As the calendar year draws to a close, one of the topics invariably bound to become issues of the day is that of the changes in the tax legislation. Naturally, the question of interest to individuals and legal entities is the expected change to the size, methods of determining and payment of their public obligations, state and local taxes and fees included.
Having undergone no substantial legal changes in recent years the issue of determining the amount of the fee for solid urban waste has become a hot topic because the amount of the fee usually exceeds many times the amount of the tax liabilities pertaining to real estate.
As is well known the solid urban waste fee is paid for the services of collecting, trucking away and rendering harmless the waste in landfills and other waste treatment facilities, as well as for sanitation in settlements. The fee by definition is owed by the owners of the real property. It is only in the hypothesis of a constituted real right of use or of a granted concession that the fee is owed by the user, respectively by the concessionaire. Users on other grounds, for example, tenants of real property, are not deemed liable under the statute law and if they pay the fee, this is solely by virtue of their assuming an obligation towards the landlord under the tenancy agreement. This rule is important because the law does not identify tenants as being responsible nor does it treat them as having the legal capacity to participate in the various procedures for determining, altering or contesting the size of the fee and it certainly is the case that in all circumstances tenants will need assistance from the owner of the real property.
The solid urban waste fee represents a local fee the collection of which, on the grounds of art.6, pa.1, b”a” of the Local Taxes and Charges Act (LTCA), is granted to the municipality where the taxable real property is located. The procedure for determining the size and the administration of the solid urban waste fee is set out in the regulations of the municipal councils (art.9 LTCA), whereas the concrete amount of the fee is determined annually with a resolution of the municipal council (art.66, pa.1 LTCA). Pursuant to art.7, pa.1 LTCA the size of the fee must be determined on the basis of the necessary expenses for materials and equipment and the administrative costs for rendering the service. This statutory provision is by no means accidental: in a legal theory perspective taxes are a unilateral sovereign taking by the state whereas fees are prices for services which the state, respectively municipalities, render to citizens and legal entities. This is why fees, in contrast to taxes, are owed only against delivery of the service by the state/ municipality, i.e. payment of fees presupposes recompense. What is more – the considerations, that is, the amount of the fee and the actual costs incurred for delivering the service must be roughly equivalent in the least. This theoretical principle has its normative expression in relation to the solid urban waste fee in art.67, pa.1 LTCA, which states that the size of the fee is determined according to the quantity of the solid urban waste. This norm unconditionally requires that the fee being paid by individuals and legal entities corresponds to the actual quantity of waste generated by them. The law deems this criterion basic and primary. Only where it is practically impossible to determine the actual amount of the waste does the law (art.67, pa. 2, LTCA) allow for the secondary and facultative possibility that the fee be determined per user (by the number of people) or in proportion to a base determined by the municipal council, that is, on the basis of formal criteria.
And this is exactly where the practice faces its most serious problem: a fairly large number of municipalities in the country ignore the principles established by the law, and adopt all along in their regulations on the amount of local fees and their administration the secondary method straight away, with the solid urban waste fee being determined solely on the basis of formal criteria, namely in proportion to the tax assessment, for legal entities – the book value of the real property. In this case the actual quantity of waste is ignored completely, which very often leads to serious disproportions between the actual value of the service delivered by the municipality and the price being paid by the citizens and legal entities for that service (fee). Thus it becomes possible for owners of large industrial estates and facilities to have to pay huge fees even if their enterprises have suspended activity temporarily or for a longer term, hence, have stopped generating waste. The argument advanced by municipalities is that allegedly in virtually all cases it is impossible to find out the actual individual quantity of waste produced by the individual subjects. Even if we accept that there is some justification in this argument as regards the residential real properties, and especially those in regime of condominium ownership, where a number of individual subjects use common containers for the collection of solid urban waste, that certainly is not the case of non-residential real estates, particularly the commercial ones, which have their own and separate containers, the number of which and the intervals at which they need be emptied can be established easily. This is why the majority of municipalities still try abiding by the law and allow for fees to be determined in accordance with the actual quantity of waste – i.e. on the basis of the number of waste collection containers the subjects use. Accordingly, these municipalities in their regulations on the procedure for determining the size and the administration of local fees establish specific procedures under which the citizens and legal entities can claim their rights relating to the order of determining the fee amount/ reduction/ exemption. It is important to note in this connection that the exercise of aforesaid rights is limited in time. The time limits are different for the different municipalities but by all means they are limited within the current year concerning determining the fees for the next year. This is why it is recommendable that the persons concerned should try to find out as early as possible in the current year about the specific procedures and time limits established by the municipal council by location of their property. However, there are municipalities which do not provide for any such possibility and determine the fees unilaterally and only on the basis of formal criteria thereby preventing the persons liable under the law from exercising their rights. Although the problem is not new, a fairly large number of municipalities refuse to revise their obviously unlawful practices. In this case the citizens and legal entities concerned are left with no option but to turn to the court for protection of their legitimate rights.
However, there is a well established practice of the Supreme Administrative Court of Bulgaria, under which the municipal councils are not free to abandon without good justification the primary criterion for charging the solid urban waste fee, namely – according to the actual quantity of waste generated, which is why the persons concerned should not underestimate and relinquish the legal remedies available in similar circumstances.