Lietuviškai
THE CONSTITUTIONAL COURT OF
THE REPUBLIC OF LITHUANIA
R U L I N G
On the compliance of items 5, 6, 7, 8, 16, 17, 19,
27.4-27.9, 29, 34, 36 of the stamp tax rates
confirmed by the 11 November 1994 Resolution
No.1123 of the Government of the Republic of
Lithuania "On the confirming the rates of stamp
tax, as well as the procedure of payments and
returning of stamp tax" with the Constitution of
the Republic of Lithuania, Article 6 of the Law of
the Republic of Lithuania on Stamp Tax, as well as
Article 6 of the Law of the Republic of Lithuania
on Competition.
15 March 1996, Vilnius
The Constitutional Court of the Republic of Lithuania,
composed of the justices of the Constitutional Court Algirdas
Gailiūnas, Kęstutis Lapinskas, Zigmas Levickis, Vladas
Pavilonis, Pranas Vytautas Rasimavičius, Stasys Stačiokas,
Teodora Staugaitienė, Stasys Šedbaras and Juozas Žilys,
the secretary of the hearing - Daiva Pitrėnaitė,
the petitioner - Vidmantas Žiemelis, a member of the
Seimas, and Stasys Juocevičius, a lawyer, both representatives
of a group of the Seimas of the Republic of Lithuania members,
the party concerned - Leonora Žukienė, Head of Legal
Division of the State Tax Inspectorate under the Ministry of
Finance, representative of the Government of the Republic of
Lithuania,
pursuant to Part 1, Article 102 of the Constitution of the
Republic of Lithuania and Part 1, Article 1 of the Law on
Constitutional Court of the Republic of Lithuania, in its
public hearing on 7 March 1996 conducted the investigation of
Case No.13/95 subsequent to the petition submitted to the Court
by a group of the Seimas of the Republic of Lithuania members,
requesting to investigate if items 5, 6, 7, 8, 16, 17, 19,
27.4-27.9, 29, 34, 36 of the stamp tax rates confirmed by the
11 November 1994 Resolution No.1123 of the Government of the
Republic of Lithuania "On the confirming the rates of stamp tax
, as well as the procedure of payments and returning of stamp
tax" are in compliance with the Constitution of the Republic of
Lithuania, Article 6 of the Law of the Republic of Lithuania on
Stamp Tax, as well as Article 6 of the Law of the Republic of
Lithuania on Competition.
The Constitutional Court
has established:
I
The Seimas on 23 June 1994 passed the Law on Stamp Tax
(Official Gazette "Valstybės Žinios", No.51-950, No.89-1712,
1994; No.47-1135, 1995; No.18-462, 1996) Part 2, Article 3
whereof stipulates "the rates of stamp tax save for the cases
under investigation in courts or copies of granted documents
shall be established by the Government of the Republic of
Lithuania".
The rates of stamp tax were confirmed by the Government by
its 11 November 1994 Resolution No.1123 "On the confirming the
rates of stamp tax, as well as the procedure of payments and
returning of stamp tax" with subsequent amendments and
appendages.
II
In the opinion of the petitioner, the rates established in
items 5, 6, 7, 8, 16, 17, 19, 27.4-27.9, 29, 34, 36 by the 11
November 1994 Resolution No.1123 of the Government of the
Republic of Lithuania "On the confirming the rates of stamp
tax, as well as the procedure of payments and returning of
stamp tax" are groundlessly high and violate the provisions of
Article 6 of the Law on Stamp Tax, as stamp tax, according to
this Article, shall be included into the budget, and only such
office shall be maintained by this tax which performs actions
and grants documents bearing legal power for which the
aforesaid tax is collected.
In the opinion of the petitioner, the Government by
constantly increasing stamp tax transformed it into the means
of illegal replenishing the budget and thereby in fact took the
competence of the Seimas which is established in item 15,
Article 67 of the Constitution ("establish State taxes and
other obligatory payments").
Besides, as the petitioner alleges, the Government by
groundlessly increasing the rates of stamp tax restricts
freedom of individual economic activity and initiative (Part 1,
Article 46 of the Constitution), as well as people's
opportunity to freely choose business (Part 1, Article 48 of
the Constitution).
These actions of the Government create conditions to
monopolise market because petty and average businessmen are
financially incapable to pay high stamp taxes and, therefore,
they give up the most profitable markets to large companies and
monopolies (thereby Parts 3, 4, and 5, Article 46 of the
Constitution are violated).
The petitioner also contends that the stamp tax rates
which were established by the Government restrict competition
as they impede creating new economic entities, as well as
changing the manner of their activity (Article 6 of the Law on
Competition).
On the grounds of the arguments set forth, the petitioner
requests to recognise that items 5, 6, 7, 8, 16, 17, 19,
27.4-27.9, 29, 34, 36 of the stamp tax rates confirmed by the
11 November 1994 Resolution No.1123 of the Government "On the
confirming the rates of stamp tax , as well as the procedure of
payments and returning of stamp tax" contradict Article 46,
Part 1, Article 48, item 15, Article 67 of the Constitution, as
well as Article 6 of the Law on Stamp Tax, and Article 6 of the
Law on Competition.
III
The representative of the party concerned has explained
that the request of the petitioner is not a grounded one and
that the disputed items of the stamp tax rates confirmed by the
11 November 1994 Resolution No.1123 of the Government are in
compliance with the Constitution, as well as with the Law on
Stamp Tax and the Law on Competition, and has presented the
following counter-arguments. In her opinion, the petitioner
inaccurately interprets Article 6 of the Law on Stamp Tax,
i.e., that only such office shall be maintained by this tax
which performs actions and grants documents bearing legal power
for which the aforesaid tax is collected.
Article 6 of the Law on Stamp Tax provides that stamp tax
shall be included into the budget which maintains offices
performing actions and granting documents which bear legal
power and for both of which the aforesaid tax is collected,
although this, in the opinion of the representative of the
party concerned, does not mean that this tax is allocated only
to maintain the office which collects stamp tax. Stamp tax, as
well as other taxes established by the laws of the Republic of
Lithuania, and also other payments into the budget make
revenues of the budgets of the Government and municipalities
from which all budget offices are maintained.
The representative of the party concerned argues that the
Government by establishing the rates of stamp tax did not take
the competence of the Seimas and did not excel its jurisdiction
as do to so it is authorised by the law, therefore it and no
one other decides on what criteria the procedure of licensing
is established.
Regarding the allegation of the petitioner that the
Government by groundlessly increasing the rates of stamp tax
restricts freedom of individual economic activity and
initiative, as well as people's opportunity to freely choose
business, the representative of the party concerned has
explained that the Government establishes stamp tax on only
such activity which is either not urged, or very profitable
(trading with alcoholic beverages, organising lotteries, buying
up metals and their processing, providing with international
telecommunications services, import and export of oil-products,
etc.). In her opinion, the remaining rates of stamp tax are not
high (5, 10, 25, 100, 150 Lt).
The representative of the party concerned also contends
that the petitioner by alleging that the rates of stamp tax
restrict competition and impede creating new economic entities,
as well as changing the manner of their activity, should
present the data which must be grounded with the corresponding
economic analysis of commercial-economic activity of economic
entities because without such data it is impossible to draw a
conclusion if the rates of stamp tax established by the
Government really impede creating new economic entities, as
well as changing the manner of their activity.
In the court hearing the representatives of the
petitioner, as well as those of the party concerned confirmed
their statements.
The Constitutional Court
holds that:
Taxes are one of the oldest financial institutes which is
used to generate revenues necessary for the state. Modern
states make use of other payments as the state budget revenues
as well.
Finance law defines taxes as obligatory and not
individually compensated contributions of legal and natural
persons established by state bodies into the state (municipal)
budgets (in certain cases - into non-budget purposive funds) by
indicating their amount and time limits of the payment.
The main object of taxes is the fiscal one, therefore they
are utilised as the revenue resource of the state budget which
is assigned to meet the interests of society and state. In
addition, socio-economic processes of the state are regulated
by taxes.
After the reinstatement of the independent state of
Lithuania, the reform of the system of taxes began to be
implemented. As far back as 1990 Law on Taxes on Profits of
Legal Persons and Provisional Law on Income Tax of Natural
Persons were adopted. Later, in 1993, Law on Value-Added Tax
was passed, in 1994 - Law on Excise Taxes, as well as other
laws regulating taxes were adopted.
On 28 June 1995 the Law on Tax Administering was passed
(Official Gazette "Valstybės Žinios", No.61-1525, 1995),
Article 5 whereof gives the list of the taxes applied in the
Republic of Lithuania. A unified tax system, which comprises
all taxes and other payments and dues, has been created by tax
laws, as well as by this law.
1. On the compliance of items 5, 6, 7, 8, 16, 17, 19,
27.4-27.9, 29, 34, 36 of the stamp tax rates confirmed by the
11 November 1994 Resolution No.1123 of the Government "On the
confirming the rates of stamp tax, as well as the procedure of
payments and returning of stamp tax" with item 15, Article 67
of the Constitution, as well as Article 6 of the Law on Stamp
Tax.
It is consolidated in item 15, Article 67 of the
Constitution that the Seimas shall "establish State taxes and
other obligatory payments".
Article 2 of the Law on Tax Administering defines the
notion of the tax as "monetary contribution for the state
imposed upon the tax payer by the law on taxation, so that the
state (municipality) may receive revenues to perform its
functions".
In order to assess whether the Government was competent to
establish the rates of stamp tax, one must make clear as to
what is the position of stamp tax in the system of the state
revenues established by the state as a legal form of such
revenues (payments), and how the contents of stamp tax legal
relations differ from other payments.
In Part 2, Article 127 of the Constitution it is
established: "State Budget revenues shall be accrued from
taxes, compulsory payments, dues, receipts from State property,
and other income." Thus, according to the Constitution, five
legal forms of the state budget revenues may be singled out:
regular taxes, other compulsory payments, dues, receipts from
the state property, and other income. They are specified in
particular laws. Stamp tax is not mentioned in the
Constitution, therefore it belongs to one of the aforesaid
legal forms of the state budget revenues. When comparing the
legal forms of the budget revenues mentioned in item 15,
Article 67 with the provisions of Article 127 of the
Constitution, a conclusion is to be drawn that not every legal
form of the budget revenues has the same legal meaning and
regulation. It means that the Constitution establishes an
opportunity for the Seimas to variously regulate the state
budget revenues while considering their legal forms.
According to Article 2 of the Law on Tax Administering,
the law on taxation is "the law of the Republic of Lithuania
which shall establish the tax, due, or other payment into the
state (municipality) budget...". Stamp tax was introduced with
the adoption of the Law on Stamp Tax on 23 June 1994, which
entered into force on 1 January 1995. Until the adoption of the
Law on Stamp Tax, the said legal relations were regulated by
the 12 March 1993 Resolution No.163 of the Government "On State
Dues".
Stamp tax, even though it is called a tax, in its essence
is different from taxes (regular taxes) in their proper sense
as its nature is that of a direct recompense. This tax is
collected for actions performed by the state institutions, as
well as for granted documents bearing legal power (Article 1 of
the Law on Stamp Tax). As a rule, such payments are paid only
once. Meanwhile, the characteristic of taxes is that they are
paid regularly during established time limits, and their nature
is not that of direct recompense, i.e., after they had been
paid to the state which accepted the said tax, the
aforementioned institution has no obligation to perform any
actions or render any particular service for the tax payer.
Recompense is characteristic of such a legal form of the
state budget revenues as the due. Article 2 of the Law on Tax
Administering defines the due as "a monetary contribution for a
person for particular services rendered to him by the state
institutions. Dues are a supplementary revenue resource to
perform the state (municipality) functions". Thus the general
contents of legal relations of the state due are analogous to
those of stamp tax. They differ from each other in merely being
the general and special legal notions.
In addition, stamp tax, as well as the due, has a two-way
character, as the subjects of the legal relations which occur
after the stamp tax has been paid have the corresponding rights
and obligations. According to Article 2 of the Law on Stamp
Tax, "stamp tax shall be paid by legal and natural persons to
the state institutions for performed actions, or granted
documents bearing legal power". Therefore, the state
institution which collects stamp tax and which is the
compulsory subject of the said legal relations must perform
corresponding actions in favour of the tax payer, e.g., to give
a licence of taking up a particular activity, to render certain
services, etc. On the other hand, the stamp tax payer is
entitled, in his turn, to demand that the state institutions
which collected the tax should perform corresponding actions,
or render a particular service to the tax payer. Such a two-way
link of subjects' rights and obligations of the legal relations
which occur after the said taxes have been paid entails them
the nature of recompense.
Unlike regular taxes, which are always compulsory, stamp
tax, along with other taxes, may be either compulsory, or
voluntary. The character of compulsory dues reveals itself in
that when they are not paid in the cases provided for, they
will be exacted by the procedure established by law. However,
the essentials of regular taxes and those of compulsory dues,
hence of stamp tax as well, are different: taxes are paid
providing there exists a permanent object subject to taxation,
whereas there are two essentials of paying compulsory dues: the
object subject to taxation and the actions performed, or
services rendered by the competent institutions of the state to
legal, as well as natural persons.
As a rule, most dues, as well as stamp tax, are voluntary
payments, i.e., a person, who desires to get some service or a
particular action from a state office, consents to pay stamp
tax or any other due before the actions are performed, or
documents bearing legal power are granted, and on such basis he
becomes entitled to demand that the requested actions be
performed, or that the documents he wants be granted.
Article 6 of the Law on Stamp Tax establishes that "stamp
tax shall be included into the budget which maintains offices
performing actions and granting documents which bear legal
power and for both of which the aforesaid tax is collected". It
does not mean, however, that the said tax is allocated for only
the office which collects it. Stamp tax is included into the
budget which maintains all budget offices, not to mention the
office collecting the said tax.
It is established in Part 1, Article 127 of the
Constitution: "The budgetary system of the Republic of
Lithuania shall consist of the independent State Budget of the
Republic of Lithuania and the independent local governments
budgets." According to Part 1, Article 11 of the Law on
Budgeting, the state budget of the Republic of Lithuania shall
be a centralised fund of financial resources. Part 2 of the
said article stipulates: "Financial resources accumulated in
the State Budget of the Republic of Lithuania shall be used for
financing national needs." Article 13 of the said law
enumerates particular national needs for which appropriations
from the state budget shall be made. In particular, item 7 of
this Article establishes: "maintenance of state power, state
government and law enforcement institutions". Financial
resources to satisfy the needs of local governments are
reapportioned through the state budget as well.
On the ground of the mentioned above, it is impossible to
assert that the Government by establishing the rates of stamp
tax took the competence of the Seimas because it was the
Seimas, and not the Government, which introduced stamp tax
after passing the Law on Stamp Tax. In Part 1, Article 3 of
this law the object of taxation is established, i.e., it is
indicated what stamp tax is collected for, whereas in Part 2 of
the said Article it is established: "The rates of stamp tax
save for the cases under investigation in courts or copies of
granted documents shall be established by the Government of the
Republic of Lithuania".
According to item 2, Article 94 of the Constitution, the
Government shall "implement laws and resolutions of the Seimas
concerning the implementation of laws". That is also provided
for in item 2, Article 21 of the Law on the Government.
The Government by establishing the rates of stamp tax
fulfilled the provision of the law. Thereby it did not violate
the provision of item 15, Article 67 of the Constitution as it
merely established the rates of stamp tax, but did not
establish new taxes, or other obligatory payments. Thus a
conclusion should be made that the disputed items of the stamp
tax rates confirmed by the 11 November 1994 Resolution No.1123
of the Government are in compliance with item 15, Article 67 of
the Constitution, as well as with Article 6 of the Law on Stamp
Tax.
2. On the compliance of items 5, 6, 7, 8, 16, 17, 19,
27.4-27.9, 29, 34, 36 of the stamp tax rates confirmed by the
11 November 1994 Resolution No.1123 of the Government "On the
confirming the rates of stamp tax, as well as the procedure of
payments and returning of stamp tax" with Article 46 and Part
1, Article 48 of the Constitution, as well as Article 6 of the
Law on Competition.
The petitioner in his request contends that the Government
by establishing groundlessly high rates of stamp tax restricts
freedom of individual economic activity and initiative, as well
as people's opportunity to freely choose business, and that
these actions of the Government create conditions to monopolise
market and impede competition.
1. The provision of Part 1, Article 46 of the Constitution
"Lithuania's economy shall be based on the right to private
ownership, freedom of individual economic activity, and
initiative" is tightly connected with people's right
established in Part 1, Article 48 of the Constitution to freely
choose an occupation or business. Both of the said provisions
are also linked to the principle established in the
Constitution of people's equality before the law, the court,
and other state institutions (Part 1, Article 29 of the
Constitution), as well as with the provision of Part 3, Article
46 of the Constitution, that the state shall regulate economic
activity so that it serves the general welfare of the people.
All these constitutional provisions by conditioning each other
constitute constitutional preconditions to pass laws which
respond to the conditions of national economy, the diversity
and change of economic and social life.
The Constitutional Court has already held that law may
establish different legal regulation concerning certain
categories of people who are in different situation. This
should also be applied to legal persons, and not only to
natural persons as the former are, as a rule, corporations of
natural persons (the Constitutional Court 28 February 1996
ruling - Official Gazette "Valstybės Žinios", No.20-537, 1996).
Thus people's right to freely choose one or another type of the
occupation or business may be regulated by varied manner. This
right is first linked to manifold natural requirements, i.e.,
to skills and capacities of every person. These requirements
may be diverse: the possession of corresponding training, moral
and other qualities (e.g., physicians, teachers, judges, public
prosecutors, etc.), acquiring a specific license (e.g.,
drivers), etc. The opportunity to freely choose business is
also restricted by natural requirements, e.g., the possession
of the initial capital. In fact, a person with no necessary
material condition would not make use of this right. Therefore,
a person when choosing an occupation or business knows in
advance that he is supposed to have an adequate training, or
pay particular taxes, and, according to his skills or
capacities, decides what to choose. It is most important that
the opportunity of free choice for a person were not restricted
directly, by the normative manner, i.e., the person may not be
prohibited to choose a particular occupation or business.
The rate of a tax or a due in particular does not restrict
people's right to freely choose an occupation or business.
Assuming that one or another tax rate restricts people's right
to freely choose an occupation or business, a conclusion can be
reached that taxes as such which are imposed on the entities of
a particular branch of economy or business restrict the said
right of people.
2. It is established in Part 4, Article 46 of the
Constitution: "The law shall prohibit monopolisation of
production and the market, and shall protect freedom of fair
competition." In Article 2 of the Law on Competition the
competition is defined as emulation during which economic
entities, by acting independently in the market, restrict one
another's abilities to attain a dominant position in that
market.
The statement of the petitioner that groundlessly high
stamp tax rates restrict competition as they impede creating
new economic entities and, therefore, contradict Article 6 of
the Law on Competition, is to be estimated as a general
precondition, as this precondition is not grounded on the legal
facts of application of particular rates for individual
economic entities. Meanwhile, if different amounts for
individual branches of economy of stamp tax rates were regarded
as restricting competition, then, on the whole, it would mean
denial of the possibility to regulate economic activity in such
a way that the conditions of national economy, the diversity
and change of economic and social life were taken into account.
The stamp tax rates established by the Government would
restrict competition if they were different for the same
categories of persons (those of a branch of economy or
business), i.e., if for certain economic entities they were of
one kind, and for others they were different. Then some persons
would be discriminated, while others would be granted
privileges. Meanwhile, the Government has established equal
stamp tax rates for all entities of the same type of economy or
business.
The allegation of the petitioner that such actions of the
Government create conditions to monopolise the market is to be
estimated analogously. The establishment of stamp tax rates
does not of itself mean that conditions are created to
monopolise the market, i.e., to introduce monopoly. The
monopoly is understood as an exclusive right of a person, or a
group of persons, or a state to operate in a certain field.
Meanwhile, the Government by establishing different stamp tax
rates for individual branches of economy or business has not
granted any exclusive right for any economic entity or group of
persons to operate in an individual field of economy or
business, and thereby did not restrict freedom of economic
activity and initiative.
Taking into account the motives set forth, a conclusion is
to be made that the disputed items of the stamp tax rates
confirmed by the 11 November 1994 Resolution No.1123 of the
Government are in compliance with Article 46 and Part 1,
Article 48 of the Constitution, as well as Article 6 of the Law
on Competition.
Conforming to Article 102 of the Constitution of the
Republic of Lithuania and Articles 53, 54, 55 and 56 of the Law
of the Republic of Lithuania on the Constitutional Court, the
Constitutional Court of the Republic of Lithuania has passed
the following
ruling:
To recognise that items 5, 6, 7, 8, 16, 17, 19, 27.4-27.9,
29, 34, 36 of the stamp tax rates confirmed by the 11 November
1994 Resolution No.1123 of the Government of the Republic of
Lithuania "On the confirming the rates of stamp tax , as well
as the procedure of payments and returning of stamp tax" are in
compliance with the Constitution of the Republic of Lithuania,
Article 6 of the Law of the Republic of Lithuania on Stamp Tax,
as well as Article 6 of the Law of the Republic of Lithuania on
Competition.
This Constitutional Court ruling is final and not subject
to appeal.
The ruling is promulgated on behalf of the Republic of
Lithuania.