Lexploria

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)

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KAIRA v. FINLAND

KAIRA v. FINLAND

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