Madise pointed out that introducing a new national tax is an expression of the will of the democratically elected Riigikogu majority, and no new tax is automatically unconstitutional, no matter how unpopular it may be.

"The Riigikogu's decision-making power is not entirely unlimited, however: property rights, the recognition of large families, support for people with disabilities and other constitutional provisions must be considered. Only the Riigikogu can determine which exemptions apply when imposing a tax to ensure that taxpayers are not treated unfairly. Without necessary exemptions, a tax law may be unconstitutional," Madise stated.

According to the Chancellor of Justice, the Motor Vehicle Tax Act and the Traffic Act are not in line with the Constitution, as they lack provisions addressing cases of property destruction or other situations in which a vehicle is taken out of use.

"The vehicle tax consists of two parts: a registration fee and an annual tax. If a car is registered during the calendar year, the motor vehicle tax must be paid for the remaining days of that year. However, if the vehicle is destroyed on the first day of the year, for example, the full year's tax is still required, even though the taxable asset no longer exists. If the person can afford to buy a new car, they must pay tax both on the asset they no longer have and on the new one they acquire. In cases of vehicle destruction, the second part of the motor vehicle tax — the registration fee — also cannot be refunded," Madise noted.

She emphasized that vehicle taxation is solely based on the traffic register entry — meaning whether a person is listed as the vehicle's owner on January 1. However, it is not reasonable to impose a full year's tax on a motor vehicle that has been stolen or destroyed, nor is it justified to require full payment of the registration fee if the vehicle is lost or destroyed shortly after registration.

"In this way, taxpayers are treated equally, even though they are in very different situations. If an asset no longer exists — meaning the taxable object is gone — it is not right to demand full taxation of it," the chancellor of justice stated.

In cases where a vehicle is destroyed, the registration fee is not refunded. It is only reimbursed if the vehicle is deleted from the traffic register for export purposes.

Madise noted that in both cases, it is technically possible to avoid taxing a non-existent asset: similar calculations are made when taxing a vehicle registered mid-year and when a vehicle is taken abroad. However, the current situation allows the state to impose additional taxes through daily calculations, while reducing the tax amount in a similar manner is not permitted — daily tax calculations are not legally allowed.

"The Riigikogu has the option to create a legal basis for proportionally calculating the motor vehicle tax based on the number of days the vehicle is registered in the traffic register, including cases where the car is destroyed or otherwise taken out of use (e.g., theft) at the beginning or middle of the year. If daily tax calculations are not considered feasible for some reason, a quarterly tax calculation could be an alternative. For instance, heavy vehicle tax is collected on a quarterly basis," the justice chancellor suggested.

If a vehicle is destroyed immediately after the registration fee has been paid, not refunding the fee is clearly excessive, according to Madise. The state could retain an amount corresponding to the cost of the registration process, but the remaining portion of the fee should be refunded. Since the registration fee is not a cost-based charge for a service, Madise argued that the failure to refund it cannot be justified simply by stating that the person has already paid and received the service.

The chancellor of justice acknowledged that the fewer circumstances requiring tax recalculations in a law, the simpler it is to administer the tax. However, she emphasized that administrative simplicity cannot be used as a justification for everything, including unequal treatment.

"When imposing a tax, factors that ensure the tax burden is distributed reasonably, fairly, and equitably among taxpayers must be taken into account. There is no justification for imposing a property tax on those who no longer possess taxable property," she asserted.

Madise also pointed out that a confiscatory property tax — where an owner is forced to give up taxable property because the tax burden is unaffordable — is unconstitutional. While she admitted that the motor vehicle tax cannot be unequivocally classified as confiscatory, given that the median tax amount is €116, she noted that many countries with long-established vehicle tax systems provide exemptions for people with disabilities.

The chancellor of justice stressed that each country considers its own societal needs and capabilities when determining taxes or tax benefits, meaning no country is obligated to follow another's example.

"Nevertheless, failing to provide exemptions for large families and people with disabilities could lead to situations where they are forced to give up a vehicle they rely on due to the vehicle tax, creating an unconstitutional situation. The Constitution mandates special care for large families and people with disabilities," Madise concluded.

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