Saturday, December 26, 2009
Leslie A. Powell (J.D. 2010, Emory) has published Comment, User Fee or Tax: Does Diplomatic Immunity From Taxation Extend to New York City's Proposed Congestion Charge?, 23 Emory Int'l L. Rev. 231 (2009). Here is the Conclusion:
Congestion pricing is simply a user fee charged to motorists. Congestion charges attempt to internalize the costs motorists place on society for inefficient road usage. A congestion charge that is a fee is primarily concerned with traffic restraint and road funding, unlike the motorway tolls that are in place for raising general revenue. The congestion charge proposed by both the Traffic Commission and Mayor Bloomberg is directly aimed at decreasing congestion in Manhattan’s CBD. While one purpose of the charge is to raise revenue, that revenue would be kept separate from the general revenue fund and used to increase the efficiency of transit in and around New York City. Consequently, the revenue-raising purpose does not transform the fee into a tax under New York law.
The VCDR provides diplomatic immunity from taxation but will not protect diplomats from paying New York City’s congestion charge. The VCDR’s exceptions, as well as reciprocity agreements and other bilateral and multi-lateral treaties, limit the extent of that immunity. In this case, diplomatic immunity would not relieve diplomats of the obligation to pay the congestion charge because an exception to immunity would apply. The congestion charge is for a specific service, for which diplomats are obligated to pay pursuant to Article 34(e) of the VCDR. The proposed congestion charge would fall within this explicit exception to immunity. Applying the factors articulated by several New York courts, the congestion charge constitutes a fee and not a tax: it provides a benefit; it is not compulsory; it is proportional to and reasonably associated with the benefit conferred; and the revenues raised are not used for general government purposes.
While Article 34 of the VCDR presents immunity from taxation, other language in the VCDR could prove problematic for New York City. Article 22 presents a practical problem because it protects the mission property from being attached if New York City were to obtain a judgment against a foreign state for non-payment. Article 26 limits a host state’s ability to restrict a diplomat’s movement. Together, these two articles provide additional challenges for New York City in imposing congestion charges on the resident diplomatic population.Mayor Bloomberg’s congestion pricing experienced a setback when the New York Assembly declined to vote on the Traffic Commission’s proposal. Many deemed it an overly ambitious campaign by Mayor Bloomberg; however, the concept of congestion pricing had traction in the legislature and support from both citizens and politicians. Should the opportunity present itself again, the Assembly should move forward with the modified congestion pricing scheme proposed by the Traffic Commission. If such a plan is implemented, the details will determine diplomatic liability. The plan should require the allocation of all monies raised into a special fund separate from the general revenue fund and dedicated solely to congestion-related expenses. Maintaining separate and targeted funds will strengthen any argument that the charge is a fee, not a tax.