poses to support the view that the Legislature could have had as a purpose the determination [sic] of land speculation.99 In addition, the Court took judicial notice "of an increasing concern within the State over the use and development of land as a natural resource, a concern to which the legislature has responded in other instances with appropriate legislation.' The Court then concluded that it would be constitutional for the General Assembly to discourage land speculation via the exercise of the taxing power. It is not the function of this Court to pass upon the validity The ultimate issue to be determined, the Court said, "is whether the classification [in 32 V.S.A. 10003] rests on grounds relevant to the achievement of some legitimate State purpose."101 Having found the 99 Id., at 5. "Speculation in land," the Court said, "may be adequately here defined as the purchase of land in the expectation of deriving a profit from its later sale at a higher price. Both high gain and a relatively short holding period are essential for such speculation with its inherent risk of market fluctuation, to present an attractive alternative to, for example, depositing the equivalent capital in a savings account and drawing interest on it. See The "Capital Asset" Concept, 59 Yale L. J. 837 (1950)." purpose to be legitimate, as described above, the Court proceeded The tax places a burden on short-term ownership and on high The appellants also specifically questioned the rational basis for a six-year holding period. The standard for judging, the court said, was that "a quantitative distinction created by the legislature will be upheld unless it is so 'wide of the mark'103 that it cannot be said to tend toward achievement of any legislative purpose it might be said to serve. "1104 This the appellants had not shown, the court held. Finally, the appellants challenged the land gains tax on the procedural grounds that the bill had not originated in the House of Representatives as required by Chapter II, Article 6 of the Vermont Constitution. Since this was the first time such a question had been 102 103 Id., at 7. The quoted language paraphrases that of Justice Holmes' dissent in Louisville Gas Co. v. Coleman, 277 U.S. 32 (1928), which the court said is the dominant standard today: 104 When a legal distinction is determined, as no one doubts that it may be,... a point has to be fixed or a line drawn,... to mark where the change takes place. Looked at by itself without regard to the necessity behind it the line or point seems arbitrary. It might as well or nearly as well be a little more to one side or the other. But when it is seen that a line or point there must be, and that there is no mathematical or logical way of fixing it precisely, the decision of the legislature must be accepted unless we can say that it is very wide of any reasonable mark. Id. at 41. Andrews v. Lathrop, supra, note 96, at 8. raised in Vermont, the Supreme Court referred to decisions under Where the matter has been considered in other jurisdictions, the Since the trial court found the primary purpose of the land gains Effects of the Law 107 The land gains tax went into effect May 1, 1973. In the last two weeks of April 1973 land sales boomed in Vermont. They had been rising steadily since 1970, albeit at smaller increases each year. Sale of tracts over 100 acres of unimproved land seemed to be one kind of transaction which has been considerably less frequent since the tax became effective. Commissioner of Taxes Robert G. Lathrop has the impression from the increased number of inquiries to the Department about the tax that more people are taking the tax consequence of selling land into consideration prior to doing so (since the transferor is liable for the tax) and speculative land sales have declined. 108 It would be difficult to assess the impact 107 108 Section 11, Act No. 81 of the 1973 Session of the General Assembly. Letter to Will Irwin, Environmental Law Institute, dated July 3, 1974, and telephone conversation with Ross D. Pollack, Environmental Law Institute, August 28, 1974. Commissioner Lathrop: From all indications, the sale of residences has not been of the land gains tax on speculation without considerable data on the impacts on sales from inflation, general economic, weather, and energy factors, Lathrop said. In fiscal year 1973-74 the net receipts from the capital gains tax were $1.222 million. 109 The first $.5 million of this (and the first $.5 million each succeeding fiscal year) funds a comprehensive property mapping program conducted by the Department of Taxes.110 down anything, I am of the opinion that those developments were started before the land gains tax was even thought of and in two or three years we will probably see some slowing down of the volume of those permits. As you know, it was never intended that the land gains tax completely curtail development, but to simply slow it down and in those areas where people would speculate anyway then the state would tax a heretofore untapped source of revenue to help provide property tax relief. After one year's experience it seems to be working pretty much along that line. Id. "For the fiscal year just ended, the tax raised about $1.222 million. We had estimated that it would raise about $3 million and I think it would have given a normal economic situation and if there had not been serious court challenges to the constitutionality of the statute and rumblings by the Legislature that it would repeal it." 109. 110 Section 10, Act No. 81 of the 1973 General Session of the General Assembly. The mapping program is required by 32 V.S.A. 3409. SECTION VI CHARGES IN OTHER INDUSTRIALIZED NATIONS INTRODUCTION Many of the "effluent charges," "emission fees" or other disincentives which have been reported as existing in other industrialized nations are in fact more analogous to fines or user charges than to disincentives as defined in section II. The laws and regulations of several European nations will be described to demonstrate this. GERMAN DEMOCRATIC REPUBLIC Beginning in 1969 in the Halle region on an experimental basis1 and Effective May 1, 1973, similar provisions were implemented for emissions of air pollutants (dust and gaseous emissions) exceeding authorized individual limits. This fine is based on the difference between actual and authorized emissions times the hours of the excess times cost factors which vary with the kind of pollutant emitted.5 1 2 Christian Science Monitor, November 11, 1970, page 7. Zweite Durch fuhrungsverordnung (Second Implementing Regulation to the Water Law), 16 December 1970, 1971 Gesetzblatt der Deutchen Demokratischen Republik [hereinafter cited as Gesetzblatt der DDR], Teil II, Nr. 3, 25-29. The regulations are based on sections 19 and 55 of the water law of April 17, 1963. 3 3Id., 4Funfte Durchführungsverordnung zum Landeskulturgesetz (Fifth Implementing Regulation of the National Environment Act), 17 January 1973, Gesetzblatt der DDR, Teil I, Nr. 18, section 18. 5Erste Durchführungsbestimmung zum Funften Durchführungsverordnung |