21 September 2006 № J-195/2006
The Constitutional Court of the Republic of Belarus, comprising of the Presiding Officer - Chairman of the Constitutional Court G.A. Vasilevich, Deputy Chairman A.V. Maryskin, judges T.S. Boiko, K.I. Kenik, V.V. Podgrusha, A.G. Tikovenko, R.I. Filipchik, V.Z. Shuklin
with participation of representatives:
of the House of Representatives of the National Assembly of the Republic of Belarus - R.I. Vnuchko, Head of Standing commission on monetary and credit policy and bank activities; A.N. Burova, Deputy Head of Standing commission on housing policy, construction, trade and privatization; V.I. Marakhin, Deputy Head of Standing commission on budget, finances and tax policy; A.V. Chuprakov, adviser-consultant of Division of civil, labour and social legislation of Main expert and legal Department of Secretariat of the House of Representatives of the National Assembly;
Ministries on taxes and dues, economy, finance, statistics and analysis, culture of the Republic of Belarus -
A.A. Doroshenko, Deputy Minister on Taxes and Dues; A.A. Selitskaya, Head of Legal Department of the Ministry on Taxes and Dues; M.O. Grigorchuk, Head of Division of calculation of property taxes, declaration of income and property of Department of taxation of natural persons of the Ministry on Taxes and Dues; V.A. Hlabordov, Head of legal Department of the Ministry of Economy; D.I. Fedorako, deputy Head of legal Department of the Ministry of Finance; N.B. Schastny, deputy Head of Department of tax policy of Main Department of tax policy and budget receipts of the Ministry of Finance; V.G. Mikhno, Deputy Minister of Statistics and Analysis; D.E. Gorbajchuk, main legal adviser of Department of educational institutions and personnel of the Ministry of Culture,
has examined in open Court session the case "On the conformity between the Constitution, laws and other acts of legislation of the Republic of Belarus of Resolution of 5 January 2002 No. 2/1/1/1/2 "On making alterations and addenda into Provision on composition, rates and procedure of exemption from the sums of author's fees and other incomes of natural persons" adopted by ministries on taxes and dues, economy, finance, statistics and analysis, culture of the Republic of Belarus.
The Court session was attended by: V.N. Vyshkevich - Deputy Chairman of the Supreme Court of the Republic of Belarus; A.V. Ivanovsky - Deputy Procurator-General of the Republic of Belarus; I.G. Tushinsky - Deputy Minister of Justice of the Republic of Belarus.
The proceedings were brought by the Constitutional Court of the Republic of Belarus of 27 June 2006 as a result of the proposal of the House of Representatives of the National Assembly of the Republic of Belarus on the grounds of Article 116 of the Constitution of the Republic of Belarus, Articles 5, 6 and 27 of the Law "On the Constitutional Court of the Republic of Belarus" and Article 43 of the Rules of Procedure of the Constitutional Court.
The subject to verification was Resolution of the Ministry on Taxes and Dues of the Republic of Belarus, the Ministry of Economy of the Republic of Belarus, the Ministry of Finance of the Republic of Belarus, the Ministry of Statistics and Analysis of the Republic of Belarus, the Ministry of Culture of the Republic of Belarus of 5 January 2002 No. 2/1/1/1/2 "On making alterations and addenda into Provision on composition, rates and procedure of exemption from the sums of author's fees and other incomes of natural persons" (hereinafter is also referred to as Resolution of 5 January 2002) (National register of legal acts of the Republic of Belarus, 2002, No. 10, 8/7697).
The House of Representatives of the National Assembly in its proposal noted that in accordance with the effective before 1 January 2006 legislation, privatization checks to a named person "Zhiljo" ("Dwelling") (hereinafter is also referred to as checks "Zhiljo") could be use for privatization of dwelling occupied by citizens in the houses of state housing stock or for payment of share in housing or housing and building cooperative or for repayment of debt (loan) borrowed for the construction in question. In these cases the value of one check "Zhiljo" was determined taking into account the index of rise of construction cost of dwelling, and, for example, in 2005 it was 10 - 13 thousand of Belarusian roubles. Subsequently, as the House of Representatives of the National Assembly underlines, due to alteration in the middle of 2005 of the legislation that stipulated new rules of circulation of checks "Zhiljo", citizens started to sell them at the price of 0,7 - 2 thousand of Belarusian roubles. The House of Representatives of the National Assembly deems that the Ministry on Taxes and Dues of the Republic of Belarus acted unlawfully by imposing the income tax on returns of citizens from selling of checks "Zhiljo" and used while taxing this income for specification of expenses the index of consumer costs instead of using the index of rise of construction cost of dwelling fixed by Resolution of the Council of Ministers of the Republic of Belarus of 21 September 2001 No. 1399 "On approval of Provision on privatization of living accommodation in houses of state housing stock, their maintenance and repair and Provision on indexation of dwelling quota (sums of quotas)".
Having heard the judge-speaker, Mrs T.S. Boiko, representatives as litigants, having analysed the provisions of the Constitution, other enforceable enactments of the Republic of Belarus, having studied other materials of the case, the Constitutional Court found the following.
1. The Constitution shall secure the right of citizens of the Republic of Belarus to housing. This right is safeguarded by the development of state and private housing and assistance for citizens in acquisition of housing (Article 48).
According to the Law "On privatization of housing stock in the Republic of Belarus", privatization of housing stock shall be carried out on paid, unpaid and mixed grounds (Article 9), and unpaid privatization of living accommodation shall be exercised by way of granting the citizens of the Republic of Belarus the housing quota in money form and that shall be certified by checks "Zhiljo" (Article 10, 11).
Checks "Zhiljo" shall be used, first of all, for privatization of living accommodation in the houses of state and public housing stock. Checks "Zhiljo" unused for purpose may be used for other purposes stipulated by the legislation of the Republic of Belarus (Article 12 of the Law "On privatization of state property in the Republic of Belarus").
According to Article 16 of the Law "On privatization of housing stock in the Republic of Belarus" in case of impossibility of use of checks "Zhiljo" partially or in full for privatization of the occupied accommodation in the houses of state housing stock they shall be used for: payment of share in housing or housing and building cooperative or repayment of debt (loan) borrowed for this construction; for financing of individual or collective housing construction, reconstruction of one-flat, block system dwelling houses, share in housing construction, while acquiring of dwelling by way of purchase, as well as for repayment of debts of banks and loans of legal entities borrowed and used for the aims in question; privatization of state property; exchange for securities. Moreover, before 1 January 2006 checks "Zhiljo" could be subject to selling (Article 16 of the Law "On privatization of housing stock in the Republic of Belarus" and Article 11 of the Law "On privatization of checks of the Republic of Belarus to a named person").
2. According to the Law "On income tax from natural persons" in wording of Law of 9 March 1999 income of citizens from selling of securities since 1 January 1999 had become the object of income taxation (sub-item 1.11 of point 1 of Article 3 of the given Law). Whereas according to Article 1 of the Law "On privatization checks of the Republic of Belarus to a named person") the check "Zhiljo" is a state security of the Republic of Belarus to a named person, then the income of citizens from selling of these checks had become the subject to taxation.
For natural persons who earned income from paid alienation of property, and securities, checks "Zhiljo" included, shall be referred to them, the income under taxation was reduced to the sum of documentary confirmed expenses related to earning of the income in question (Article 16 of the Law "On income tax from natural persons". Composition of these expenses, procedure of their specification and exclusion from income according to part three of point 1 of Article 19 of the Law "On income tax from natural persons" were approved by the Government of the Republic of Belarus or by the body it authorized. The Council of Ministers of the Republic of Belarus on the basis of delegated by the legislator powers in its Resolution of 9 June 1999 No. 863 "On composition of expenses related to drawing of income by natural persons" had specified the relevant authorized persons. Order of the State Tax Committee, ministries of economy, finance, statistics and analysis, entrepreneur activities and investments culture of 28 July 1999 No. 185/73/204/174/102/262 had approved the Provision on composition, rates and procedure of exclusion of expenses from the sums of author's fees and other income of natural persons. This Provision specified different methods of indexation of expenses the use of which depended on the type of an alienable property.
According to point 11 of the Provision on composition, rates and procedure of exclusion of expenses from the sums of author's fees and other income of natural persons in wording of Resolution of 5 January 2002 (hereinafter is also referred to as Provision of 2002) (invalid since 27 March 2006) expenses on acquisition of property were determined on the grounds of factual and certified expenses (part one); expenses on acquisition of property consisted of the cost of the property at the moment of acquisition increased at the ration that reacted to alteration of the index of consumer costs (part two).
Thus, tax bodies while taxing the income from selling of checks "Zhiljo" had become to use the ratio that shall react to alteration of the index of consumer costs, and that was envisaged by points 11 and 14 of Provision of 2002. By using this ration the tax bodies had made the calculation of expenses, i.e. the sums that were not included into the tax base.
Meantime, as it follows from explanations of representatives of the House of Representatives of the National Assembly, the use of the index of rise of construction cost of dwelling would be more preferable also in tax law relations due to the fact that the rate of expenses that are deducted from selling of checks "Zhiljo" would be higher than in case of use of index of consumer costs and, therefore, the rate of the income tax would be reduced.
However, index of rise of construction cost of dwelling fixed by the legislation on privatization was not subject to application while taxing returns from selling of checks "Zhiljo" due to adoption by the relevant ministries on the grounds of delegated to them powers of Resolution of 2002. In this particular case there was no prohibition against stipulation and fixation in tax relations of index of consumer costs by the acts of higher legal force. Index of rise of consumer cost of dwelling was subject to application only under condition of using of checks "Zhiljo" in accordance with their purpose envisaged by the legislation (part four of Article 11 and part 1 of Article 21 of the Law "On privatization of housing stock in the Republic of Belarus").
According to the given Law, specification of the procedure of indexation of checks "Zhiljo" taking into account the rise of construction cost of dwelling was referred to the competence of the Government of the Republic of Belarus. The Council of Ministers of the Republic of Belarus in its Resolution of 21 September 2001 No. 1399 has approved Provision on privatization of dwelling accommodation in the houses of state housing stock, their maintenance and repair (hereinafter is also referred to as Provision on privatization of living accommodation) and Provision on indexation of dwelling quota (sums of quotas) (hereinafter is also referred to as Provision on indexation). (Provision on indexation is invalid as a result of adoption by the Council of Ministers of the Republic of Belarus of Resolution No. 968 of 1 September 2005). The Constitutional Court emphasized that the given Provisions settled the issues of indexation of checks "Zhiljo" only in case of their purpose using, first of all, for privatization of dwelling. Indexes specified in these Provisions were not fixed for selling of checks "Zhiljo", as well as for settlement of issues of taxation.
On the basis of content of part four of Article 11 of the Law "On privatization of housing stock in the Republic of Belarus" and part one of point 4 of Provision on indexation, in cases of selling of checks "Zhiljo" the right to their indexation taking into account alteration of the cost of construction of dwelling shall be vested to the person who bought the checks and who uses them further for designated purpose.
On the grounds of stated above, the Constitutional Court considers that index of rise of construction cost of dwelling stipulated by enforceable enactments on privatization was subject to application by the citizens only in cases of use by them of checks "Zhiljo" while privatizing living accommodation in the houses of state housing stock or while carrying out by citizens and members of their families, who are in need of improvement of living conditions, of individual or collective housing construction, including by way of share, reconstruction of one-flat, block system dwelling houses, by way of share in housing construction, or those who join the organization of citizens having built, as well as in case of repayment of debts of banks and loans of legal entities borrowed and used for the aims in question.
3. The Constitutional Court, by examining the issue on lawfulness of adoption by the relevant ministries of Resolution of 5 January 2002, underlines the following.
Part one of Article 55 of the Law "On enforceable enactments of the Republic of Belarus" stipulates that the norm creating body (official) shall have the right to delegate a part of one's norm creating powers to other norm creating bodies (officials), if it is in line with the Constitution and with other legislative acts of the Republic of Belarus.
The Council of Ministers of the Republic of Belarus on the basis of Article 19 of the Law "On income tax from natural persons" by its Resolution of 9 June 1999 No. 863 "On composition of expenses related to drawing of income of natural persons" has referred solution of the indicated issues to the State Tax Committee (at present - Ministry on Taxes and Dues) to ministries of economy, finance, statistics and analysis, culture and other interested organs of the Republic of Belarus.
The Constitutional Court, on the grounds of content of enforceable enactments that are related to the case under examination, has come to the conclusion that Resolution of 5 January 2002 was adopted in conformity with the acts of legislation of the Republic of Belarus of higher legal force. Thus, norms of Provision of 2002 approved by the given Resolution in part of specification of expenses for their exclusion from income that is subject to taxation while selling of checks "Zhiljo" with use of index of consumer costs is in line with the Constitution, Laws "On privatization of housing stock in the Republic of Belarus", "On privatization of checks of the Republic of Belarus to a named person", other legislative acts of the Republic of Belarus, as well as with Resolution of the Council of Ministers of the Republic of Belarus of 21 September 2001 No. 1399 "On approval of Provision on privatization of living accommodation in houses of state housing stock, their maintenance and repair and Provision on indexation of dwelling quota (sums of quotas)".
The Constitutional Court in its decisions, where the subject to examination were norms of tax legislation of by-legislative normative legal acts of the ministries, local representative and executive bodies, has paid attention to the necessity of determination of main elements of taxation (payers, object of taxation, tax base, tax period, tax rate (rates), procedure of calculation, procedure and periods of payment) at the level of legislative acts. This position is related also to the republican taxes, in particular, legal regulation of collection and calculation of income tax from natural persons and found its approval in Decree of the President of the Republic of Belarus of 3 November 2005 No. 520 "On improvement of legal regulation of certain relations in economic sphere".
Examination of this particular case shall signify that while delegating by the Parliament and by the Government to other bodies the powers on the issues that involve the rights, freedoms and obligations of citizens it is practical to specify the limits of legal regulation in by-law acts. This shall make it possible to exclude adoption of decisions that meet not in full the aims of legislative regulation.
The Constitutional Court points out that under the formed conditions of legal regulation of the procedure of indexation of checks "Zhiljo", actions of the Ministry on Taxes and Dues were not as a whole at variance with the legislation. At the same time, it should be noted that checks "Zhiljo" were issued for the citizens free of charge taking into account their labour contribution in creation of the housing stock that was the state fund before privatization. Although checks "Zhiljo" are referring to securities, however, due to specific nature of providing citizens with them and their purpose use, legal regulation of these checks may have peculiarities. Due to that the citizens in their numerous applications to the House of Representatives of the National Assembly expressed their objections that checks "Zhiljo" they earned in case of their initial selling were subject to taxation. In this situation the Constitutional Court finds to be positive the position of the Ministry on Taxes and Dues, when in case of undue payment of tax the tax bodies by initial selling of checks "Zhiljo" made only notifications and made no penalization. At the same time, according to the available information, many of citizens were called to administrative liability and penalized. The Constitutional Court is not entitled to examine the issues on revision of adopted decisions on calling of citizens to liability. Possibilities of constitutional jurisdiction could be more effective in case of timely raising of questions before the Constitutional Court by the authorized subjects on verification of constitutionality of enforceable enactments, including those of them adopted in development and in fulfillment of laws, and that shall make it possible for the Constitutional Court to influence timely during the period of effect of these acts on the legal situation within the available powers of the Court.
Grounded on the abovestated and guided by Article 116 of the Constitution, Articles 5, 6, 38, 40 and 43 of the Law "On the Constitutional Court of the Republic of Belarus", the Constitutional Court
RULED:
1. To find to be in conformity with the Constitution, laws and other acts of legislation of the Republic of Belarus of Resolution of 5 January 2002 No. 2/1/1/1/2 "On making alterations and addenda into Provision on composition, rates and procedure of exemption from the sums of author's fees and other incomes of natural persons", adopted by the Ministry on Taxes and Dues of the Republic of Belarus, the Ministry of Economy of the Republic of Belarus, the Ministry of Finance of the Republic of Belarus, the Ministry of Statistics and Analysis of the Republic of Belarus, the Ministry of Culture of the Republic of Belarus, in part of specification of expenses with use of index of consumer costs for their exclusion from returns that are subject to taxation by selling of checks "Zhiljo" ("Dwelling").
2. To propose the National Assembly of the Republic of Belarus and the Council of Ministers of the Republic of Belarus while delegating the powers on the issues that involve the rights, freedoms and obligations of citizens to specify the limits of legal regulation in by-law acts, and that shall make it possible to exclude adoption of decisions that meet not in full the aims of legislative regulation.
3. To publish the present Judgment within the time period fixed by the legislation in newspapers "Zvyazda" and "Narodnaya gazeta", as well as in National register of legal acts of the Republic of Belarus and in "Vesnik Kanstytutsijnaga Suda Respubliki Belarus".
4. The present Judgment shall come into legal force from the day of its adoption, is final and subject to no appeal or protest.
Presiding Officer —
Chairman of the Constitutional Court
of the