Law 7/2022 on waste and contaminated land for a circular economy required local authorities to introduce a waste charge that is specific, separately identified and fully cost-covering—or a non-tax public levy, where appropriate—and that allows pay-as-you-throw systems to be introduced.
This new model has led many local councils to approve new by-laws or amend existing ones. However, the obligation to introduce the charge does not mean that every method of calculating it and allocating the cost of the service is lawful.
A recent judgment of the High Court of Justice of the Canary Islands, concerning the waste charge imposed by Las Palmas de Gran Canaria City Council, emphasises that the technical and economic report must justify not only the cost of the service, but also the criteria used to allocate that cost among taxpayers.
WHAT DEFECTS DID THE COURT IDENTIFY?
The by-law governing the waste charge imposed by Las Palmas de Gran Canaria City Council set a charge made up of a fixed component and a variable component, the latter being linked to the amount of waste generated.
The Court identified three main deficiencies in the technical and economic report:
- Lack of justification for the criteria used to calculate the variable component.
Two studies conducted in Catalonia on the generation of household and commercial waste were used to calculate the variable component. However, the report did not explain why those data could be considered representative of the circumstances in the municipality or how they had been compared with the information available in Las Palmas de Gran Canaria.
- The studies used were not included in the file made available for public consultation.
The studies used as the basis for setting the charges were not included in the file made available for public consultation. As a result, interested parties could not see all the data underpinning the by-law, nor make submissions on a fully informed basis.
- Insufficient justification for the allocation of the fixed component.
The judgment also found that insufficient reasons had been provided for applying the same fixed charge to different categories of users. Although the report explained the method used to calculate the amount, it did not justify why the same amount should apply to categories as different as residential properties, commercial establishments and tourist accommodation, or why other allocation criteria had been rejected.
In short, the Court considered that the problem did not lie in the mathematical calculations used to determine the charge, but in the failure to explain the decisions taken to allocate the cost of the service among taxpayers with very different characteristics. These deficiencies affected essential aspects of the quantification and allocation of the tax burden and made it impossible to determine whether the system complied with the principles of equality, proportionality and the prohibition of arbitrariness.
CAN OTHER WASTE CHARGES BE CHALLENGED?
Although the judgment only takes effect in relation to the by-law adopted by Las Palmas de Gran Canaria City Council, its significance extends beyond this municipality.
The judgment itself refers to recent rulings by the High Courts of Justice of Madrid and Castilla y León, which have also identified deficiencies in the reasoning provided.
These judgments show that the courts are paying close attention to the technical and economic reports on which such by-laws are based. It is not sufficient to justify the total cost of the service; the authorities must also explain why the criteria used to allocate that cost among taxpayers are reasonable and appropriate to the circumstances of the municipality.
This does not mean that by-laws approved by other local councils have the same problems. Each case must be assessed on the content of the by-law, the technical and economic report and the procedure followed to approve it.
WHAT ASPECTS SHOULD BE REVIEWED?
To assess whether a waste charge is sufficiently justified, it is advisable to verify:
- Whether the report adequately identifies and quantifies the cost of the service.
- Whether it makes it possible to determine the source of the data used.
- Whether external studies were included in the administrative file and their application to the municipality was justified.
- Whether it explains why particular criteria were selected to allocate the cost among residential properties, commercial premises, establishments and other users.
- Whether differences in the charges—or the absence of such differences—are sufficiently justified.
