AS TO THE ADMISSIBILITY OF
Application No. 27109/95
by Raimo KAIRA
against Finland
The European Commission of Human Rights (First Chamber) sitting
in private on 15 May 1996, the following members being present:
Mr. C.L. ROZAKIS, President
Mrs. J. LIDDY
MM. E. BUSUTTIL
A.S. GÖZÜBÜYÜK
A. WEITZEL
M.P. PELLONPÄÄ
B. MARXER
B. CONFORTI
N. BRATZA
I. BÉKÉS
G. RESS
A. PERENIC
C. BÎRSAN
K. HERNDL
Mrs. M.F. BUQUICCHIO, Secretary to the Chamber
Having regard to Article 25 of the Convention for the Protection
of Human Rights and Fundamental Freedoms;
Having regard to the application introduced on 12 April 1995 by
Raimo KAIRA against Finland and registered on 25 April 1995 under file
No. 27109/95;
Having regard to the report provided for in Rule 47 of the Rules
of Procedure of the Commission;
Having deliberated;
Decides as follows:
THE FACTS
The applicant is a Finnish citizen, born in 1917. He is a retired
pharmacist residing in Helsinki. Before the Commission he is
represented by Mr. Matti Wuori, a lawyer practising in Helsinki.
The facts of the case, as submitted by the applicant, may be
summarised as follows.
The applicant owned a pharmacy in Helsinki. He retired from
business as from 1 March 1992 and sold his pharmacy to another
pharmacist.
Under section 1 of the 1946 Act on the Pharmacy Duty (laki
apteekkimaksusta, lagen om apoteksavgift), hereinafter "the 1946 Act",
a pharmacist is obliged to pay pharmacy duty (apteekkimaksu, apotek-
avgift) based on the pharmacy's turnover. Under section 5 of the 1946
Act, if the pharmacy has been transferred to another pharmacist in the
course of the year, the pharmacy duty for the relevant calendar year
shall be divided between the pharmacists in accordance with their
respective shares of the turnover. The pharmacy duty is determined by
the National Agency for Medicines (Lääkelaitos, Läkemedelsverket - "the
Agency") and it must be paid to the relevant County Administrative
Board (lääninhallitus, länsstyrelsen). Section 7 of the 1946 Act refers
to the Act on the Enforced Recovery of Taxes and Duties (laki verojen
ja maksujen perimisestä ulosottotoimin, lagen om indrivning av skatter
och avgifter i utsökningsväg). The duty is progressive. The minimum
duty is 6 % and the maximum duty is 11 % of the turnover. Furthermore,
section 2 of the 1946 Act empowers the Council of State (valtio-
neuvosto, statsrådet) to determine the lower limit of each payment
band. Under the Council of State's decision concerning the pharmacy
duty for 1992, a pharmacy duty of 6 % must be paid on a turnover
exceeding FIM 1,371,000. Furthermore, for example, a duty of 10.5 %
must be paid for a turnover exceeding FIM 5,941,000.
The applicant declared his pharmacy's turnover from 1 January to
29 February 1992.
On 18 June 1993 the Agency determined the applicant's pharmacy
duty to be FIM 95,673 for January and February 1992 and his successor's
duty to be FIM 640,246 for the rest of the year of 1992. The Agency had
added up the applicant's turnover (FIM 1,164,218) and his successor's
turnover (FIM 7,791,000) and based the pharmacy duty on the pharmacy's
total turnover in 1992. The total pharmacy duty was subsequently
divided between the two pharmacists in proportion to their shares of
the total turnover.
The applicant appealed to the Supreme Administrative Court
(korkein hallinto-oikeus, högsta förvaltningsdomstolen) as regards the
method of calculating the duty. He stated that it was incorrect to base
the pharmacy duty on the pharmacy's total turnover and requested that
his duty be calculated only on the basis of his own turnover. He also
maintained that the turnover had been incorrectly assessed since he was
denied the right to make a deduction for the furniture that his
successor had not bought from him.
On 13 October 1994 the Supreme Administrative Court rejected the
applicant's appeal. It found that the turnover, on which the duty was
based, had been correctly assessed. Furthermore, it found that the
method of calculating the pharmacy duty had been in accordance with
sections 2 and 5 of the 1946 Act.
COMPLAINTS
1. The applicant complains that he has been denied the peaceful
enjoyment of his possessions by the allegedly disproportionate and
unfair level of the pharmacy duty levied on his relinquishing his
practice. He maintains that his turnover for the two months was so low
that if the duty had been levied on his own turnover alone, he would
have been charged no duty at all. He maintains that the duty merely
served the fiscal interests of the State and, together with the refusal
to deduct the value of the furniture, infringed his right under Article
1 of Protocol No. 1 to the Convention. He maintains that the duty was
unreasonable and confiscatory in nature.
2. The applicant maintains, furthermore, that the Supreme
Administrative Court has routinely endorsed the views of the state
monopoly and the fiscal interests of the State. Therefore, he complains
that the court proceedings were so deficient that his right to a fair
and impartial hearing has been violated. He invokes, in this respect,
Article 6 of the Convention.
THE LAW
1. The applicant complains that the relevant pharmacy duty was
disproportionate and confiscatory in nature on the basis of certain
alleged errors in the manner of its determination. He invokes Article
1 of Protocol No. 1 (P1-1) to the Convention, which reads:
"Every natural or legal person is entitled to the peaceful
enjoyment of his possessions. No one shall be deprived of
his possessions except in the public interest and subject
to the conditions provided for by law and by the general
principles of international law.
The preceding provisions shall not, however, in any way
impair the right of a State to enforce such laws as it
deems necessary to control the use of property in
accordance with the general interest or to secure the
payment of taxes or other contributions or penalties."
The Commission recalls that any legislation which introduces some
sort of fiscal obligation will as such deprive those affected of a
possession, namely the amount of money which must be paid. However, the
second paragraph of Article 1 of Protocol No. 1 (P1-1) to the
Convention expressly secures to the States Parties to the Convention
the right to enforce such laws as they deem necessary to secure the
payment of taxes or other contributions (see No. 13013/87, Dec.
14.12.88, D.R. 58, p. 163). Accordingly, the Commission will first
consider whether the interference with the applicant's right under
Article 1 of Protocol No. 1 (P1-1) is justified by the second paragraph
of this provision.
The Commission notes that the applicant was obliged to pay a
certain sum of his turnover. The Commission finds that this constituted
a monetary contribution on turnover. It would not differ from a
monetary contribution on, for example, capital assets or a piece of
land. Having regard to this and to the maximum percentage of the levy,
the effects on the applicant were not such as could deprive the
legislation of the character of a tax within the meaning of the second
paragraph of Article 1 of Protocol No. 1 (P1-1). Nevertheless, this
does not take the issue wholly outside the Commission's control since
the correct application of Article 1 of Protocol No. 1 (P1-1) is
subject to supervision by the Convention organs.
Applying this supervision, the Commission finds that a financial
liability arising out of the raising of taxes or contributions may
adversely affect the guarantee secured under this provision if it
places an excessive burden on the person or entity concerned or
fundamentally interferes with his or its financial position. However,
it is in the first place for the national authorities to decide what
kind of taxes or contributions are to be collected. Furthermore, the
decisions in this area will commonly involve the appreciation of
political, economic and social questions which the Convention leaves
within the competence of the Contracting States. The power of
appreciation of the Contracting States is therefore a wide one (cf. No.
11036/84, Dec. 2.12.85, D.R. 45 p. 211).
The Commission notes that the dispute concerned mainly the
interpretation of the provision concerning the method of calculating
the pharmacy duty, i.e. the interpretation of section 5 of the 1946
Act. The Commission recalls that the dispute was examined by the
Supreme Administrative Court, which, acting within its competence and
applying what it considered to be the relevant rules of the applicable
law, found it established that the method of calculating the duty was
in accordance with the relevant law. The Commission, taking into
account its limited powers to review compliance with domestic law,
concludes that the interference with the applicant's possession rights
was lawful within the meaning of Article 1 of Protocol No. 1 (P1-1) to
the Convention.
Furthermore, the Commission notes that the pharmacy duty varies
between 6 % and 11 % of a pharmacy's turnover, in the applicant's case
being about 8 %. It is true that if the applicant's pharmacy duty had
been determined only on the basis of his own turnover for the two
months, his turnover would have been below the minimum threshold for
paying such a duty. Nevertheless, the Commission cannot find that the
relevant pharmacy duty affected the applicant's possession rights or
interfered with his financial situation to such an extent that this
could be considered disproportionate or an abuse of the State's right
under Article 1 of Protocol No. 1 (P1-1) to levy taxes and other
contributions.
It follows that this part of the application is manifestly ill-
founded within the meaning of Article 27 para. 2 (Art. 27-2) of the
Convention.
2. The applicant also complains that the proceedings in the Supreme
Administrative Court were not fair within the meaning of Article 6
(Art. 6) of the Convention, which reads, in so far as relevant, as
follows:
"1. In the determination of his civil rights and
obligations ... , everyone is entitled to a fair ...
hearing ... "
The Commission has consistently held that Article 6 (Art. 6) is
not applicable to proceedings regarding tax assessments. Furthermore,
analysing the various features of public and private law in the instant
case (cf. Eur. Court H.R., Schouten and Meldrum judgment of 9 December
1994, Series A no. 304), the Commission notes that the relevant
contribution was based on legislation and was of a compulsory nature
whereas there are no elements of private law. The Commission concludes
that the dispute in the present case is not to be regarded as having
involved "the determination of civil rights and obligations" and
Article 6 (Art. 6) of the Convention is therefore not applicable.
It follows that this part of the application is incompatible
ratione materiae with the Convention within the meaning of Article 27
para. 2 (Art. 27-2).
For these reasons, the Commission, unanimously,
DECLARES THE APPLICATION INADMISSIBLE.
Secretary to the First Chamber President of the First Chamber
(M.F. BUQUICCHIO) (C.L. ROZAKIS)
Full & Egal Universal Law Academy