AS TO THE ADMISSIBILITY OF
Application No. 26560/95
by Alfred MIKA
against Austria
The European Commission of Human Rights (First Chamber) sitting
in private on 26 June 1996, the following members being present:
Mr. C.L. ROZAKIS, President
Mrs. J. LIDDY
MM. A.S. GÖZÜBÜYÜK
A. WEITZEL
M.P. PELLONPÄÄ
B. MARXER
G.B. REFFI
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 23 September 1994
by Alfred MIKA against Austria and registered on 17 February 1995 under
file No. 26560/95;
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 an Austrian national, residing in Aistersheim.
In the proceedings before the Commission he is represented by Mr. L.J.
Kempf, a lawyer practising in Peuerbach.
A. Particular circumstances of the case
The facts of the case, as submitted by the applicant, may be
summarised as follows.
The applicant is married and has six children. He is a
psychologist by profession.
On 12 March 1993 the Upper Austria Finance Directorate
(Finanzlandesdirektion) dismissed the applicant's appeal relating to
his income tax assessments for the years 1986 to 1991.
The Finance Directorate dismissed the applicant's request that
his maintenance payments to his wife and his six children be considered
as extraordinary expenses (außergewöhnliche Belastung) within the
meaning of S. 34 of the Income Tax Act (Einkommenssteuergesetz). It
noted that expenses were extraordinary, if they were higher than those
incurred by the majority of taxable persons of the same income, the
same financial circumstances and the same marital status. It further
noted that the Constitutional Court (Verfassungsgerichtshof) on
12 December 1991 had annulled the words "and the same marital status"
in S. 34 para. 2 of the Income Tax Act of 1972 and S. 34 para. 2 of the
Income Tax Act of 1988, as discriminating against parents with
maintenance obligations. However, the Court had emphasized that the
legislator was free to amend the law by changing the tariff, by
introducing tax-free amounts or by providing for transfer payments. It
followed that maintenance payments to children were not necessarily to
be qualified as extraordinary expenses. It followed further from the
Constitutional Court's judgment of 10 June 1992 that the arguments
adduced by the court in the first-mentioned judgment did not apply to
maintenance payments to spouses.
On 17 May 1993 the applicant lodged a complaint with the
Constitutional Court. He submitted in particular that the Finance
Directorate had violated his right to equality before the law in that
it had refused to accept maintenance payments to his wife and children
as extraordinary expenses, which would lower the assessment basis. The
contested decision was based on an unconstitutional law, namely S. 34
para. 2 of the Income Tax Act 1972 and S. 34 para. 2 of the Income Tax
Act 1988, which continued to apply to his case despite the annulment
decision of the Constitutional Court. The applicant considered in
particular that income tax law was generally guided by the principle
of personal financial capacity. He maintained that the said provision
contained an exception from that principle, for which there was no
objective justification. He was discriminated against as, although his
financial capacity was lower, his income tax was assessed on the same
basis as the income tax of persons not having maintenance obligations.
On 28 September 1993 the Constitutional Court refused to deal
with the applicant's complaint on the ground that it lacked sufficient
prospects of success. It referred to its constant case-law concerning
Article 140 para. 7 of the Federal Constitutional Act (Bundes-
Verfassungsgesetz) and, as regards maintenance payments to spouses, to
its decision of 10 June 1992. It referred the case to the
Administrative Court (Verwaltungsgerichtshof).
On 14 December 1993 the Administrative Court rejected the
applicant's complaint as far as it related to the income tax
assessments for 1989 to 1991 on formal grounds.
On 22 February 1994 the Administrative Court dismissed the
applicant's complaint as regards the income tax assessments for 1986
to 1988. The court found that the annulment of the words "and the same
marital status" in S. 34 para. 2 of the 1972 Income Tax Act 1972 by the
Constitutional Court's judgment of 12 December 1991, did not affect the
applicant's case as it was not the case in point within the meaning of
Article 140 para. 7 of the Federal Constitutional Act. As a result of
the Constitutional Court's annulment decision the provision could not
be challenged anew. The Finance Directorate had correctly applied S. 34
para. 2 of the 1972 Income Tax Act in the version applicable to the
assessment period. Maintenance payments which did not exceed the
payments made by the majority of taxable persons of the same income,
the same financial circumstances and the same marital status were not
to be considered as extraordinary expenses, the term "marital status"
referring not only to the question whether the taxable person was
single (divorced, widowed) or married but also to the number of
children he had to maintain. The applicant had failed to claim that he
had incurred any extraordinary costs, as for example expenses for a
boarding school or expenses on the ground of the illness of one of his
children. As regards the applicant's complaint that the said provision
was discriminatory, the Administrative Court found that its examination
did not fall within its competence.
The decision was served on the applicant on 25 March 1994.
B. Relevant domestic law and practice
1. The 1972 and 1988 Income Tax Act
S. 34 para. 2 of the Income Tax Act 1972 (Einkommenssteuergesetz)
in its former version, provided as follows:
"Eine außergewöhnliche Belastung, die zu einer Ermäßigung der Einkommenssteuer führt, liegt vor, wenn einem Steuerpflichtigen zwangsläufig ... größere Aufwendungen als der Mehrzahl der Steuerpflichtigen gleicher Einkommensverhältnisse, gleicher Vermögensverhältnisse und gleichen Familienstandes erwachsen." "Extraordinary expenses, leading to a reduction of income tax, are allowed, if a taxable person inevitably ... incurs higher expenditure than the majority of taxable persons of the same income, the same financial circumstances and the same marital status." S. 34 para. 2 of the 1988 Income Tax Act provided as follows: "Die Belastung ist außergewöhnlich, soweit sie höher ist als jene, die der Mehrzahl der Steuerpflichtigen gleicher Einkommens- verhältnisse, gleicher Vermögensverhältnisse und gleichen Familienstandes erwächst." "Expenses are extraordinary, insofar as they are higher than those incurred by the majority of taxable persons of the same income, the same financial situation and the same marital status." According to S. 125 the 1988 Income Tax Act was to be applied for the first time to the tax assessment for 1989. 2. Decisions of the Constitutional Court a. In its decision of 12 December 1991 the Constitutional Court annulled the wording "and the same marital status" in S. 34 para. 2 of the 1972 Income Tax Act. In its reasoning the Constitutional Court referred to its decision concerning the introduction of norm control proceedings (Gesetzprüfungsverfahren). It had departed from the consideration that the wording " and of the same marital status" referred not only to the question whether the taxable person was single (divorced, widowed) or married but also to the number of children he had to maintain. It followed that maintenance payments to children were not to be considered as extraordinary expenses, except in very particular circumstances. The Court had then argued that the lack of a possibility to claim maintenance payments to children as extraordinary expenses seemed to be incompatible with the possibility under S. 34 para. 3 to claim maintenance payments to a divorced spouse as extraordinary expenses. Further, S. 34 para. 1 generally applied to expenses which were inevitable and lowered the financial capacity (wirtschafliche Leistungsfähigkeit). Given that maintenance payments fulfilled these criteria, the Court had doubts whether there was an objective reason justifying the fact that they could not qualify as extraordinary expenses. Finally, despite the fact that parents received family allowance and other benefits from the state, the 1972 Income Tax Act appeared to be discriminatory by disregarding the reduced financial capacity of persons with maintenance obligations. Having regard to the above considerations, the Constitutional Court found that the wording "and the same marital status" led to the exclusion of the deduction of maintenance payments as extraordinary expenses and violated the principle of equality before the law, as it discriminated against parents with maintenance obligations. It pointed out in particular that income tax law was guided by the principle of personal financial capacity. Any exception from this principle required an objective justification. Even considering that people with maintenance obligations received family allowance from the state, the need to maintain their children reduced their financial capacity. Finally, the Constitutional Court emphasised that the legislator was free to choose the means, when amending the law in order to achieve conformity with the constitution. He could for instance change the tariff or introduce tax-free amounts or provide for transfer payments. However, within the existing system of income tax law, the annulment of part of S. 34 para. 2 was the only possibility to avoid discrimination against parents. The Constitutional Court found that it was not necessary to set a time-limit for the annulment to enter into force, as the annulled provision continued to apply to circumstances which occurred before the annulment decision, with the exclusion of the case in point (Anlaßfall). Further, the applicability of the law was limited by S. 125 of the 1988 Income Tax Act, according to which the said Act applied as from 1989. b. In a further decision of 12 December 1991 the Constitutional Court annulled the wording "and the same marital status" in S. 34 para. 2 of the 1988 Income Tax Act. It referred to the reasoning of its judgment concerning S. 34 para. 2 of the 1972 Income Tax Act. According to the decision the annulled provision should continue to apply until the entry into force of an eventual amendment. Should no amendment be made, the unconstitutional provision was to become ineffective on 31 December 1992. c. The Constitutional Court's decision of 10 June 1992 also relates to the question whether maintenance payments to children and to a spouse could qualify as extraordinary expenses within the meaning of S. 34 para. 2 of the 1988 Income Tax Act. The Court recalled its annulment decision of 12 December 1991. Further it referred to its constant case-law concerning Article 140 para. 7 of the Federal Constitutional Act, according to which cases which were already pending before it at the time of the oral hearing, or in absence of a hearing at the beginning of the private deliberations in the relevant norm control proceedings, are to be treated like the case in point, i.e. the case which gave rise to the introduction of the norm control proceedings. The Constitutional Court noted that the private deliberations in the norm control proceedings had taken place on 12 December 1991 and that the complaint had been received before that date. Thus, it had to be treated like the case in point and the contested tax decision had to be set aside. However, as regards maintenance payments to spouses, the Constitutional Court noted that the reasoning of its above- mentioned annulment decision could not be applied to maintenance payments to spouses. It argued in particular that the spouses's right to maintenance depended on how the spouses organised their life, e.g. on whether one of them stayed at home to take care of the children. COMPLAINTS 1. The applicant complains under Article 1 of Protocol No. 1 that he was taxed on the basis of S. 34 para. 2 of the Income Tax Act 1972. He submits that part of this provision had been annulled by the Constitutional Court as being discriminatory, but continued to be in force and could not be challenged by him. 2. Further, the applicant complains under Article 13 of the Convention that he did not have an effective remedy to challenge his taxation on the basis of an unconstitutional law. 3. The applicant complains under Article 14 of the Convention that he was discriminated against by the Austrian authorities' decisions. Firstly, he submits that the Constitutional Court only exempted a particular group of cases from the further application of the annulled provision, namely those in which an appeal was pending. Secondly he submits that S. 34 para. 2 of the 1972 and 1988 Income Tax Act was discriminatory in that it did not accept maintenance payments as extraordinary expenses, which would lower the assessment basis. Thus, the principle of personal financial capacity which otherwise guides income tax law was infringed and taxable persons with obligations to pay maintenance were discriminated against in comparison with persons of the same income not having such obligations. THE LAW 1. The applicant complains under Article 1 of Protocol No. 1 (P1-1) that he was taxed on the basis of S. 34 para. 2 of the 1972 Income Tax Act. He submits that part of this provision had been annulled by the Constitutional Court as being discriminatory, but continued to be in force and could not be challenged by him. Article 1 of Protocol No. 1 (P1-1) reads as follows: "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 observes that the second paragraph of Article 1 of Protocol No. 1 (P1-1) expressly leaves unimpaired the State's right to enforce such laws as it deems necessary to secure the payment of taxes. Therefore, the duty to pay taxes falls within its field of application (Eur. Court H.R., Darby judgment of 23 October 1990, Series A no. 187, p. 12, para. 30). The Commission recalls that the principle of legal certainty, inherent in the Convention, may dispense States from reopening legal acts or situations which antedate judgments of the European Court of Human Rights declaring domestic legislation incompatible with the Convention. The same principle applies where a Constitutional Court annuls legislation as unconstitutional (cf. No. 22651/93, Dec. 18.10.95, D.R. 83-A p.14) The applicant complains about his taxation under the 1972 Income Tax Act, i.e. the tax assessment for 1986 to 1988. The Commission notes that S. 34 para. 2 of the 1972 Income Tax Act was in force during the relevant assessment period, as the Constitutional Court's annulment decision was only given on 12 December 1991. The Court ruled that the annulled provision should continue to apply to circumstances which occurred before the annulment decision, only the case in point being excluded. Further, it found that it was not necessary to set a time- limit for the annulment to enter into force, as the applicability of the law was limited by the 1988 Income Tax Act, which applied for the first time to the tax assessment for 1989. The Commission finds that the continued application of S. 34 para. 2 of the 1972 Income Tax Act served the interest of legal certainty. In these circumstances, there is no appearance of a violation of Article 1 of Protocol No. 1 (P1-1). 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. Further, the applicant complains under Article 13 (Art. 13) of the Convention that he did not have an effective remedy to challenge his taxation on the basis of an unconstitutional law. Article 13 (Art. 13) reads as follows: "Everyone whose rights and freedoms as set forth in this Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity." The Commission recalls that Article 13 (Art. 13) does not go so far as to guarantee a remedy allowing a Contracting State's laws as such to be challenged before a national authority on the ground of being contrary to the Convention or equivalent domestic norms (Eur. Court H.R., James and Others judgment of 21 February 1986, Series A no. 98. p. 47, para. 85; Lithgow and Others judgment of 8 July 1986, Series A no. 102, p. 74, para. 206). 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. 3. The applicant complains under Article 14 (Art. 14) of the Convention that he was discriminated against by the Austrian authorities' decisions. Firstly, he submits that the Constitutional Court only exempted a particular group of cases from the further application of the annulled provision, namely those in which an appeal was pending. Secondly, he submits that S. 34 of both the 1972 and 1988 Income Tax Act was discriminatory in that it did not accept maintenance payments as extraordinary expenses, which lowered the assessment basis. Article 14 (Art. 14) reads as follows: "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 notes that this complaint relates to the 1972 as well as the 1988 Income Tax Act. The latter served as a basis for the applicant's income tax assessments for 1989 to 1991. The Administrative Court, on 14 December 1993, rejected the applicant's complaint relating to these tax assessments on formal grounds. However, the Commission is not called upon to decide whether the applicant complied with the requirements of Article 26 (Art. 26) of the Convention, as the complaint is in any case inadmissible. The Commission recalls that a treatment is discriminatory, if it has no objective and reasonable justification, that is, if it does not pursue a legitimate aim or if there is no reasonable relationship of proportionality between the means employed and the aim sought to be realised. In this respect the Contracting States enjoy a certain margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify a different treatment in law (Eur. Court H.R. Lithgow and Others judgment, loc, cit., p. 66 et seq., para. 177). The Commission further recalls that the prohibition against discrimination is also applicable in relation to taxation (Eur. Court H.R., Darby judgment, loc. cit.). The Commission notes that the Austrian Constitutional Court is empowered to annul a provision as being unconstitutional, but that it is left to the legislator to amend the law. In the present case, the Constitutional Court in its decision relating to the 1988 Income Tax Act provided that the annulled provision should continue to apply until the entry into force of an amendment, but not beyond 31 December 1992. In its decision relating to the 1972 Income Tax Act, it did not set a time-limit, as the applicability of the law was limited by the entry into force of the 1988 Income Tax Act. The court ruled that the annulled provision should continue to apply to circumstances which occurred before the annulment decision, with the exclusion of the case in point. According to the Constitutional Court's constant case-law, cases in which an appeal was pending before it at a certain stage of the norm control proceedings, were to be treated in the same way as the case in point. The Commission recalls its above considerations relating to the principle of legal certainty. It finds that in the present case the Constitutional Court created an interim regulation of general application, which was neither arbitrary nor based on any criteria of personal status incompatible with Article 14 (Art. 14) of the Convention (cf. No. 15464/89, A.P. v. Austria, Dec. 8.10.1991, unpublished). It follows that this part of the application is also manifestly ill-founded within the meaning of Article 27 para. 2 (Art. 27-2) of the Convention. 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)
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