The Supreme Court Continues To Vacuum Municipalities’ “Autonomy”

The Constitutional Reform of 1994 introduced into its text a disposition which refers to Municipal autonomy.
Section 123 states that “Each Province enacts its own Constitution as stated in Section 5, ensuring Municipal autonomy and ruling its scope and content regarding the institutional, political, administrative, economic and financial aspects”.
Section 123 comes as a compromise, agreed within the scope of the Reforming Convention, between the constituents who were in favor of Municipal autonomy and those who were not.
The principle adopted entrusted the Provinces to ensure the autonomy of Municipalities, simultaneously authorizing them to “rul[e] its scope and content”, in such a way that autonomy is limited but not absolute.
Since the sanction of the Constitutional reform, the topic of Municipal autonomy has generated some concern, especially with regards to taxation, because a strict definition of autonomy would enable Municipalities to establish any type of taxes and fiscal charges.
This concern tends to disappear while the Supreme Court of Justice through its case law is outlining interpretive criteria according to which, Provincial legislation which limits the scope and content of the taxing power of the Municipality is valid.
This evolution takes place in the ruling of the Court issued on February 25, 2014, in a case brought by the company Aguas Argentinas against the Municipality of Avellaneda in the Province of Buenos Aires, related to the introduction of a right to occupy public spaces, whose magnitude should be fixed on the basis of gross income accrued in favor of the company.
In the view of the Court, the constitutional mandate for autonomy does not prevent the Provinces from setting the economic and financial system outlines to be met by Municipalities as a result of which a Municipal tax may be invalid, as has been established contrary to Provincial legislation that sets guidelines for the exercise of the Municipal taxing power.
Under that case law, the Municipal autonomy settled by Section 123 of the Constitution is not an obstacle to the validity of Provincial rules placing restrictions on the taxing power of the Municipality.
Thus, the Constitutional amendment would not constitute an obstacle to the enforcement of the rules limiting the taxing power of the Municipalities to the imposition of compensatory rates for services actually rendered (Section 9 of the Federal Revenue Sharing Act) as well as establishing that the income attributed to the Province in the Gross Income Tax operates as the limit of tax base by all Municipalities in the jurisdiction (Section 35 Multilateral Convention).