The European Commission of Human Rights sitting in private on
11 November 1986, the following members being present:
MM. C.A. NØRGAARD, President
F. ERMACORA
E. BUSUTTIL
S. TRECHSEL
B. KIERNAN
A.S. GÖZÜBÜYÜK
A. WEITZEL
H.G. SCHERMERS
H. DANELIUS
G. BATLINER
J. CAMPINOS
H. VANDENBERGHE
Mrs G.H. THUNE
Sir Basil HALL
Mr. F. MARTINEZ
Mr. J. RAYMOND, Deputy Secretary to the Commission
Having regard to Article 25 (art. 25) of the Convention for the
Protection of Human Rights and Fundamental Freedoms;
Having regard to the application introduced on 4 June 1984 by
Mr. L. and Mrs. L. against the United Kingdom and registered on 16
August 1984 under file No. 11089/84;
Having regard to:
- the report provided for by Rule 40 of the Rules of Procedure,
- the Government's observations of 16 August 1985,
- the applicants' observations of 16 December 1986,
- the second report provided for by Rule 40 of the Rules of Procedure,
- the Government's further observations of 8 August 1986,
- the submissions of the parties at the hearing on 11 November 1986;
Having deliberated;
Decides as follows:
THE FACTS
The facts as submitted by parties may be summarised as follows.
The applicants were married in 1959 and remain married. They have
three children. Their complaint relates to the functioning of the UK
tax legislation concerning married couples, and in particular that
legislation as it refers to income tax.
Concerning the taxation of income a distinction is made in the
legislation between "earned" income and "investment" income. Broadly
speaking, the former relates to an individual's salary or profits from
a trade, profession or vocation whilst the latter covers, as its name
suggests, income received from any investments.
The husband applicant has earned income from his full time job. The
wife is fully engaged in running the family home and looking after the
children and has no earned income. The applicants each have a half
share in the income from their joint investments, and in addition the
wife has a small sum of investment income from a settlement made by
her deceased father. The precise sums involved are set out below.
The application concerns specifically the tax computed on the
applicant's income for the year ending 5 April 1983. The relevant
provisions of the United Kingdom tax legislation as it applies to the
application are set out below.
Each single person in the United Kingdom has a personal allowance in
respect of his liability to income tax. This personal allowance
entitles the individual to earn up to a certain sum in the tax year
without being subject to any income tax (£1565 in the tax year
1982/83) . It amounts to an exemption from tax up to the limit of the
allowance. Once the allowance is exhausted (i.e. if the individual
earned more than £1565 in the tax year 1982/83) he or she will pay
income tax upon any such further income. The tax is payable at rates
which increase progressively in direct relation to the amount of money
earned. In the year 1982/83 the basic rate of tax was thirty per cent
and the highest rate was seventy-five per cent with gradations in
between.
However, once a couple marry this basic rule no longer applies.
Pursuant to Section 37 of the Income and Corporation Taxes Act 1970
(ICTA) if and for so long as a wife is living with her husband and she
has no earned income, then any income she may have will be aggregated
with that of her husband for the purposes of taxation. A married
couple, save in the first year of marriage when special rules apply,
are no longer treated as two separate people but as a single taxable
unit. As a result the wife ceases to have a personal allowance. At
the same time the husband's personal allowance is increased to the
level of the "married man's allowance". The married man's allowance
is only approximately one and a half times the value of the personal
allowance. It is alleged that the practical effect is that the
married couple have "lost" one half of one personal allowance. These
circumstances only apply to those women who have investment income but
no earned income, the category into which the wife applicant falls.
If, on the other hand, a wife has earned income (i.e. she is in
receipt of a salary), her husband will be entitled to the wife's
earned income allowance pursuant to Section 8 (2) of ICTA. It is to
be noted that the husband's personal allowance is not dependant upon
him having an income earned or unearned. He will continue to have the
personal allowance even if he is not in receipt of a salary, for
example if the wife were to be employed and the husband took over the
role of running the house and looking after the family.
In addition, the husband may set his investment income against his
personal allowance if he has insufficient earned income to utilise his
full exemption. However, the wife's personal allowance can only be
set against earned income. Any balance (for example, in the event of
her earning less than £1565 in the tax year 1982/83) must remain
unused.
The table set out below reproduces the particular facts of the
applicants' income for the tax year 1982/83 and shows the results
achieved by the tax legislation in given circumstances.
The applicants' income in 1982/83 was as follows:
Source of income Husband Wife
_____________________________________________________
Remuneration from £16,110.00 -
employment
(earned income)
Joint Investment
income £2,657.50 £2,534.50
Wife's separate
Investment income - £1,079.00
The income tax actually paid by the applicants amounted to £ 6,948.40,
being the tax on the joint aggregate income attributed to the husband
of £ 22,381.00. The applicants complain of the iniquity of this result
when compared with the following possible alternatives:
(i) Had the applicants been cohabiting as an unmarried couple, and
all the other circumstances had remained the same, then the respective
incomes would not have been aggregated for tax purposes. The male
applicant's tax liability would have been £ 5,706.12 and the female
applicant's tax liability would have been £ 614.55. The aggregate tax
liability of the couple would therefore have been £6,320.67. (The
Government calculates instead £ 6,298.10 tax liability in this
situation.)
(ii) Alternatively, if the couple were married but the breadwinner
had been the wife, the husband tending to the home and family, then
tax on a joint basis (pursuant to Section 8 (2) of ICTA) would have
been £ 6,232. (The Government calculates a tax liability of £ 6,209.25
in this situation. Further, if, in this situation, the husband and
wife elected for separate assessment under Section 23 of the Finance
Act the total tax payable would be £ 5,935.)
The tax legislation has not been substantially altered since the
period to which the application refers. A similar result would obtain
if the calculations were carried out using the applicant's income for
the tax year 1983/84 or the current tax year.
COMPLAINTS
Articles 8 and 12 (art. 8, art. 12)
The applicants contend that the spirit and intention of these Articles
(art. 8, art. 12) is to safeguard the institution of marriage and that
insofar as the income tax legislation taxes a married couple more
heavily than an unmarried couple, who are nevertheless living
together, it tends to encourage disrespect for marriage and
consequently for family life.
Article 8 (art. 8) read in conjunction with Article 14 (art. 14)
The applicants contend that the UK income tax legislation taxes a
married couple more heavily than an unmarried couple which has the
effect of causing greater interference to the private and family life
of a married couple than to the private and family life of a couple
who are unmarried but cohabiting.
Article 1 of Protocol No. 1 (P1-1) read in conjunction with
Article 14 (art. 14)
The applicants complain that the aspects of the income tax legislation
at present under review have various discriminatory results, namely:
i) a couple married in church is taxed more heavily than an
unmarried couple who cohabit, which it is contended amounts to
discrimination against religion and the religious ceremony of
marriage;
ii) a married couple is taxed more heavily than an unmarried
couple who cohabit; and,
iii) married couples in which the man is the main breadwinner are
taxed more heavily than married couples in which the woman is the main
breadwinner.
The applicants contend that such different treatment amounts to
discrimination on the basis of religion, marital status and sex
respectively.
PROCEEDINGS BEFORE THE COMMISSION
The application was introduced on 4 June 1984 and registered on
16 August 1984. On 11 March 1985, the Commission decided to communicate
the application to the Government pursuant to Rule 42 (2) (b) of its
Rules of Procedure and to invite them to submit written observations
on the admissibility and merits. In particular, the Government were
asked whether the income tax treatment of the applicants was in
conformity with Article 1 of Protocol No. 1 (P1-1) read in
conjunction with Article 14 (art. 14) of the Convention.
The Government's observations were received on 16 August 1985 after an
extension of eight weeks of the time-limit. The applicants'
observations in reply were received on 16 December 1985 following a
request for an extension of the time-limit of one month.
On 13 March 1986, the Commission decided to invite the parties to a
hearing on the admissibility and merits of the application concerning
the issues arising under Article 1 of Protocol No. 1 (P1-1) read in
conjunction with Article 14 (art. 14).
On 18 July 1986, the Commission decided to grant to the applicants
one-half of the normal legal aid contribution towards the cost of
attendance of a lawyer at the hearing.
On 8 August 1986, the Government submitted further observations.
At the hearing which was held on 11 November 1986, the parties were
represented as follows:
The Government
Mr. Michael WOOD, Agent, Foreign and Commonwealth Office
Mr. Alan MOSES, Counsel
Mr. Brian CLEAVE, Inland Revenue
Mr. Brian MACE, Inland Revenue
Mr. John GRAINGER, Foreign and Commonwealth Office
The applicants
Mr. David PANNICK, Counsel
Mr. LINDSAY, Applicant, was also present.
SUBMISSIONS OF THE PARTIES
A. The Respondent Government
1. Article 1 of Protocol No. 1 (P1-1) read in conjunction with
Article 14 (art. 14)
The Government submit that a tax system must inevitably favour one or
more groups of tax payers. The Government contend that the state must
enjoy a wide margin of appreciation in the field of taxation in
assessing whether differences in treatment are justified. The
Government argue that it is in the best position to appreciate what
measures are necessary and what are the needs and resources of United
Kingdom society. Its decisions in this area should not be reviewed
unless they are manifestly without reasonable foundation.
The Government suggest that the question asked by the Commission is
based on the mistaken assumption that husband and wife are regarded by
the tax system as two separate individuals, each entitled to their own
personal allowance. The present tax system treats husband and wife as
a unit; their incomes are added together and the personal allowances
which accrue to that unit are claimed by the husband. If a wife
works, the husband may claim an extra personal allowance which may be
deducted from the part of their income representing the wife's
earnings. Thus, the wife cannot be regarded as having her own
personal allowance. Neither can the higher personal allowance
accruing to the husband be regarded as entirely belonging to him,
since if a wife, with investment income only asks to be separately
assessed, then a proportionate part of the higher allowance is set
against her investment income.
The structure of a tax system inevitably depends on the social and
economic objectives of successive Governments. Treatment of spouses
as a single unit was considered to have realistically reflected their
taxable capacity. It was following the war, when it was felt that
there was an economic need to encourage wives to work, that the
legislation increased a wife's earned income allowance to the same
level as an individual's personal allowance. Any difference in
treatment in respect of whether the husband or the wife is the sole
earner is therefore justified by the aim of encouraging married women
to work and thereby promoting the equality of the sexes.
Insofar as the applicants complain of being treated differently from
unmarried couples, the Government argue that in questions of
discrimination one can only compare like with like. A married couple
with its specific legal status is not in an analogous position to an
unmarried couple. But even assuming there can be said to be
difference of treatment for the purposes of Article 14 (art. 14),
the Government contend that the system treating married couples as a
unit has an objective and reasonable justification and that the means
used are proportionate to that end. The choice of a married couple as
a taxable unit is a rational choice based on the principle of taxable
capacity. Further, 97% of married couples either benefit from lower
taxation or pay no more than if they were individuals. This shows
that the means employed are proportionate to the ends sought to be
achieved.
2. Proposals for legislation
The Government has published a Green Paper proposing the reform of
personal taxation. It is proposed that everyone, married or single,
would have the same standard allowance. However, if one spouse was
unable to make full use of his or her allowance, the unused portion
could be transferred to the other.
However, the proposed system cannot be introduced until 1990, as it
depends on the completion of the current computerisation programme.
When introduced however, it will achieve all the objects sought by the
applicants.
B. The Applicants
1. Article 1 of Protocol No. 1 (P1-1) read in conjunction with
Article 14 (art. 14)
For the purposes of Article 14 (art. 14), a difference in treatment is
dicriminatory if it has "no objective and reasonable justification" or
if there is no "reasonable relationship of proportionality between the
means employed and the aim sought to be realised". In assessing
whether differences in treatment are justified, the scope of the
margin of appreciation enjoyed by a State will vary according to the
background and subject matter. In ABDULAZIZ (Eur. Court H.R. judgment
of 28.5.85), the Court emphasised that the advancement of the equality
of the sexes was a major goal and weighty reasons would be required to
justify a difference in treatment. The applicants contend that the
principle applies also to a difference of treatment on grounds of
marital status. Adverse treatment may have the effect of discouraging
people from marrying and marriage should not lead to people being
treated less favourably. The decision of the Irish Supreme Court,
MURPHY v. A.G. (1982, 1R, 241) held that a law which had that effect
was contrary to their Constitution and cited similar decisions in the
Federal Republic of Germany, Italy and Cyprus.
The applicants submit that the Government has failed to advance
sufficiently weighty factors to justify the difference of treatment on
grounds of sex and marital status. It is irrelevant that there are
few victims if there is no compelling reason for discrimination
against these. The present law clearly contravenes the principle
stated by the 1920 Royal Commission that taxation should depend on the
amount of income accruing to the married pair and not upon the way it
happens fortuitously to be owned by the members of the union.
The Government could avoid the anomaly whereby the wife's investment
income, unlike her earned income, is added to the income of the
husband without receiving the benefit of any allowance. No
justification has been put forward for not doing this. If it was
recognised in 1971 as unfair not to allow the wife to have a separate
assessment of her earned income, there can be no objective
justification in denying the same opportunity in respect of investment
income. Any encouragement for women to work resulting from the system
is likely to be incidental and outweighed by the effects of adverse
discrimination. While the original aim of the system might have been
to encourage married women to work, the applicants dispute that this
can be said to be the position today.
2. Proposal for reform
Since the Government have acknowledged a strong case for change in the
law, it is inconsistent to contend that there is a compelling reason
for the discrimination complained of. The applicants do not accept
that the new system cannot be introduced until 1990 i.e. after four
years. The option for separate taxation was made available in 1971
without any delay and the discriminatory anomalies only affect 3% of
married couples.
THE LAW
1. The applicants first complain that their rights under
Article 1 of Protocol No. 1 (P1-1) have not been secured without
discrimination and invoke Article 14 (art. 14) read in conjunction
with this provision. In particular the applicants allege that the
United Kingdom income tax legislation has the effect of taxing
comparable couples in a discriminatory fashion on the separate grounds
of sex, marital status and religion.
Article 1 of Protocol No. 1 (P1-1) provides:
"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."
Article 14 (art. 14) provides:
"The enjoyment of the rights and freedoms set forth in this Convention
shall be secured without discrimination on any ground such as sex,
race, colour, language, religion, political or other opinion, national
or social origin, association with a national minority, property,
birth or other status."
The Commission considers that taxation is in principle an interference
with the right guaranteed by the first paragraph of Article 1 (P1-1-1)
but that this interference is justified according to the second
paragraph of that Article (P1-1-2) which expressly provides for an
exception in regard to the payment of taxes and other contributions.
However, as taxation falls within the general scope of Article 1
(P1-1), it follows that the prohibition against discrimination in
Article 14 of the Convention (art. 14) is applicable to taxation.
a) The applicants complain first that married couples in which
the husband is the sole breadwinner, as in their case, are more
heavily taxed than married couples in which the wife is the sole
breadwinner. They complain that this is discrimination on the grounds
of sex contrary to Article 1 of Protocol No. 1 (P1-1) read in conjunction
with Article 14 (art. 14) of the Convention.
It is clearly established on the facts of the present case that there
is a difference in taxation provisions depending on whether the
husband or the wife in a married couple is the sole breadwinner. When
the husband is the sole breadwinner, he is entitled to a taxable
allowance known as the married man's allowance, which is equivalent to
about one and half times the normal single person's allowance. When
the wife is the breadwinner, she is entitled to an allowance equal to
a single person's allowance to set off against her earned income. Her
husband will also continue to have a married-man's allowance. Since
the taxation provisions treat the wife's income as accruing to her
husband, the couple will have therefore the benefit of an extra tax
allowance against their income.
In examining the applicants' complaints of discrimination, the
Commission recalls the principles established by the European Court of
Human Rights in the Belgian linguistic case (Eur. Court H.R., Belgian
linguistic judgment of 9 February 1967, Series A No. 5 p. 35):
"On this question the Court, following the principles which may be
extracted from the legal practice of a large number of democratic
States, holds that the principle of equality of treatment is violated
if the distinction has no objective and reasonable justification. The
existence of such a justification must be assessed in relation to the
aim and effects of the measure under consideration, regard being had
to the principles which normally prevail in democratic societies. A
difference of treatment in the exercise of a right laid down in the
Convention must not only pursue a legitimate aim: Article 14
(art. 14) is likewise violated when it is clearly established that
there is no reasonable relationship of proportionality between the
means employed and the aim sought to be realised."
The Commission must therefore consider whether the difference of
treatment in the present case has a legitimate aim within the meaning
of the principles outlined above.
The present tax system in the United Kingdom treats a husband and wife
as a unit for tax purposes. Their incomes are added together and
treated as one, the personal allowances accrue to the unit and are
claimed by the husband. The Government contend that the system of
treating married couples as taxable units reflects most realistically
their taxable capacity. The Royal Commission on Income Tax reviewed
this system in 1920 and stated, inter alia:
"The aggregation for Income Tax purposes of the income of husband and
wife is not dependent upon any medieval conception of the
subordination of women... The incomes are aggregated because the law
of taxable capacity is the supreme law in matters of taxation, and
taxable capacity is, in fact, found to depend on the amount of the
income that accrues to the married pair, and not upon the way in which
that income happens fortuitously to be owned by the members of that
union. It is beyond question that in the immense majority of cases
where the wife has separate means she contributes to the common purse,
either by the actual merger of her income with her husband's, or by
bearing expenses which in less fortunate households would fall upon
the husband."
During the Second World War however, it was considered desirable to
give encouragement to married women to go out to work. The wife
therefore received an earned income allowance equivalent to a single
person's allowance to set off against her earned income. The
Government argue that the present system accordingly has the
legitimate aim of encouraging married women to work and thereby
advances the equality of the sexes. The Government submit that one of
the principal causes of discrimination against women and of the
equality of the sexes has been the prejudice in the minds of men as to
the capability of women to take up work. Such prejudice, it is
argued, is only broken down by more women obtaining work and
demonstrating that any belief that they are less capable is wholly
prejudiced. The grant of an extra allowance is therefore said to
encourage married women to work and thereby help to break down
injustifiable prejudices.
The applicants contend that there is no evidence that the present
system in fact still serves this aim and argue that the rule whereby
the husband is always liable for the investment income of the wife,
which is the cause of the problem in their case, is a blunt tool to
use to further this alleged goal.
The Commission is of the opinion however that it is for the national
authorities to make the initial assessment, in the field of taxation,
of the aims to be pursued and the means by which they are pursued:
accordingly, a margin of appreciation is left to them. The Commission
is also of the view that the margin of appreciation must be wider in
this area than it is in many others. The Commission recalls in this
respect that systems of taxation inevitably differentiate between
different groups of tax payers and that the implementation of any
taxation system creates marginal situations. The applicants have
themselves stated that the situation of which they complain affects
only 3% of the tax payers. Also, attitudes as to the social and
economic goals to be pursued by the State in its revenue policy may
vary considerably from place to place and time to time. A government
may often have to strike a balance between the need to raise revenue
and reflecting other social objectives in its taxation policies. The
national authorities are obviously in a better position than the
Commission to assess those needs and requirements.
The applicants have also relied in their observations on the United
Kingdom Government's own proposals, as set out in their Green Paper,
to change the present system to one in which both spouses receive
identical allowances, which can be transferred between them. They
argue that the Government have thereby acknowledged that the present
system has no compelling justification. The Commission is of the
opinion however that the existence of proposals for new legislation to
change the present system does not necessarily have the consequence
that the present system must be regarded as infringing the provisions
of the Convention. As stated above, the economic or social goals to
be pursued by a state in its revenue policies may legitimately vary
from time to time. A margin of appreciation must also apply to the
moment when a government thinks fit to amend the tax system.
In light of the above considerations, the Commission concludes that
the tax provisions which result in extra tax advantages accruing when
a wife is the breadwinner of a family can be said to fall within the
margin of appreciation accorded to the national authorities. The
Commission therefore finds that the difference in treatment in the
present case has an objective and reasonable justification in the aim
of providing positive discrimination in favour of married women who
work. The Commission also finds that the test of proportionality is
satisfied in the present case.
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.
b) The applicants also complain that they are taxed more heavily
than a cohabiting but unmarried couple would be, who received the same
income. They complain therefore that the United Kingdom tax
legislation discriminates against them as a married couple.
The Commission recalls first of all that Article 14
(art. 14) of the Convention safeguards individuals placed in similar
positions from any discrimination in the enjoyment of the rights and
freedoms set out in the Convention and Protocols (see e.g. Eur.
Court H.R., Marckx judgment of 13 June 1979, Series A No. 31 and Eur.
Court H.R., Van der Mussele judgment of 23 November 1983, Series A
No. 70).
The applicants in the present case seek to compare themselves, a
married couple, with a man and woman who receive the same income, but
who live together without being married. The Commission is of the
opinion that these are not analogous situations. Though in some
fields, the de facto relationship of cohabitees is now recognised,
there still exist differences between married and unmarried couples,
in particular, differences in legal status and legal effects. Marriage
continues to be characterised by a corpus of rights and obligations
which differentiate it markedly from the situation of a man and woman
who cohabit.
The Commission accordingly concludes that the situation of the
applicants is not comparable to that of an unmarried couple and that
part of the application therefore does not enclose any appearance of a
violation of Article 1 of Protocol No. 1 (P1-1) read in conjunction
with Article 14 (art. 14) of the Convention.
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.
c) The applicants complain further that a couple married in
church are taxed more heavily than an unmarried couple who cohabit,
and that this amounts to discrimination on the ground of religion,
particularly regarding the religious ceremony of marriage. The
Commission notes that, under English law, any differential rates of
taxation which may apply to married couples as compared to unmarried
couples who cohabit result from the fact of marriage, irrespective of
the type of wedding ceremony undergone. A couple married pursuant to
a civil ceremony will be taxed in exactly the same way as a couple
married in a religious ceremony. It follows that the application as
it concerns discrimination on the ground of religion does not reveal
any difference in treatment between persons married in a religious
service and persons married in a civil ceremony.
Accordingly, 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 applicants also complain that the tax treatment of the
income of married couples infringes their right to respect for private
and family life, and furthermore that to the extent that a married
couple is taxed more heavily than unmarried cohabitees this has the
effect of discriminating against such married couples in their
enjoyment of their private and family life. They invoke in this
respect Article 8 (art. 8) of the Convention and Article 8 (art. 8)
read in conjunction with Article 14 (art. 14) of the Convention.
The Commission considers however that the provisions whereby a married
couple is taxed more heavily than unmarried cohabitees cannot be said
to interfere with their right to respect for private and family life.
An examination of this complaint fails to disclose any appearance of
any interference with the applicants' right to respect for their
private and family life.
As concerns the applicants' complaint of discrimination in this
respect, the Commission would refer to its opinion, stated above, that
married couples and cohabitees are not in analogous situations and
cannot be compared under Article 14 (art. 14) of the Convention.
It follows that the application as it concerns the right to respect
for private and family life alone and in conjunction with Article 14
(art. 14) is manifestly ill-founded within the meaning of Article 27
para. 2 (art. 27-2) of the Convention.
3. The applicants further claim that the spirit and intention of
Article 12 (art. 12) is to safeguard the institution of marriage, and
in so far as the income tax legislation taxes a married couple more
heavily than unmarried cohabitees it tends to encourage disrespect for
marriage.
The Commission notes however that Article 12 (art. 12) guarantees to
men and women of marriageable age the right to marry. An examination
of the complaints as submitted by the applicants fails to disclose any
interference with the exercise of this right. The Commission notes
moreover that, according to both parties' submissions, in most
circumstances a married couple either benefit from lower taxation or
pay no more than if they were unmarried individuals and that to some
extent the tax legislation could therefore be said to encourage
persons to marry. It would also be artificial in comparing the
respective treatment of married and unmarried couples to consider one
particular aspect of taxation in isolation from the general economic,
fiscal and social welfare regimes applicable to them.
It follows that the application as it concerns the claim under
Article 12 (art. 12) is manifestly ill-founded within the meaning of
Article 27 para. 2 (art. 27-2) of the Convention.
For these reasons, the Commission
DECLARES THE APPLICATION INADMISSIBLE.
Deputy Secretary President
to the Commission of the Commission
(J. RAYMOND) (C.A. NØRGAARD)