AS TO THE ADMISSIBILITY OF Application No. 13013/87 by Wasa Liv Ömsesidigt, Försäkringsbolaget Valands Pensionsstiftelse and a group of approximately 15,000 individuals against Sweden The European Commission of Human Rights sitting in private on 14 December 1988, the following members being present: MM. C.A. NØRGAARD, President J.A. FROWEIN S. TRECHSEL G. SPERDUTI E. BUSUTTIL G. JÖRUNDSSON A.S. GÖZÜBÜYÜK A. WEITZEL J.C. SOYER H.G. SCHERMERS H. VANDENBERGHE Mrs. G.H. THUNE Sir Basil HALL MM. F. MARTINEZ C.L. ROZAKIS Mrs. J. LIDDY Mr. H.C. KRÜGER, Secretary to the Commission Having regard to Article 25 of the Convention for the Protection of Human Rights and Fundamental Freedoms; Having regard to the application introduced on 15 June 1987 by Wasa Liv Ömsesidigt, Försäkringsbolaget Valands Pensionsstiftelse and a group of approximately 15,000 individuals against Sweden and registered on 15 June 1987 under file No. 13013/87; Having regard to the report provided for in Rule 40 of the Rules of Procedure of the Commission; Having deliberated; Decides as follows: THE FACTS The facts of the case, as submitted by the applicants, may be summarised as follows: The first applicant, Wasa Liv Ömsesidigt, is a Swedish mutual life insurance company with its headquarters in Stockholm. The second applicant, Försäkringsbolaget Valands Pensionsstiftelse, is a Swedish pension foundation also with its headquarters in Stockholm. The third applicant is a group of approximately 15.000 Swedish and non-Swedish nationals holding pension and endowment insurance policies in the first and second applicant companies. Before the Commission the applicants are represented by Mr. Dag Wersén of the law firm Lagerlöf in Stockholm. The application concerns the introduction in Sweden of a new legislation in December 1986 imposing a once and for all property tax on life insurance companies, certain friendly societies and pension foundations (Lag om tillfällig förmögenhetsskatt för livsförsäkringsbolag, understödsföreningar och pensionsstiftelser). The relationship between on the one hand the first and second applicant and on the other hand the third applicant One of the various pension systems available in Sweden is the buying of a private pension policy from a private life insurance company. Such policies do not follow any social insurance index but the future value of the policies depends exclusively upon successful administration of the premium income received. The greater part of such insurance is contracted by private individuals wishing to improve their pension status. This category includes private employees requiring a better pension than they can expect from the national social insurance scheme as well as businessmen and farmers who have to arrange their service pensions themselves. In addition to the above groups there are people who are not in need of any additional pension themselves but want to make provision for their survivors in case of their death. Furthermore, life insurance is generally also a long-range kind of saving. In Sweden, licensing and forms of life insurance business are governed by the Insurance Companies Act of 1982 (försäkringsrörelselag (1982:713)). Licensing (in the form of a concession) by the Government is mandatory for carrying on life insurance business. A concession includes official confirmation of the company's charter and the general rules for the life insurance business. The general rules of a life insurance company can be regarded as a legal supplement to the company's charter. They are also essential for the contractual relationship between the company and its policyholders. In most cases the general insurance conditions of life insurance policies contain an explicit provision which makes the general rules, applying at any time, an integral part of the insurance agreement. As a general principle of Swedish insurance law, all life insurance business must be operated solely in the interest of the policyholders. As a consequence all profits have to be allotted to the policyholders in the form of a bonus. Dividends to shareholders and similar payments are not allowed. As a consequence of the said general principle most life insurance companies in Sweden are operated in mutual form - i.e. the companies are owned by the policyholders. There is, however, no rule against carrying on life insurance business in the form of a joint stock company. However, no dividends may in this case be paid to shareholders. Consequently, there is in practice virtually no difference between the company forms for life insurance business. The business is always operated in accordance with mutual principles and solely in the interests of the policyholders. The fact that all insurance companies are effectively operated on a mutual basis does not mean that the policyholders have any legal claim to direct ownership of the companies' assets as such. All property - shares, bonds, real estate etc. - in which the companies invest their funds is the company's own property as in the case of any other legal entity. The fact that there are no interested parties in life insurance companies other than the policyholders does not alter this fact. An individual life insurance policy is a long-term agreement often running for a period of 30 years or more. The amount insured and the premium are fixed on the basis of an assumed income on invested premiums received. The surplus that arises when the actual income is higher, is returned as a bonus on the policies in accordance with the general mutual principle. Depending on the success or otherwise of the insurance business the aggregate value of the bonus reserve may increase or decrease. Consequently, an insurance policy constitutes a vested right to the insurance amount contracted in the policy and a right to a bonus which amounts to a fair share of the surplus, if any. As already mentioned, all surplus on life insurance business is to be returned as a bonus on the policies. Each individual policy is entitled to a certain share of the surplus in proportion to its relative contribution to the creation of the surplus. This principle is universal for all life insurance companies. The manner in which the allotment of the surplus is effected may nevertheless vary slightly from one company to another, depending on which way the individual life insurance company allocates receipts and expenditure on the policies. In all cases, the principle of equitable treatment of policies must be adhered to. Details on the allotment principles can be found in each company's general rules. The actual allocation of the bonus is not formally effected until the amount insured for becomes payable. It is common for life insurance companies to describe the importance of the bonus to the future value of insurance policies by preparing what are referred to as "bonus illustrations". Such illustrations often accompany the general information given to potential buyers of life insurance policies. The bonus illustrations do not represent any guarantee of a future bonus to be received on the policy in question, the intention being simply to show how various levels of bonus interest are influenced by the factual return on invested premiums. It is, nevertheless, the experience that the bonus illustrations are understood by policyholders as a prognosis of future bonus, which makes it necessary to prepare all such illustrations on a very conservative basis and to make a number of reservations. The particulars of the one-off property tax The essential stipulations of the legislation on the property tax may be summarised as follows. The legislation on the property tax was passed by the Swedish Parliament on 16 December 1986 and published the same day as No. 1986:1225 of the Swedish Law Gazette. The Act entered into force on 23 December 1986. The one-off property tax was calculated as 7% of the taxable assets of the below mentioned companies. For pension insurance the taxable assets equalled the aggregate assets of the contributor whereas the taxable assets for the purpose of endowment insurance were 72% of the aggregate assets referable to this type of insurances. No tax should be paid on that part of a company's assets which were referable to sickness or accident insurances. The basic principle was that the assets were assessed, with certain exceptions, at their book value. The one-off property tax was to be paid to the State by Swedish life insurance companies, certain friendly societies and pension funds. The tax liability was imposed on the subjects concerned which had started business activities before the end of 1984. No others were subjected to the property tax. The tax was based on the entities' aggregate assets in excess of 10 million Swedish crowns by 31 December 1986. As a result the levy concerned approximately 200 companies, societies and funds directly, including the first and second applicant. The method of distributing the tax burden chosen by the first and second applicants, as well as by other insurance companies affected by the Act, was, in the absence of any criteria provided for by law, to reduce the bonus payments which would otherwise have been credited the policyholders for the years 1987 and 1988. Those entities which were liable to the tax had to file a special tax return relating to the levy no later than 1 June 1987. At the same time one half of the amount to be paid had to be remitted. One half of the remainder of the amount had to be paid no later than 31 August 1987 and the remaining part on 30 November 1987. The property tax was not deductible for the entities concerned when calculating their income tax to the State. The one-off tax totalled approximatelly 16 billion Swedish crowns, and the first and second applicants paid 916,091,000 and 356,000 Swedish crowns respectively. When the Government presented the new legislation to Parliament the responsible minister stated inter alia the following: "Since the autumn of 1982, economic policy has aimed at eliminating the various balance problems in the Swedish economy. Among other things, this has involved a strict budgetary policy aimed at reducing the large budget deficit. During this period, the margin for improvements, both in the form of increases in real household income and through public expenditures, has been extremely narrow. During these years large groups of our society have contributed to a pronounced decrease of the Swedish economy's problems by various types of sacrifices. The deficits on the national budget and in the balance of current payments have thus been reduced or eliminated. This has proved possible parallel to a reduction in unemployment. The policy pursued - in combination with international development - has thus made a radical reduction in the rate of inflation possible. A necessary condition for continued low inflation, which is essential for any favourable economic development in real terms, is that the deficit on the national budget be further limited in coming years. It has also proved possible to reduce the level of interest rates, in that the balance problems in the Swedish economy have been softened. However, the fall in interest rates has not been as rapid as the decrease in the rate of inflation. While inflation has fallen from 10% in 1982 to around 3% this year, nominal interest rates have decreased over the same period from 13% to 9%. It is not surprising therefore that the rates of real interest have risen sharply. Experience shows that changes in the inflation rate - upwards or downwards - are only reflected in the nominal rate after a considerable period of time. On the other hand, the level of real interest is almost unique. Real interest has not been anywhere near today's level in modern times. It is impossible to foresee how long the level of real interest will remain high. It may be noted, however, that institutions with a high proportion of their wealth invested in assets at a tied rate will be in a position to enjoy a continued high yield for several years after any decision in the general level of interest rates. Given continued low inflation, such investors can even now reckon, with a high degree of certainty, on a very good real yield, at least for the remainder of the 1980s, even if the interest on new investments were to fall. Through the rise in real interest rates, the yield on insurance saving has gone up markedly. One may note, among other things, a trend increase in the so-called 'refund rates'. These show what a yield individual pension and endowment insurances give for individual years. In real terms, the refund rates have thus risen from around 1% in 1981 to approximately 11% this year. Refund rates can be expected to remain at this level for a further few years. Another factor contributing to the rise in refund rates has been the rapidly rising rates noted for listed shares, an increase in value which is the result of the high level of profit in business and industry. The increased attractiveness of insurance saving has led to a strong increase in the demand for policies. During the period 1980-85, the number of newly subscribed P-insurances rose by no less than 23% per year, while the number of E-insurances rose by 16% per year. At the same time as insurance saving has expanded strongly so far during the 1980s, total savings by households have continued to remain low, or actually to fall. There is thus reason to believe that the increase in insurance saving has to a large extent replaced other savings by households. It also seems probable that part of this saving, particularly in the case of E-insurance, has been achieved with borrowed money. The rapid real growth in the insurance companies' refund rates - i.e. the yield on insurance saving - is in contrast with the restricted development of real wages in recent years. The high yield entails, in the case of individual insurance saving, increased benefits. There is a direct link between the yield in an insurance company and the scale of, for example, the pension paid on the grounds of a pension insurance policy. In the case of collective insurance saving, the scale of pensions and other insured benefits is dependent only in part on the yield on insurance capital. These benefits are set out in collective agreements. If the yield on capital is very high, as is the case at present, the effect is to render the costs to the employer lower than otherwise. It is thus the employers who, primarily, benefit from the high yield. That this is the case is confirmed by the fact that the level of premiums for service pension insurance has fallen during the past two years. General considerations Life insurance saving enjoys a favoured position in the context of taxation. Saving in a pension insurance (P-insurance) takes place with untaxed money. The yield on its capital is not subject to taxation within the insurance sector. Only when pension sums are actually paid does a tax obligation arise. In the case of endowment policies (E-insurance), the arrangement if different. Saving is effected with taxed money. The yield is subject to a low rate of taxation within the insurance company. The sums that fall due are exempt from income tax. The life insurance capital is entirely exempt from wealth tax and is favourably treated, by comparison with other assets, in inheritance taxation. Also, it should be noted that the costs to an employer of service pensions and other 'security' insurances for the employees are not included in the basis for the employers' social charges. It will be clear from what I have now said that the entire life insurance sector is consistently afforded a favourable treatment as regards taxation. This is the case both regarding individual insurance savings, and the savings based on collective agreements between labour and management. Even if the rules are differently structured in respect of P- and E-insurance, both types are favoured, compared with other types of savings. It is not without reason, however, that benefits have been accorded to savings in the form of insurance. The long-term character ascribable to most insurance savings is generally desirable. Savings in the form of insurance mean that the saver often ties up funds over long periods of time. Even if the financial security ensured in sickness and old age has been radically improved by the development of the national insurance, there is reason also to provide conditions favouring a complementary financial protection, whether this is based on collective agreements, or created by individual insurance solutions. The benefits accorded, in taxation, to insurance savings are for the reasons I have just quoted, among others, essentially well considered during periods when the growth of insurance capital is normal. As I have indicated, however, in the preceding section, we are currently experiencing a growth of wealth in the insurance sector that one is bound to characterise as unique. The yield on insurance capital now lies at a level in excess of 10%. No such situation has prevailed at all in modern times. I would observe, in this context, that fluctuations in the yield are per se a regular feature in insurance company operations. Periods when the real yield is low, or actually negative, alternate with periods when the yield is at a higher level. What we are now experiencing, however, is a growth in whealth far beyond what can be contained by such normal fluctuations. ..................... In the light of what I have just said, I have reached the conclusion that the disadvantages connected with a tax on real interest are so considerable as to prevent me from recommending the introduction of such a tax. My position entails that a solution to the problems of income distribution consequent upon the growth of wealth in the insurance sector must be sought along different lines. As already stated, it is my opinion that the general order of things prevailing as regards the taxation of insurance savings affords an acceptable result both when profitability is good, and when it is bad. In the situation currently prevailing, however, with a growth of wealth that is unique in modern times, the favoured position of insurance savings from the standpoint of taxation entails that such savings are enjoying benefits on a scale that must be called into question. In my opinion, special measures are thus called for. When considering the thrust of such measures, one should in my opinion take into account precisely the circumstance that the present level of yield will not persist. In a few years' time, we can foresee a return to a more normal level of profitability. What has just been said leads also to the conclusion that no other new, permanent forms of taxation should be introduced. On the contrary, it would be sufficient to exact, now, a (one-off) wealth tax from the insurance sector. Such a tax would not entail drawbacks of the kind associated with a tax on real interest. An occasional tax can be simply structured. It will not create uncertainty regarding the future as to the scale of the tax to be exacted on insurance savings. Also, its budgetary effects can be entirely estimated. By way of summary, I would make the following judgment. The growth of wealth noted within the life insurance sector is at present at such a level that the favourable tax rules applying produce results that are unreasonable from the point of view of distribution-of-income policy. The present situation is in the historical perspective almost unique, and cannot be expected to persist over any long period of time. To alter the fundamental tax provisions or introduce an entirely new, permanent system of taxation to meet the present situation can produce undesirable long-term effects. By a (one-off) wealth tax, one avoids such effects, at the same time as the sector which is being favoured with particular force by successful efforts to combat inflation is required to contribute to a clean-up of the state's finances. My conclusion is therefore that the rules of the taxation of life insurance should be retained, in their essentials, but that an occasional tax should be exacted. I would also add, at this point, that this tax will create the possibility for improvements for those pensioners who are worst off." The Swedish Law Council (Lagrådet) The proposal the Swedish Government presented to Parliament was under the Constitution submitted for scrutiny from a legal point of view by an institution called the Law Council. This Council is composed of three members from the country's supreme legal institutions, the Supreme Court (Högsta Domstolen) and the Supreme Administrative Court (Regeringsrätten). In the present case, two Supreme Court judges and a Supreme Administrative Court judge scrutinised the bill and gave their opinion on 31 October 1986. Concerning the compatibility of the Government bill with the Swedish Constitution and the European Convention on Human Rights, the Law Council made the following statement: "The Council has in particular studied the bill from its constitutional aspects. In this respect, the Council has started from the statement in the remittted proposal that the bill, if a decision is made by Parliament before its Christmas recess, will not be in conflict with the prohibition against retroactive tax legislation contained in Chapter 2 Section 10 of the Instrument of Government, nor with any Swedish commitments under international treaties. By the latter are envisaged, presumably, the European Convention of 4 November 1950 on the Protection of Human Rights and Fundamental Freedoms together with the supplementary protocol of 20 March 1952 relating to the protection of, among other things, property rights. The Council has also considered the compatibility of the bill with these documents, which for the sake of simplicity are referred to below as the European Convention. ................... A circumstance considered inter alia in many statements by the bodies to whom the bill was circulated is that it is intended to tax insurance companies etc. for a wealth that they only manage in accordance with agreements with the policyholders. This view is developed, among others, by the Court of Appeal for Western Sweden (hovrätten för västra Sverige), which found the construction objectionable on legal grounds and recommended that the liability to tax rest with the owner of the wealth asset. Applying a strict judgment by the terms of the Instrument of Government, the Law Council finds, to begin with, that there is no obstacle to exacting tax on the actual wealth assets in question. Whether a tax is exacted in one way or another, from the insurance institutions or the policyholders, is a question to which inter alia practical administrative considerations can obviously be applied. The Council cannot find any legal obstacle to the construction which has been chosen. It is of major importance, however, that the tax should ultimately burden the individuals involved in accordance with fair and objective principles. Satisfactory guarantees of this should be available within the framework of the control system that would be in operation under the Act, and in view of the tax subjects in question. On the other hand, the wealth tax's character of a once-for-all tax presents a major problem. It should be noted per se that alterations to taxes, and above all, charges that limit their period of application in various ways have been made on numerous occasions. In this context, an example close to hand can be recalled in the Act (1983:968) concerning an Occasional Increase in the State Wealth Tax, which applied to the assessment of 1984 and was introduced as one among many aspects of a larger proposal on economic policy. The background, according to the Government's bill (1983/84:40 p. 32) was that the wealth values of certain assets had risen dramatically. It was not considered acceptable that this increase in value should benefit only a limited group of citizens. The objections raised by those entering reservations in the Standing Committee on the Constitution lack relevance in the present context. In the present case, however, it is a question not of any temporary change in a previously payable tax, but of the introduction of an entirely new wealth tax of a once-for-all character. This has given rise to certain special constitutional questions, which have not previously been brought forward. The Law Council recalls that the idea of a once-for-all tax on wealth was raised during the Second World War. A memorandum regarding the conditions for and consequences of such a tax was compiled by Professor Erik Lindahl (SOU 1942:52). The question was raised several times in Parliament, most recently by the Standing Committee of Ways and Means in 1945 (No. 55), shortly after the end of the war in Europe. The majority of the Standing Committee then recommended an enquiry into the forms in which private wealth should contribute to the covering of the expenditures arising during the period of the emergency. The minority did not quote any constitutional grounds against the proposal. The general opinion appears to have been that extraordinary measures were permitted in conditions of crisis. The national defence tax, for example, had been introduced with retroactive effects. The same came to apply - but here with political differences of opinion - to the excess profit tax exacted on income from business and agricultural operations during 1951, against the background of the Korean War. This latter tax became in fact an example of a once-for-all tax. A once-for-all tax on wealth is obviously of a more sensitive nature than a once-for-all tax on income. It is one thing to exact a tax that is in principle of the customary general nature - as was the case during the war - another to abandon this general nature, and instead limit, with a greater or lesser degree of narrowness, the circle of tax-liable entities. In the present case, the number of entities liable to tax is said to be around 2,000, but the majority will escape taxation owing to the deduction of 10 million Swedish crowns which it is proposed to allow. The Council finds that a basis is lacking on which to calculate the number of entities liable in practice. Still less can the Council arrive at any general picture as to how the deduction will influence the effects of the tax on different policyholders and persons entitled to pensions. In the field of tax legislation it is accepted - obviously - that a relatively far-reaching differentiation be made between different taxable entities, and between different kinds of receipts, property and other sources of tax. However, the limit for what can be regarded as acceptable is by no means unproblematic. In the case of a wealth tax, special problems arise in view of the provision contained in Chapter 2 Section 18 of the Instrument of Government regarding expropriation and similar procedures. The Instrument of Government recognises no other procedures - we are here disregarding penalties for legal offences, and the like - for the transfer of property from the individual to the society than those envisaged in this provision and those effected through taxes etc. The more detailed import of the term 'tax' is not apparent from any provision in the Instrument of Government, nor is it further treated in the preliminaries to the Instrument. Nonetheless, it is still worth recalling that the Instrument of Government entailed a final break with the earlier constitutional fiction that in principle all taxes were decided for one year at a time. Even if it is clear that Parliament still has the authority to decide upon a limitation in time, the circumstance quoted contains a factor that urges a generally cautious approach to once-for-all taxes. It must, at least, be said to lie in the structure and spirit of the Instrument of Government that the taxing power should not circumvent the provision laid down in Chapter 2 Section 18 by specially directed interventions of a once-for-all character against property. The discussion concerning disputed proposals for new or increased taxes often raises the question of limits of the taxing power, and more specifically the boundary between tax and confiscation. The question has also been discussed in the legal literature both prior to the advent of the Instrument of Government and thereafter. As developed (in this literature), the confiscation argument is frequently used in tax discussions in a manner unacceptable from the legal point of view. What is stated in the literature clearly indicates that the bill now under consideration cannot be said to entail an illegal confiscation. Similar points of view to those presented above are also relevant when one considers the compatibility of the proposal with the European Convention (....). According to (Article 1 of Protocol No. 1), the right to property shall be respected. No one shall be deprived of his property other than in the public interest and on the conditions indicated in the law of the country and by the general principles of international law. It is also, however, stated that this shall not impair the right of a State to enforce laws to secure the payment of taxes and charges. Only in isolated cases have questions relating to taxes been criticised under the provisions of the Convention. One case related to a once-for-all tax of 25% on wealth above a certain limit, decided upon in a Nordic country in critical economic circumstances. By a decision of 20 December 1960, the case, as being "manifestly ill-founded", was not taken up by the Commission for consideration (No. 511/59, Dec. 20.12.60, Collection 4 p. 1 at p. 33) A similar decision was made on 2 December 1985 by reason of a complaint against the Swedish profit sharing tax (No. 11036/84, Dec. 2.12.85, to be published in D.R.). It should be observed that a development in the direction of stronger protection for ownership rights has been reflected in the findings of the European Court in recent years. Greater importance has also been accorded to (Article 14 of the Convention) which prescribes that enjoyment of the freedoms and rights set forth in the Convention shall be secured without discrimination on any ground, such as sex, race, language, or other status. In the Council's view, however, there is no basis for claiming that the bill here in question is in breach of the European Convention. The Law Council returns here to the statements in the remitted proposal, quoted in the introduction to the effect that the bill is not in breach of any provision in the Instrument of Government etc. As will have become apparent from the reasoning of the Council, these statements in no way exhaust the constitutional problems. The provisions of the Instrument of Government, like its preliminaries, are far from exhaustive, and are in several areas, including that of the financial power, couched in markedly brief and general terms. It is illustrative, for example, that the import of the concept of law is discussed in detail in the preliminaries, while the concept of 'tax' is hardly touched upon. In this situation, it becomes of great importance how the content of the Instrument of Government is implemented through the actions of the executive powers. The Council recalls that our constitutional law, prior to the constitutional reform, was based essentially on constitutional practice, which on many points had acquired substance only after prolonged dispute. It is obvious that the implementation of the new Instrument of Government by a suitable and workable practice is a matter of great urgency. Essentially, it is, of course, for Parliament and Government to shoulder this responsibility. Against this background, it is a serious shortcoming of the remitted proposal that it fails to provide either any material basis for judgment or any statements for guidance. In scrutinising any proposed legislation that raises the question of how the Instrument of Government is to be given substance in legal practice, it is an important task for the Council to report its view from the perspective this Council is set to represent. In the present case, it is thus required to do this without any support in the remitted proposal. The Law Council cannot ignore the possibility of this bill providing the starting-point of a development that could give rise to very serious doubts, in view of the grounds on which the Instrument of Government rests. Reference can be made, apart from Chapter 2 Section 18, to inter alia the fact that Chapter 1 Section 2 establishes the economic welfare of the individual as a fundamental objective of public activities. This is the first occasion on which a bill is submitted for a once-for-all tax on wealth that lacks a general nature. Such a tax fits somewhat badly per se into our constitutional system. It could also constitute grounds for various once-for-all property taxes to be exacted from a narrowly limited circle of taxable entities, and with higher rates of taxation than that which we are now considering. It is true that nothing of this kind is evident from the remitted proposal. Nor, however, does it contain any statement expressing rejection of such a development. The bill as circulated, would, in the opinion of the Law Council, create an unfortunate precedent in a sensitive area, in which the regulation provided by the constitutional laws is incomplete and unclear, and the formation of practice therefore acquires special importance. One should also in particular note that the country is not in any such critical situation as is mentioned in, for example, Chapter 2 Section 10 of the Instrument of Government. Decisions taken in extraordinary circumstances of that kind have limited, if any, force as precedents in normal times. If this bill is enacted, however, one is acquiring a precedent that cannot be dismissed on such grounds. The same argument also leads the Council to adopt a critical attitute to the manner in which the bill has been prepared and presented in the remitted proposal. The further constitutional aspects have not been taken into account. It would have been highly desirable to have a discussion of these, together with a normal procedure of circulation for comment. Shortcomings in the preparation of the bill are evident also in other respects than the constitutional. It is admittedly true that it has been possible, in the treatment of various details, to build on the report of the Committee on Taxation of Real Interest and the statements of the bodies circulated, but the construction in principle of the bill is entirely different, and the effects of it have not been illustrated in any satisfactory manner. The Law Council has, for example, drawn critical attention to the lack of clarity as to who will actually be burdened by the tax. The bill emerges almost as an improvisation, produced when a bill for a new and permanent tax was rejected. It is difficult to avoid the reflection that closer consideration could have led to essentially the same purpose having been gained by another construction, which would not have given rise to the doubts expressed by the Law Council in the foregoing. In the light of these deliberations, the Council finds itself obliged to recommend against implementation of the proposed legislation remitted to it." COMPLAINTS Article 1 of Protocol No. 1 to the Convention In the applicants' view the primary issue to be determined under this Article and which is inherent in the Convention as a whole, is whether a fair balance has been struck between the public or general interest and the protection of the proprietary rights and interests of the applicants. The purpose and effects of the Act in question are clearly concerned with the deprivation of property, with the result that the second sentence of the first paragraph of Article 1 of Protocol No. 1 is applicable. Moreover, since the present case involves the payment of taxes, it falls to be considered not only under the terms of the second sentence of the first paragraph, but also under the second paragraph of Article 1. The applicants recognise, as is made clear by the second paragraph itself, that the margin of appreciation given to national authorities under Article 1 of Protocol No. 1 in the field of economic and fiscal regulation, is necessarily a wide one. However, it is well-established in the Commission's case-law that the powers of taxation are not immune from review under the Convention (cf. for example No. 8531/79, Dec. 10.3.81, D.R. 23 p. 203). It follows that although the Act involves the payment of a tax, this fact does not exclude the circumstances of the present case from the effective protection afforded by Article 1 of Protocol No. 1 and the other relevant provisions of the Convention. The relevant principles are as follows: (i) Although the margin of appreciation available to the national legislature under Article 1 is a wide one, the measure imposed must have a legitimate aim, in the sense of not being "manifestly without reasonable foundation" (cf. for example, Eur. Court H.R., James and others judgment of 21 February 1986, Series A No. 98). (ii) Where the measure has a legitimate aim, there must be a reasonable relationship of proportionality between the means employed and the aim sought to be realised. (iii) A fair balance must be struck between the demands of the general interest of the community and the requirements of the protection of the individual's fundamental rights, and this balance will not be struck if the measure results in a person or a section of the public having an individual and excessive burden (cf. Eur. Court H.R., Sporrong and Lönnroth judgment of 23 September 1982, Series A No. 52). For the reasons given below the Act, which is both grossly unfair in its operation and lacking in any objective and reasonable justification, falls well short of satisfying these principles, and exceeds the Swedish State's margin of appreciation. Under the second sentence of the first paragraph of Article 1 of Protocol No. 1 a deprivation of possessions must not only be in the public interest, but must also be "subject to the conditions provided for by law". The applicants submit that this principle, which is inherent in the Convention as a whole, applies to every case in which the right to property guaranteed by Article 1 falls to be considered. It is evident from the jurisprudence of the European Court of Human Rights that State action does not necessarily comply with the principle of legal certainty, guaranteed by these requirements, merely by reason of the fact that it is in conformity with domestic law. The requirement that a measure must be prescribed by law can thus be seen to include the requirements that it must satisfy the principle of legal certainty and not be arbitrary. The Act fails to satisfy these requirements for the following reasons. The Act itself is arbitrary, in that its scope and application are restricted, in a discriminatory manner and without any objective and reasonable justification, to certain mutual life insurance companies, friendly societies and pension foundations and hence their beneficiaries, leaving other entities and individuals unaffected. Further, the operation of the Act is arbitrary, in that it provides no means for the relevant companies to determine the way in which the burden of the tax should be distributed, and thus fails to provide the individual policyholder or other beneficiary with any guarantee that he or she will not be unjustly burdened as compared to other policyholders or beneficiaries. It is not expedient for the insurance companies and other institutions, nor is it their function, to redress the arbitrary nature of the tax by the manner in which they transfer the burden upon the policyholders and other beneficiaries. The institutions are not, for example, required to apply a means test, nor to have regard to the family and other individual circumstances of the policyholders and other beneficiaries. From the point of view, therefore, of those who are the real taxpayers under the Act, the operation of the legislation is inherently arbitrary, as well as being neither adequately accessible nor sufficiently precise. For these reasons there has been a breach not only of Article 1 of Protocol No. 1, but also, as will be shown below, of Article 6 and Article 13 of the Convention. The Act involves the legislative taking by the Swedish Government of a large part of the savings and pension benefits of several million men and women (both Swedish and non-Swedish nationals), which have accumulated in the hands of life insurance companies, friendly societies and pension foundations. The levying of the 7% one-off wealth tax involves a deprivation of the applicants' proprietary rights and interests. It is therefore necessary to consider whether the taking of property provided for by, or as a consequence of, the Act was in accordance with the principles of fairness, proportionality, legal certainty and non-discrimination which are inherent in Article 1 of Protocol No. 1, and in the Convention as a whole. The stated aim of the Swedish Government in introducing the unprecedented measure was to reduce the national debt by redistributing wealth from the private sector to the public sector. Whilst the applicants accept that the redistribution of wealth from more favoured to less favoured groups in society is a legitimate aim the arbitrary and discriminatory taking of wealth from particular sections of the public, in circumstances in which there is no "fair balance", constitutes an aim which is "manifestly without reasonable foundation". The effect of the occasional wealth tax will be to appropriate to the Swedish State 16-18 billion Swedish crowns, in the context of total revenues from State income tax amounting to approximately 60 billion Swedish crowns. In other words, the Government seek by the levying of this tax to increase the revenue of the State by about one third of the revenue normally obtained through State income tax. Furthermore, it does so at the expense of the individual policyholders and their dependants, irrespective of their individual means and particular circumstances. In a formal sense the tax is levied under the Act upon the life insurance companies, friendly societies and pension foundations. But in reality the effective burden of this tax is necessarily borne by individual policyholders and other beneficiaries. These policyholders and beneficiaries are ordinary men and women, the majority of whom could not be said to be particularly wealthy. The Act provides no guidance as to how the burden of the tax should be distributed between those individuals. The mutual life insurance companies to which the Act applies have decided to distribute the burden by reducing, on a pro rata basis, the bonus payments that would otherwise have been made to policyholders in 1987 and 1988. There can be no doubt that under this method of distribution, the appropriation by the State of 7% of the assets of the institutions in whose hands the savings and pension benefits of policyholders have been placed, will have had the effect of diminishing the proprietary rights and interests of many people of comparatively modest means, who do not "deserve" to be taxed under a special wealth tax by reason of their individual means or particular circumstances. Whatever method is chosen to distribute the burden, the insurance companies and other relevant institutions cannot avoid the arbitrary and unfair consequences for the policyholders and their dependants. On the other hand, there will necessarily be many people who will not be affected by the Act, who are much wealthier, and whose means and circumstances would much more readily justify the imposition of a wealth tax than in the case of many of those who are affected by the Act. A tax which is imposed irrespective of the individual means and particular circumstances of those who will ultimately bear the burden of the tax is inherently arbitrary, capricious and discriminatory in its operation and effect. In the applicants' submission, therefore, to increase State revenues by means of such a tax cannot constitute a legitimate aim in the public or general interest, within the meaning of Article 1 of Protocol No. 1 to the Convention. Further, there is no reasonable relationship of proportionality between the operation of the Act and the Swedish State's proclaimed aim of reducing the national debt by redistributing wealth from the private sector to the public sector. As a means of attaining this stated aim, the occasional wealth tax operates as a grossly unfair and discriminatory measure, which places the burden of redistribution entirely on the shoulders of one section of the Swedish public, that is, those who have chosen to save and to provide for the future of themselves and their dependants by means of pension or endowment insurance, or by placing funds with friendly societies or pension foundations, or whose employers have chosen to make such arrangements on their behalf. By contrast, those whose future pension benefits are provided for by a different arrangement, for example, those whose pension is directly paid to them by their employer, are not affected by this tax, because they are outside the scope of the Act. Nor is a corresponding tax burden placed upon the large group of public servants who are entitled to a state service pension or a local government pension. Their pension benefits are safeguarded against the effects of inflation, and they do not, therefore, have the same need to provide for the future by means of private pension insurance. Furthermore, those who are outside the scope of the Act have not had to bear any risk that the value of their pension benefits may be affected by a decline in the value of the shares in which their pension funds have been invested. The operation of the tax is a measure which fails entirely to strike a fair balance between the demands of the general interest and the requirements of the protection of the applicants' fundamental righs. Even assuming that it is in certain circumstances a legitimate aim for the Swedish Government to seek, in the general interest, to reduce the national debt by a redistribution of wealth from the private sector to the public sector, Article 1 of Protocol No. 1 to the Convention does not permit this to be done arbitrarily and unjustly at the expense of the proprietary rights and interests of one particular section of the public, irrespective of their individual means or particular circumstances, leaving the rights and interests of other sections of the public unaffected. The fair balance requirement entails that no one section of the public bears a wholly disproportionate individual and excessive burden, at whose expense there is unjust enrichment by the State. Furthermore, the effect of the Act is also to leave intact, in an arbitrary and discriminatory manner, the savings and pension benefits of those who hold pension insurance policies with many smaller insurance companies whose wealth does not exceed 10 million Swedish crowns, or which were formed after 1984. Accordingly, those wealthy individuals, who have large pension savings in institutions outside the scope of the Act, remain wholly unaffected by the tax or any equivalent tax. By contrast, individuals of modest means, who have small pension savings in institutions subject to the Act, have their pension benefits diminished by virtue of the operation of the Act. The Act thus amounts to a taking of property by the Swedish State which is manifestly not in the public interest or within the scope of the second paragraph of Article 1. It is the arbitrary, capricious and discriminatory nature and effect of the Act, its failure to draw any distinction based on the individual means and circumstances of policyholders and other beneficiaries, the absence of any reasonable proportionality, which take the occasional wealth tax outside the scope of any proper use of the economic and fiscal regulatory powers exercisable by the legislature and the executive in a modern society governed by the rule of law. It is further submitted that the imposition of the tax does not constitute a deprivation "subject to the conditions provided for by law" in that the effect of the Act is in practice, although not in theory, retrospective. Through the imposition of the occasional wealth tax upon the assets of life insurance companies, friendly societies and pension foundations, the savings and pension benefits of individual policyholders and other beneficiaries over many years are in effect appropriated by the State. The Act was passed by Parliament on 16 December 1986 and it entered into force on 23 December 1986. In practice, individual policyholders and other beneficiaries were deprived of any real and effective opportunity to regulate their conduct so as to mitigate the adverse consequences of the Act for them. The applicants further submit that a deprivation of property by the imposition of a wealth tax must not only be "subject to the conditions provided for by law", but must also be subject to "the general principles of international law". However, if there is any practical difference in the circumstances of the present case (which is not admitted) between the standard of treatment required for nationals and for non-nationals under Article 1, then it is submitted that the non-Swedish nationals are plainly entitled to rely upon the general principles of international law for the protection of their property rights. By imposing the tax upon non-Swedish nationals, the Swedish State has failed to comply with the general principles of international law. The tax was arbitrary, discriminatory and grossly unfair, lacking any reasonable foundation or relationship of reasonable proportionality with its stated aim. It thus amounted in reality to a confiscation of property without the payment of prompt, adequate and effective compensation by the Swedish State. Article 14 of the Convention in conjunction with Article 1 of Protocol No. 1 to the Convention By introducing the tax in question applicable only to certain life insurance companies, friendly societies and pension foundations, the Act clearly subjected the institutions so affected, as well as their policyholders and other beneficiaries, to a different kind of treatment in their enjoyment of the right to property guaranteed by Article 1 of Protocol No. 1 to the Convention which had no objective and reasonable justification, and in relation to which there was no reasonable proportionality between the means employed and the Swedish Government's stated aim of reducing the national debt. These points have already been developed above. Article 6 para. 1 of the Convention The applicants further submit that their right to a fair judicial process under Article 6 of the Convention has been violated. The applicants' right of property is a "civil right" within the meaning of Article 6 para. 1. It is submitted that the applicants had no effective right to a fair hearing in respect of the protection of the enjoyment of the substance of their right to property, insofar as this right was affected by the arbitrary and discriminatory operation and effects of the tax. The tax, although formally applicable only to certain companies, is in reality a tax imposed on individual policyholders and other beneficiaries, whose proprietary rights and interests are adversely affected by it. The Act, however, fails to recognise this fact or its implications. It leaves it open to insurance companies, for example, to reduce the savings of policyholders on a pro rata basis, regardless of whether a person's policy has in fact benefited from the favourable returns enjoyed by insurance companies on their investments in the past few years. By leaving the method of distribution of the "real" burden of the tax in the hands of private institutions, the Swedish Government and legislature have failed entirely to recognise or to apply the principles according to which the fiscal powers of a State are ordinarily exercised, namely, that the burden of a tax should be distributed by taking into account the individual means and particular circumstances of those who must bear the burden. By failing to provide any criteria for the distribution of the tax as between those who in reality are the taxpayers, the Act has created a legal vacuum in relation to the fair determination by judicial process of the applicants' right to property. The Convention has not been incorporated into Swedish law, and there are no equivalent rules or principles of Swedish law upon which a Swedish court or tribunal, faced with the task of determining the extent of an individual's proprietary rights and interests in relation to the tax, could make a fair and just decision. In these circumstances, the applicants submit that there is a systematic failure on the part of Sweden effectively to secure the right to property to everyone within the jurisdiction of this State, without unfair discrimination, and to ensure that everyone is afforded, in the determination of his civil rights and obligations, a fair and public hearing, as required by Article 6 para. 1 of the Convention. Article 13 of the Convention The applicants do not seek to argue that Article 13 guarantees a remedy which allows the Act as such to be challenged before a national authority as being contrary to the Convention. However, they complain that, as a result of Sweden's failure to incorporate the rights and obligations of the Convention into domestic law, or otherwise adequately to secure the enjoyment of the applicants' rights under the Convention in domestic law, the applicants had no effective and sufficient remedies before any national authority, in respect of violations of their right to property guaranteed by the Convention, insofar as such violations are the result of the application of the Act to life insurance companies and other private institutions and by such institutions to the policyholders. Article 18 of the Convention The applicants submit that the only restrictions permitted in relation to the right to property guaranteed by Article 1 of Protocol No. 1 are those which are in the public general interest. It follows that any interference with the right to property which is not in the public or general interest, constitutes a violation of Article 18, as well as of Article 1 of Protocol No. 1. The Act in question thus constitutes a violation of Article 18 of the Convention, as its purpose and application are not in accordance with the public interest, contrary to Article 1 of Protocol No. 1 read on its own, and read in conjunction with Article 14 of the Convention. The reasons for this have been set out above. THE LAW 1. The applicants have complained that the introduction in 1986 of the legislation in Sweden concerning the once and for all property tax involves a breach of 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." It is clear from Article 25 para. 1 (Art. 25-1) of the Convention that the Commission can receive an application from a person, non-governmental organisation or group of individuals only if such person, non-governmental organisation or group of individuals can claim to be a victim of a violation by one of the High Contracting Parties of the rights set forth in the Convention. Moreover, the Commission is competent to examine the compatibility of domestic legislation with the Convention only with respect to its application in a concrete case, while it is not competent to examine in abstracto its compatibility with the Convention (cf. for example No. 11045/84, Dec. 8.3.85, D.R. 42 p. 247). Accordingly, the Commission will only examine the applicants' complaints insofar as the legislation in question affects the applicants themselves. The applicants have alleged that the one-off tax upon certain companies is an interference with property rights which, therefore, can only be accepted insofar as the interference is legally justified under the exceptions in the second sentence of the first paragraph or the second paragraph of Article 1 of Protocol No. 1 (P1-1) to the Convention. The Commission finds that the first and second applicants may claim to be victims of an alleged violation of Article 1 of Protocol No. 1 to the Convention (P1-1). Their assets as a whole enjoy the protection of Article 1 of Protocol No. 1 (P1-1) and the obligation to pay the levy is thus an interference with their right to peaceful enjoyment of their possessions. The third applicant is a group of approximately 15,000 persons who are policyholders in the first and second applicant companies. The question arises whether these persons can be considered victims within the meaning of Article 25 (Art. 25) of the Convention. The applicants have argued that in the end it is the third applicant who will have to bear the burden of the one-off tax as the insurance companies just administer the money and reduce the profits to the disadvantage of the third applicant in order to cover the losses suffered from the one-off tax. In such circumstances the third applicant - the group of individual insurance policyholders - is directly affected by the new legislation. The European Court of Human Rights has held that the term "victim" in Article 25 (Art. 25) of the Convention denotes the person directly affected by the act or omission which is at issue (cf. Eur. Court H.R., Eckle judgment of 15 July 1982, Series A No. 51, p. 30, para. 66). Neither the Court nor the Commission has previously considered the special relationship which exists between a company and a group of individuals such as the present one, but the Commission has held in two cases that a shareholder was entitled to claim to be a victim of measures directed against a company (No. 1706/62, Dec. 4.10.66, Collection 21 p. 26 and No. 7598/76 Kaplan v. United Kingdom, Comm. Report 17.7.80, D.R. 21 p. 5 (p. 23)). However, the Commission recalls that in both cases the individual concerned held a substantial majority shareholding in the company. In effect both applicants were carrying out their own business through the medium of the company and both applicants had a direct personal interest in the subject-matter of the complaint. Thus in Application No. 1706/62 the applicant alleged that the actions of which he complained were part of a general scheme aimed against him personally. The Kaplan case concerned restrictions imposed on the company on the basis of the applicant's alleged personal unfitness to act as a controller. In the case of Yarrow and others (No. 9266/81, Dec. 28.1.83, D.R. 30 p. 155 (p. 185)) the Commission held that the applicants, who did not hold a majority or controlling interest in the company in question, were not directly and personally affected by the measure taken (the nationalisation of the company) even though this measure undoubtedly reduced the value of their shareholdings and they could not therefore claim to be victims within the meaning of Article 25 (Art. 25) of the Convention. The circumstances of the present case are, in the Commission's view, comparable to the latter decision. Through the insurance policies the applicant group of individuals has a right to an amount contracted in the individual policies and a right to a bonus which amounts to a fair share of the surplus on the life insurance business, if any. This bonus is accordingly not a fixed sum, but depends on the success of the insurance company. Furthermore, the Commission recalls that the policyholders do not have any legal claim to direct ownership of the first and second applicant companies' assets as such. All property in which the companies invest their funds is the companies' own property as in the case of any other legal entity. Also the individuals in question are not required to pay any tax but their "burden" lies in the fact that the applicant companies for the years 1987 and 1988 reduce the bonus which would otherwise have been allotted to insurance policy claims, once they become payable. Whether the insurance companies under their contractual obligations are entitled to act in such a way vis-à-vis their policyholders is not a matter which the Commission is called upon to determine, but in the circumstances indicated above the Commission finds that the legislation in question does not affect the applicant group of individuals directly and personally to such an extent that it may claim to be a victim under Article 25 (Art. 25) of the Convention in regard to the first complaint to be considered by the Commission. It follows that this part of the application, so far as brought by the third applicant, is manifestly ill-founded and must therefore be considered inadmissible under Article 27 para. 2 (Art. 27-2) of the Convention. It thus remains to examine whether the interference with the first and second applicants' rights was justified. The first and second applicants (hereafter the applicants) submit in regard to this particular complaint that the purpose and effects of the Act in question are clearly concerned with the deprivation of property, with the result that the second sentence of the first paragraph of Article 1 of Protocol No. 1 (P1-1) is applicable. Moreover they maintain that, since the present case involves the payment of taxes, it also falls to be considered under the second paragraph of Article 1 (P1-1). The Commission is of the opinion that any legislation which introduces some sort of fiscal obligation will as such deprive the involved of a possession, namely the amount of money which must be paid. However, the second sentence 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. Accordingly, the Commission will first consider whether the interference with the applicants' right under Article 1 of Protocol No. 1 (P1-1) is justified by the second paragraph before considering, if necessary, whether the requirements set out in the second sentence of the first paragraph are fulfilled. The Commission recalls that the applicants were obliged to pay, with certain exceptions, a sum equivalent to 7% of their assets in excess of 10 million Swedish crowns by 31 December 1986. The applicant companies thus paid 916,091,000 and 356,000 Swedish crowns respectively. Accordingly, the tax took the form of a monetary contribution on capital assets, which nevertheless would not differ from a monetary contribution applied to any other asset, for example a piece of land. Having regard to this and the maximum percentage of the levy as well as the general purpose of the law, which will be further recalled below, the effects on the applicants 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) (cf. mutatis mutandis No. 511/59, Gudmundsson v. Iceland, Dec. 20.12.60, Collection 4 p. 1 at p. 33). Nevertheless this does not bring 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. Under this supervision the Commission finds that, though it is certain that no general prohibition of taxes payable exclusively out of the tax-payer's capital can be derived from Article 1 (P1-1), 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, to be published in D.R.). Considering the case in this light the Commission notes the applicants' contention that, whilst the redistribution of wealth from more favoured to less favoured groups in society is a legitimate aim, the arbitrary and discriminatory taking of wealth from particular sections of the public, in circumstances where there is no "fair balance", constitutes an aim which is "manifestly without reasonable foundation". They contend that the respondent State seeks by the levying of the tax to increase its revenues by approximately one third of the revenue normally obtained through income tax. Furthermore, there is no reasonable proportionality between the operation of the act and the State's stated aim of reducing the national debt and thus it amounts to a taking of property which is manifestly not in the public interest or within the scope of the second paragraph of Article 1 of Protocol No. 1 (P1-1). The Commission also recalls that the main reason for introducing the one-off tax were considerations concerning a continuing low inflation, essential in the Government's view for any favourable economic development, combined with the necessity of a further limitation of the national budget deficit. It is undoubtedly within the sovereign power of a State to enact legislation of this nature and the Commission finds that this is clearly a measure introduced with a public purpose and considered by the State to be in the general interest. This aim was pursued by levying the one-off tax on inter alia the applicants amounting to 7% of their assets exceeding 10 million Swedish crowns due, in particular, to the fact that the situation in the entire life insurance sector was unique at the time and because of the favourable treatment afforded to this sector as regards taxation in general, a treatment which is still maintained. In such circumstances the Commission cannot find that the one-off tax affected the applicants' rights of ownership of its assets, be it monetary or other assets, or interfered with their 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. 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. All three applicants have also complained that by the introduction of the one-off tax, applicable only to certain insurance companies, friendly societies and pension foundations, the institutions affected thereby, as well as their policyholders and other beneficiaries, were subjected to a specific and unique kind of treatment in their enjoyment of the right to property guaranteed by Article 1 of Protocol No. 1 (P1-1) to the Convention which had no objective and reasonable justification and is thus in violation of this provision in conjunction with Article 14 (Art. 14) of the Convention which reads: "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 recalls that Article 14 (Art. 14) has no independent existence but plays a role only in order to safeguard persons placed in similar situations from any discrimination in the enjoyment of the rights and freedoms set forth in the Convention and its Protocols. Furthermore, as indicated above, the Commission will only examine the applicants' complaints insofar as the issues raised affect them directly and personally. Regarding the latter point the Commission has found above that the applicant group of individuals cannot be considered to be affected directly and personally to the extent that it could claim to be a victim under Article 25 (Art. 25) of the Convention. For this reason the Commission cannot find any issue under Article 14 (Art. 14) and it follows that this part of the application, insofar as it concerns the applicant group of individuals, is manifestly ill-founded within the meaning of Article 27 para. 2 (Art. 27-2) of the Convention. Regarding the two applicant companies the Commission has found above that the taxation interfered with their rights secured to them under Article 1 of Protocol No. 1 (P1-1) to the Convention but that this interference was justified in view of the States' right to impose taxes under the second paragraph of this provision. However, as taxation falls within the general scope of Article 1 (P1-1) , it follows that the prohibition against discrimination in Article 14 (Art. 14) of the Convention is applicable to taxation as such (cf. No. 8531/79, Dec. 10.3.81, D.R. 23 p. 203 and No. 11089/84, Dec. 11.11.86, to be published in D.R.). The Commission, however, also recalls that, in the Belgian linguistic case (Eur. Court H.R., judgment of 9 February 1967, Series A No. 5), the Court stated that it is not every distinction which amounts to discrimination but that it would arise if the distinction in question had no objective and reasonable justification. In particular the Commission considers that it is not sufficient for the applicants to complain merely that they, rather than others, have been taxed, but that they must show that the tax in question operates to distinguish between similar taxpayers on discriminatory grounds. Furthermore, as indicated above, the Commission is of the opinion that in the field of taxation it is for the national authorities to make the initial assessment of the aims and the means by which they are pursued. Accordingly, a margin of appreciation is left to them and it must be wider in this area than it is in many others. The Commission recalls in this respect that systems of taxation inevitably differentiate between different groups of tax payers and that the implementation of any taxation system creates marginal situations. Also, attitudes as to the social and economic goals to be pursued by the State in its revenue policy may vary considerably from place to place and time to time. A government may often have to strike a balance between the need to raise revenue and other objectives in its taxation policies. The national authorities are obviously in a better position than the Commission to assess those needs and requirements. In the present case the Commission recalls that the one-off tax was imposed only on insurance companies, friendly societies and pension foundations and among them only on those entities which by 31 December 1986 had assets in excess of 10 million Swedish crowns due to a right for all entities involved to deduct such an amount. The Commission also recalls that the reasons for imposing the levy on the applicants were their unique financial situation at the time combined with the enjoyment of a favoured position in the context of taxation in general. In the light of this and the above general considerations the Commission finds that the taxation in question can be said to fall within the margin of appreciation accorded to the national authorities; that the difference in treatment, as claimed by the applicants in the present case, had an objective and reasonable justification in the aim pursued by the Government; and that the test of proportionality is satisfied. 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 applicants, invoking Article 6 and 13 (Art. 6, 13) of the Convention, have furthermore complained that Swedish law provides no effective remedy before Swedish courts or other authorities with regard to the questions arising in the present case; under Article 13 (Art. 13) in particular since the Swedish Government have not incorporated the Convention into domestic law. With regard to Article 6 (Art. 6) of the Convention the Commission has stated above that the levy introduced in Sweden was to be considered a tax. The Commission also considered this system to be covered by the Contracting States' power of taxation expressly recognised by the Convention. The Commission has constantly held that Article 6 (Art. 6) is not applicable to proceedings regarding taxation (cf. No. 2552/65, Dec. 15.12.67, Collection 26 p. 1, No. 2717/66, Dec. 6.2.69, Yearbook 13 p. 176, No. 8903/80, Dec. 8.7.80, D.R. 21 p. 246 and No. 9908/82, Dec. 4.5.83, D.R. 32 p. 266). It follows that this part of the application is incompatible ratione materiae with Article 6 (Art. 6) of the Convention within the meaning of Article 27 para. 2 (Art. 27-2). With regard to Article 13 (Art. 13) of the Convention the Commission recalls that neither this provision nor the Convention in general prescribes any particular manner by which the Contracting States should ensure within their internal law the effective implementation of the provisions of the Convention (cf. Eur. Court H.R., Swedish Engine Drivers' Union judgment of 6 February 1976, Series A No. 20, p. 18 para. 50). Furthermore the Court has stated that "by substituting the words 'shall secure' for the words 'undertake to secure' in the text of Article 1 (P1-1), the drafters of the Convention also intended to make it clear that the rights and freedoms set out in Section I would be directly secured to anyone within the jurisdiction of the Contracting States. That intention finds a particularly faithful reflection in those instances where the Convention has been incorporated into domestic law" (Eur. Comm. H.R., Ireland v. the United Kingdom judgment of 18 January 1978, Series A No. 25, p. 91 para. 239). It follows that Sweden is not obliged to transform the text of the Convention into Swedish law. As to the complaint under Article 13 (Art. 13) the Commission also recalls that in its judgment in the case of Klass and others the Court stated that "Article 13 (Art. 13) must be interpreted as guaranteeing an 'effective remedy before a national authority' to everyone who claims that his rights and freedoms under the Convention have been violated" (Eur. Court H.R., Klass and others judgment of 6 September 1978, Series A No. 28, p. 29, para. 64). The Commission has stated in its Report in the case of Sporrong and Lönnroth against Sweden that it is "obvious that it (Article 13) (Art. 13) cannot be considered to give an unqualified right to a remedy to anyone in respect of any complaint as soon as he chooses to invoke the Convention". According to the Commission it is necessary "to take account of the nature of the acts complained of" (Comm. Report 8.10.80, para. 155). In the case of Young, James and Webster against the United Kingdom the Commission stated that "it cannot be deduced from Article 13 (Art. 13) that there must be a remedy against legislation as such which is considered not to be in conformity with the Convention. Such a remedy would in effect amount to some sort of judicial review of legislation because any other review - generally sufficient for Article 13 (Art. 13) which requires only a remedy before a national authority - could hardly be effective concerning legislation" (Comm. Report 14.12.79, para. 177). Without considering it necessary to examine whether all three applicants in the light of its above conclusions may rely on Article 13 (Art. 13) of the Convention in the present case, the Commission is of the opinion that their complaints in substance concern legislation. Thus, in applying the case-law mentioned above the Commission finds no appearance of a breach of Article 13 (Art. 13) as this Article does not relate to legislation and does not guarantee a remedy by which legislation could be controlled as to its conformity with the Convention. 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. 4. The applicants have finally complained that their rights under Article 18 (Art. 18) of the Convention have been violated. This provision reads as follows: "The restrictions permitted under this Convention to the said rights and freedoms shall not be applied for any purpose other than those for which they have been prescribed." The applicants maintain that the above Article has been violated as the purpose of the tax legislation in question were not in the public interest as required by Article 1 of Protocol No. 1 (P1-1) to the Convention. The Commission has already found that the adoption and application of the new legislation were compatible with Article 1 of Protocol No. 1 (P1-1) and that the interference on such a basis could be considered justified as being "to secure the payment of taxes or other contributions" within the meaning of that provision. For similar reasons the Commission does not consider that the enactment and application of the 1986 Act aimed at the destruction or the excessive limitation of the applicants' rights under the Convention. The Commission accordingly finds no breach of Article 18 (Art. 18) in conjunction with Article 1 of Protocol No. 1 (P1-1) and it follows that this part of the application is also manifestly ill-founded within the meaning of Article 27 para. 2 of the Convention. For these reasons, the Commission DECLARES THE APPLICATION INADMISSIBLE. Secretary to the Commission President of the Commission (H. C. KRUGER) (C. A. NØRGAARD)