§ 7.5 p.m.
§ Lord Reay
rose to move, That the draft order laid before the House on 13th July be approved [24th Report from the Joint Committee].
The noble Lord said: My Lords, the order before us arises from the Fifth Protocol to the General Agreement on the Privileges and Immunities of the Council of Europe which was signed by our Permanent Representative in Strasbourg on 18th June 1990 with the prior agreement of the Financial Secretary to the Treasury. The protocol provides an exemption from tax for salaries, emoluments and allowances paid by the Council of Europe to members of the commission and judges of the Court of Human Rights.
Under the European Convention on Human Rights, the task of protecting human rights is shared by the European Commission of Human Rights and the European Court of Human Rights. The role of the members of the commission is to examine complaints of alleged breaches of the convention, to establish the facts and try to obtain a friendly settlement of cases, failing which they express their opinion as to whether there has been a violation of the convention. There is one member for each of the 23 states that have ratified the convention. The United Kingdom was one of the first to do so in 1951. In 1989, the commission delivered 1,338 decisions concerning applications from individuals of which 1,190 were declared inadmissible, 53 were struck off the list and 95 were declared admissible.
The role of the judges of the court is to give judgment in cases referred to it by the commission or any state concerned. The number of judges is equal to the number of members of the Council of Europe. The judges must either possess qualifications for appointment to high judicial office or be jurists of recognised competence. The court does not sit permanently but is becoming increasingly busy. Thirty cases were referred to it in 1989.
Members of the commission and judges of the court have previously been paid a daily allowance in respect of time spent in Strasbourg, travelling days and a maximum of 10 days' preparation at home before each regular session. In addition, expenses of travel to and from Strasbourg are also paid.
When this system of allowances was considered in 1961 by the Committee of Ministers of the Council of Europe, it decided that the daily allowance should be regarded as a subsistence allowance. The intention behind this decision was that it should be regarded as merely covering expenses actually incurred and should not accordingly be taxable in any member state. Although this intention was not translated into a binding provision in the relevant protocols to the General Agreement on the Privileges and Immunities of the Council of Europe, the allowances have in 1606 practice been exempted from tax in most member states. In the United Kingdom, the allowances paid to the one British judge of the court and one British member of the European Commission of Human Rights have been exempted by extra statutory concession.
As a result of recent increases in the workload of the commission, a Council of Europe study was undertaken to see how the commission could deal with a greater number of applications. It concluded that the number of working weeks should be increased from 28 to 32, putting the operation of the commission on to a virtual full-time basis. At the same time, the members of the commission should, in view of the commitment required of them, in future be paid a retainer, in addition to the daily allowance and travelling expenses. It was also recognised that the judges of the court were also having to spend more time on the work of the court and similar financial arrangements should be made for them.
In the light of the study's findings, the new financial arrangements were drawn up on the assumption that the remuneration would be exempt from taxation in all member states. The Fifth Protocol was prepared to provide tax exemption for both the daily allowance and the retainer paid to members of the commission and judges of the court.
The draft statutory instrument which has been laid in accordance with Section 10 of the International Organisations Act 1968 will enable the Government to give effect to the United Kingdom's obligations under the protocol by conferring an exemption from income tax on the emoluments paid by the Council of Europe to members of the commission and judges of the court. It is usual for the emoluments of officials of international organisations to be exempted from national tax. Exemption of the emoluments of members of the commission and judges of the court will ensure equality of treatment with emoluments paid to judges of the European Court of Justice and the International Court of Justice. This order, in addition to exempting the retainer, will also put the existing treatment of the daily allowance on to a clear statutory basis.
I commend the European Commission and Court of Human Rights (Immunities and Privileges) (Amendments) Order 1990 to your Lordships.
Moved, That the draft order laid before the House on 13th July be approved [24th Report from the Joint Committee].—(Lord Reay.)
§ Baroness Ewart-Biggs
My Lords, I am grateful for the noble Lord's clear explanation of the order and for his description of the role of the judges of the court. The reason for the order is clear from his explanation. There is not much to say on this matter as the order clearly flows from an international protocol in which we have little or no discretion. As the Minister has said, the order continues the underlying principle that members of the Court of Human Rights should be relieved from national taxation because they serve the international community. The main result of that practice is that it appears very generous and it makes 1607 ordinary people who do not benefit from it rather envious of those people who do. That reduces the popularity of people who are in the fortunate position of benefiting from the measure.
However, I should like clarification on one or two matters. Is the retainer paid in addition to subsistence and other allowances? I hope the Minister can say how much the exemptions and privileges are worth, or at least give me an idea of the sums involved. Do other British nationals who are working either as typists or interpreters for the Commission or the court receive the same favourable treatment? I should be grateful for clarification on those points, but I must say that we on this side of the House support the order.
§ Lord Stoddart of Swindon
My Lords, I should like to say a few words about the order. I heard the Minister's explanation of the order, but nevertheless I am no' convinced that British nationals, or for that matter other nationals, should be exempt from tax because they are employed by an international organisation. After all, they are citizens of one country or another and they presumably enjoy all the benefits that flow from the taxation of the citizens of that country. As they will live in the country of their nationality most of the time, the benefits gained from the taxpayers of that country will flow to them. I cannot understand why those people should be exempt from taxation in this way. I appreciate that this is a matter of international protocol, but nevertheless I should like to discover whether the level of remuneration or the retainer, as opposed to the allowances, is adjusted because no tax is paid. If that is not the case, why should these people enjoy a privilege that no other citizen, except perhaps the Queen. enjoys?
§ Lord Reay
My Lords, I have been asked a number of questions by the noble Baroness, Lady Ewart-Biggs, and the noble Lord, Lord Stoddart of Swindon. I shall try to reply to those questions as best I can. The noble Baroness asked me whether the retainer was paid in addition to allowances. I can confirm that that is the case. I can provide figures to show the rate of the allowances. The daily allowance for those working in the Commission is approximately £180 while in Strasbourg. The daily allowance is approximately £156 while travelling and approximately £115 while working at home. The retainer for the members of the Commission is approximately £15,000 per annum.
The retainer for members of the court is approximately £17,500 per annum. The daily allowance is approximately £190 while in Strasbourg. It is approximately £170 while travelling and approximately £130 while working at home. I hope that deals with the questions that the noble Baroness asked. It is difficult to calculate the cost of the measure but it is worth making the point that the retainers payable would have been set at a higher level if the exemption had not been provided. In other words, the fact that the retainers are tax exempt is taken into account when the original level of the retainers is fixed.
The noble Baroness also asked me about staff in the Council of Europe. The Council of Europe (Immunities and Privileges) Order 1960 provides that 1608 all permanent and temporary members of the staff of the Council of Europe shall enjoy exemption from income tax in respect of the emoluments received by them as officers of the Council of Europe. This privilege is conferred in accordance with the general agreement on privileges and immunities of the Council of Europe.
The noble Lord, Lord Stoddart of Swindon, gave his opinion on this measure when he said that he considered it was not a justified procedure. I can only explain why the salaries that are paid to employees of these international organisations are normally exempt from income tax. That is done to ensure that the country in which the organisation is based does not enjoy an undue fiscal advantage in relation to other member states as a result of taxing the salaries of the employees of the organisations which are based there. Further, the salaries of these employees are exempt from income tax to ensure that those employees are treated on an equal basis because if they had to pay national tax to their states of origin they would pay taxes at different rates and they would not enjoy the same salary after tax. The noble Lord may dislike this procedure but that is the general thinking behind this long-standing international practice.
§ On Question, Motion agreed to.