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1. The author of the
communication is R.P.C.W.M. Brandsma, a Dutch national born on 14 October
1961. He claims to be a victim of a violation of article 26 of the
International Covenant on Civil and Political Rights by the Netherlands. He
is represented by counsel.
THE FACTS AS DESCRIBED BY THE AUTHOR
2.1 In 1998, the author worked as a civil servant both for the Ministry of
Finance and for the University of Leiden. He was given holiday supplementary
payment of Fl. 9,166 in addition to his normal wages during the holidays
which totalled Fl. 11,894. These amounts of holiday payments were fully
subject to the imposition of income tax, in conformity with the Dutch laws
and regulations.
2.2 The author states that, like he, most employees in the Netherlands
receive their holiday payments directly from their employer. In some sectors
of industry, notably in the building sector, however, employees receive
holiday vouchers. These are entitlements that can be cashed in, at the time
of vacation, at a foundation that is funded with contributions from the
employers. The value of these vouchers is taxed at the same time as the
monthly or weekly salary, although the employees receive the actual payment
at a later stage.
2.3 During the period before the tax reform of 1990, a technical
complication in the calculation of wage taxes would have led to the holiday
vouchers being taxed at a higher rate than normal holiday payments. In order
to compensate for this disadvantage, holiday vouchers were taxed at only a
percentage of their normal value (75% in 1950, 50% in 1953 and 60% in 1969).
It is stated that the system led to criticism from fiscal experts, who
claimed that the undervaluation of the vouchers privileged employees
receiving holiday payments through vouchers.
2.4 In 1986, a committee of experts (the Oort-committee) advised the
government about simplification of the tax system. This new system would
take away the higher tax rate for the holiday voucher payments and the
committee advised therefore to tax the vouchers at 100%. However, the Social
Economic Council, a permanent advisory body to the government, was of the
opinion that this would lead to increased expense for the employers and a
decrease in net wages for the employees and, thus, would be opposed by those
concerned. Following this advice, and after consultations with the Labour
Foundation, the official consultative forum between organizations of
employers and employees, a tax reform package was presented, abolishing the
tax disadvantage of the holiday vouchers and at the same time raising their
valuation to 75%. This proposal was accepted by Parliament and became
effective on 1 January 1990.
2.5 In 1996, further tax reforms were proposed. After consultations with the
organisations of employers and employees new rules were issued, effective 1
January 1999, which will gradually abolish the valuation of the holiday
vouchers. From 1999 onwards, their valuation will increase with 2.5% every
year, reaching 92.5% in 2005. As of 2006, it is proposed to tax the vouchers
against their effective value (estimated at around 97.5% because of the
discrepancy between the moment of taxation of the vouchers and the moment of
effective payment).
THE COMPLAINT
3.1 The author complains that he is a victim of a violation of article 26 of
the Covenant, because he had to pay taxes over 100% of his holiday payments
in 1998 whereas those employees who were being paid their holiday payments
through vouchers were taxed at 75% of their payments.
3.2 The author states that he has not objected to the tax assessment or
exhausted domestic remedies in this respect, in the light of the Supreme
Court's judgement of 16 June 1999 in a similar case, where the Court decided
that the difference in taxation did not constitute unlawful discrimination.
According to the author, the application of domestic remedies would thus not
have any prospect of success.
3.3 The author argues that although his holiday payments are not identical
to the holiday payments through vouchers, the two situations are so similar
that unequal treatment cannot be justified. He argues that after the tax
reform of 1990 no relevant distinction between the two systems of holiday
payments exists. Only the difference between the moment of taxation and the
moment of payment in the case of holiday vouchers would be a relevant
distinction, but the estimated difference is said to be only around 2% and
does not justify a difference in the taxable payment of 25%.
3.4 The author further remarks that the group of taxpayers who are entitled
to holiday vouchers are mainly men, and stresses that the present system
amounts to indirect distinction on the basis of sex prohibited by article
26.
3.5 Concerning the opposition against full taxation by employers and
employees in the sectors where the holiday vouchers are used, the author
argues that the opposition may be an explanation for the delay in providing
equal treatment, but does not provide any justification for continuing the
favourable treatment of a small group of taxpayers. He states that measures
which have broad support in society can nevertheless be discriminatory and
therefore violate the Covenant. As to the validity of the arguments used by
the social partners, the author argues that the abolition of a privilege
leads automatically to a financial disadvantage of the persons who used to
enjoy the privilege. This argument can thus not be used to maintain
privileges.
3.6 The author further argues that the gradual abolition of the privilege is
not justifiable as the State party is under an unconditional obligation to
secure the substantive Covenant rights. Even if some form of gradual change
after 1990 can be accepted, it cannot be justified that the difference in
taxation was still unchanged in 1998, eight years after the difference in
tax basis between the two systems had been abolished.
3.7 If the Committee were to decide that the holiday vouchers and normal
holiday payments are not similar payments that require equal treatment, the
author argues that the difference in tax base of 25% is completely
disproportionate in relation to the actual time difference between the
moments of taxation, and thus still amounts to discrimination.
3.8 On the basis of the above, the author requests the Committee to rule
that there has been discrimination in his case and that he should be
retroactively granted the privileged treatment enjoyed by the others, and be
compensated for the tax that he has paid additionally.
STATE PARTY'S OBSERVATIONS
4.1 By submission of 23 November 2001, the State party refers to a
comparable case submitted by the author's counsel on behalf of another
client to the European Court of Human Rights, which was declared
inadmissible by the Court on 23 October 2000. According to the State party,
the claims of discrimination of the case are the same as in the present
case. Indeed, the author has referred to the Supreme Court's judgement in
this case as a justification for the non-exhaustion of domestic remedies.
The State party agrees in this context that it was reasonable for the author
to expect that domestic remedies would not have given him any relief.
4.2 The State party refers to a letter to counsel from the registry of the
European Court of Human Rights, dated 7 September 2000, in which it explains
the obstacles to the admissibility of the case, referring to the Court's
case law from which follows that States parties have a wide margin of
appreciation in the implementation of social and economic policies, in
assessing when and to what extent differences in otherwise similar
situations justify a different treatment in law. In its decision declaring
the case inadmissible, the Court found that the matters complained of did
not disclose any appearance of a violation of the rights and freedoms set
out in the European Convention.
4.3 The State party recalls that it has not entered a reservation to article
5, paragraph 2(a), of the Optional Protocol vis-�-vis matters that have
already been decided by the European Court because it was believed that
wide-spread similar reservations could undermine the universal system for
the protection of individual human rights. The State party requests the
Committee however to avoid opposing rulings by international supervisory
bodies and thus to share the conclusion of the European Court that there has
been no violation of the principle of non-discrimination. In this
connection, the State party argues that the difference in scope between
article 14 of the European Convention and article 26 of the Covenant does
not play a role in the present case, since the combined scope of article 14
and article 1 of the First Protocol is comparable to the scope of article 26
of the Covenant.
4.4 On the facts of the case, the State party explains that in the
construction industry and related sectors, it has been the custom that
workers are not paid while they are on holiday. Instead, they receive
holiday vouchers from their various employers for each day they work, which
can be exchanged for cash at a central fund in the holiday period. Out of
the total of about five million employees in the Netherlands who have some
kind of holiday entitlement, roughly 330,000 are entitled to holiday
vouchers. The author is therefore in the same position as about 93.4% of the
total number of employees with holiday entitlement.
4.5 The State party explains that the difference in treatment arose from the
need to prevent the situation where those who received holiday vouchers were
taxed more heavily than recipients of holiday pay. It further explains that
after the simplification of the taxation system in 1990, the assessment of
the value of holiday vouchers was raised to 75%. Although a rise to a 100%
had been proposed originally, it was felt that this would confront employees
concerned with a sudden, substantial drop in income. After consultation, a
rate of 75% was therefore agreed as a temporary compromise. Further
consultations finally led to the gradual abolition of the special rate as of
1 January 2006.
4.6 On the merits, the State party refers to the courts' finding that
holiday pay and holiday vouchers are unequal cases, both de facto and de
jure. The Supreme Court noted in its judgement of 16 June 1999 that it was
not the existence of the differences that was contested but only their
weight. It then concluded that an objective and reasonable justification
existed for the unequal treatment given that the government had compelling
reasons of a social, economic and political nature for not immediately
raising the rate of the vouchers to their market value. The State party
explains that the Supreme Court explicitly examines cases in the light of
international conventions, including the Covenant.
4.7 The State party reiterates that weighty social, economic and political
considerations underlie the different tax regimes applied to holiday pay and
holiday vouchers. It acknowledges that the difference in treatment should be
abolished but affirms that this has to be done with caution. It suggests
that the sudden denial to individuals of what were in the past undisputed
rights, with reference to the principle of equality before the law, may be
at odds with other human rights, in particular the right to the protection
of property. The State party argues that this applies all the more in the
present case since in contrast to the author the recipients of holiday
vouchers belong to the lowest salary category.
4.8 The State party concludes that the communication (a) does not involve
equal cases and (b) does not involve a manifest disproportionate treatment
of unequal cases which could be classified as a violation of article 26 of
the Covenant.
THE AUTHOR'S COMMENTS
5.1 By letter of 21 January 2002 the author comments on the State party's
submission. He agrees that the case which was decided by the European Court
is highly comparable with the present communication. He argues however, that
decisions of the European Court interpreting the European Convention cannot
be decisive when interpreting the Covenant, since they are two different
treaties with different States parties and different supervisory mechanisms.
5.2 Furthermore, the author submits that the European Court leaves States
parties in tax cases a wide margin of appreciation. The author argues that
the application of this approach to article 26 of the Covenant would
undermine the basic and general character of the principle of
non-discrimination. The proper test under article 26 is whether the criteria
for differentiation are reasonable and objective.
5.3 The author also argues that political considerations cannot, in
themselves, be regarded as a reasonable and objective justification for a
distinction between similar situations which does not have a reasonable,
legitimate aim in itself. In the author's opinion, admitting such
considerations as a justification under article 26 would largely deprive the
non-discrimination clause of its content.
5.4 The author refers to his original communication and reiterates that the
distinction made in the present case is discriminatory. He challenges the
Supreme Court's conclusion, invoked by the State party, that holiday
vouchers and holiday payments cannot be regarded as identical situations and
refers in this respect to the government's initial proposal in 1990 to tax
the vouchers against a rate of 100%. According to the author, the Supreme
Court leaves too much of a margin of appreciation to the public authorities
when deciding whether a different treatment of a very similar situation is
justified. The author argues that to the extent that there may be a relevant
difference between holiday vouchers and holiday payments, this difference is
far too small to justify an exemption of 25% for holiday vouchers, making
the difference in treatment disproportionate and thus discriminatory.
ISSUES AND PROCEEDINGS BEFORE THE COMMITTEE
6.1 Before considering any claims contained in a communication, the Human
Rights Committee must, in accordance with rule 87 of its rules of procedure,
decide whether or not the communication is admissible under the Optional
Protocol to the Covenant.
6.2 The Committee notes that the author claims to be a victim of a violation
of article 26 by the Netherlands because of the different treatment in
taxation of holiday payments between him and those employees who receive
their payments through vouchers. The Committee further notes that the courts
in the Netherlands have decided that the difference in treatment is based on
factual and legal differences in the two forms of payment. The author's
claim is based on a different assessment of these differences.
6.3 The Committee takes note of the reasons advanced by the State party as
to why it decided to raise the valuation of the holiday vouchers in a
gradual manner. It considers that the author has not substantiated, for
purposes of admissibility, his claim that he, as a recipient of holiday pay,
similarly to the vast majority of employees in the State party, was
discriminated against compared to the small minority of workers who, because
of the nature of their work, receive holiday vouchers, the taxation of which
continues to be somewhat lower than that of holiday pay. Therefore, this
part of the communication is inadmissible pursuant to article 2 of the
Optional Protocol.
6.4 Concerning the author's claim about indirect discrimination (paragraph
3.4 above), the Committee notes that the author is not a woman and thus
cannot be considered to be a victim within the meaning of article 1 of the
Optional Protocol. Accordingly, this part of the complaint is inadmissible
pursuant to article 1 of the Optional Protocol.
7. The Committee therefore decides:
a) that the communication is inadmissible under articles 1 and 2 of the
Optional Protocol;
b) that this decision shall be communicated to the State party and to the
author.
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[Adopted in English, French and Spanish, the English text being the original
version. Subsequently to be issued also in Arabic, Chinese and Russian as
part of the Committee's annual report to the General Assembly.] |
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