The question is whether the refusal to recognize the tax effectiveness of a legal arrangement is a matter for the legislator or the courts. Arguments against the courts are largely based on the principle of legality and the role of the courts vis-à-vis the legislature.142 The doctrine of separation of powers states that it is not for the judiciary to legislate. Thus, if the clear wording of the tax law does not tax certain situations, leaving gaps and loopholes, even if these situations should be taxed in a reasonable and fiscal manner, courts will be reluctant to impose a tax if there is no formal legal basis to do so. Curiously, the same courts can fill gaps and loopholes left by legislators in other areas of law. The reason for this is that many countries have an explicit or implicit constitutional provision for taxes that limits the power to impose taxes similar to the power to impose criminal sanctions: no taxation without a legal basis. This presupposes an omniscient and infallible legislator for the effective implementation of tax law, which in reality does not exist. As regards the extension of the scope of tax law to legal arrangements and transactions that have a real effect, such as situations subject to higher taxation, many jurisdictions will allow the tax administration to reclassify a legal arrangement or transaction, provided that it can demonstrate that the legal elements of such a different classification exist, but refuse to reclassify it for tax purposes if there is only a factual similarity. In simpler terms, this is called the problem of the opposition between substance and form. The attitude of the courts, in turn, presupposes that the tax consequences associated with any legal arrangement or transaction constitute the appropriate tax response to the actual facts covered by the construction or operation; That is to say, it presupposes an infallible internal coherence of the law, so that each legal form is always the appropriate translation of the underlying substance. This unique quality of the legal norm is of course lacking in many cases. The principle of proportionality is increasingly applied by Western European courts in general and by the European Court of Justice in particular. This means that there must be some proportional relationship between the objectives to be achieved and the means employed by the legislator.37 In the field of taxation, this means that taxes must not be excessive.
Although this principle is applied to taxation, it has not prevented governments from imposing progressive taxes. In some cases, progressive tax rates are enshrined in the Constitution.38 The principle of proportionality is generally interpreted as marginally limiting the power of governments to impose taxes in that they cannot levy taxes. Administrative acts with the greatest legal force are called regulations. (They may also be called orders, decrees, rules, or orders.) The competent minister or the Council of Ministers may be empowered immediately under the Constitution to make regulations for the enforcement of laws, or fiscal laws may delegate the power to make regulations. As long as a regulation does not violate the law, it has the force of law, which means that it binds both the taxpayer and the state. Regulations are typically used to fill gaps and details not covered in bylaws, although they can also shape rules from entire fabrics if approved. Belgium has a long tradition of strict and literal interpretation of tax laws. The basis for this is the principle of legality enshrined in the Constitution: taxes are payable only if they are imposed by law, and the burden of proof in determining tax liability lies with the tax administration. The quintessence of Belgian case-law in tax matters was laid down in a judgment of the Cour de cassation94, in which the Court held that a taxable person may choose the `least taxed route`95 and that a legal interpretation given by a taxable person remains in place for the application of tax legislation. even if the form of construction is abnormal, provided that the taxable person bears all the legal consequences of the taxpayer`s construction.
