additionally, it is argued that the established tax is not an environmental tax, since it does not directly tax emissions, as the Baja California Congress indicated, but rather the sale of fuels (hydrocarbons). Finally, the ambiguity of this tax is alleged, given that it stipulates the funds collected will be primarily allocated to environmental programs, which would create a loophole for discretionary spending and is contrary to the principle of legality.
For its part, the state of Baja California countered that it is not a tax on hydrocarbons per se, but rather an environmental tax. Similarly, its arguments cite jurisprudence establishing concurrent legislative authority in environmental matters for both the federal government and local legislative systems. Finally, it was argued that the tax does not interfere with the hydrocarbon industry or with federal powers. In its analysis, the Supreme Court of Justice of the Nation of Mexico (SCJN) recognizes that the Congress of the Union has exclusive jurisdiction to legislate on hydrocarbons, including taxation, on products such as gasoline, diesel, natural gas, and LP gas. Despite the existence of concurrent powers in environmental matters, local legislatures do not have, within their jurisdiction, the power to legislate or tax matters expressly reserved to the federal government.
Thus, the Supreme Court of Justice of the Nation (SCJN) determined that the established tax does not directly tax pollution or hydrocarbon emissions, but rather their sale to the end consumer. In this sense, it establishes that the tax falls on those who distribute and sell fuels, not on those who generate polluting emissions. Since it does not meet the requirements of an environmental tax, it cannot be considered as such (as established in previous SCJN jurisprudence).
Regarding the provision that the funds be primarily earmarked for environmental programs, the Supreme Court of Justice of the Nation (SCJN) acknowledged the vagueness and discretion inherent in the wording, establishing that it violates the principle of tax legality. Thus, the Court ruled that extra-fiscal taxes for environmental purposes must be clear in their objective and allocation; that is, they cannot be used for general revenue collection.
As a consequence of the above, the Supreme Court of Justice of the Nation (SCJN) declared the articles of the Baja California State Tax Law invalid, since: a) it exceeds the scope of the powers of the local Legislative Branch, encroaching on the sphere of exclusive powers of the Federation in matters of hydrocarbons; b) the real object of the tax is the sale of fuels, not environmental protection; c) its structure and purpose do not conform to the parameters of a true ecological tax
When the challenged articles were declared invalid, with general effect, the tax was not applied.
Although the Supreme Court of Justice of the Nation (SCJN) did not delve into an analysis of the climate element of the tax, this section establishes that within the statement of reasons for the reform carried out in the Congress of the state of Baja California, it was established that the reasons for establishing the tax are reasons of pollution.
More specifically, the legislative body established that, on the one hand, environmental and air pollution negatively impacts human health and ecosystems, and damages property. In this regard, those who sell polluting products contribute little to no taxes toward measures to mitigate these effects.
For several consecutive years, the state of Baja California failed to comply with regulations regarding micrometric particles, especially considering that motor vehicles are the largest emitter of pollutants that contribute to the formation of tropospheric ozone, which is associated with serious cardiopulmonary diseases. Consequently, the state Congress opted to establish a tax on the sale of petroleum-derived fuels and LP gas.
The aim was to reduce pollutants through regulations governing sustainable development to improve the quality of life for its population. Furthermore, the explanatory memorandum stated that the revenue generated would be allocated to mitigating the environmental damage caused by fuel consumption.
Federal Executive Branch of Mexico
Executive Branch and Congress of the State of Baja California
The state of Baja California is located in northern Mexico, bordering the United States. It has been observed that the high number of automobiles contributes to air pollution. In other words, the generation of pollutants can negatively impact both health and the environment. This is especially relevant given the recent instances of non-compliance with regulations regarding the emission of micrometric particles in the state.
Political Constitution of the United Mexican States