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Monday, 28 June 1999
Page: 6570


Senator MARGETTS (1:12 PM) —I have a question that relates to my earlier point of order. We are dealing here with the A New Tax System (Bonuses for Older Australians) Bill 1998 and my question is, first of all: is Senator Newman the minister with carriage of the bill or in this instance is she sitting in for Senator Kemp? The reason I ask this is that earlier on in the debate Senator Cook asked a number of questions on issues relating to these amendments, but more importantly he asked Senator Newman whether she would briefly explain the amendments she herself moved. We have not heard either of those answers. So my question is: is Senator Newman the minister with carriage of this bill? Even if she is not and is standing in for someone else, there should be some explanatory notes to go with the amendments that have been moved. I do not think it is unreasonable for the Senate to ask for a brief explanation of the amendments that are being moved.

Considering we are dealing with a bill that is intimately linked with the whole package, I also ask leave to incorporate in the Hansard six pages from Commentaries on the Constitution of the Australian Commonwealth by Quick and Garran which specifically relate to section 55 of the Constitution.

Leave granted.

The pages read as follows

254. The Imposition of Taxation.

During the debate on the financial sections 53 and 55, the meaning of the expression "the imposition of taxation" was discussed, and the question raised whether a law imposing taxation and also providing for its collection would be ultra vires of the Constitution. Doubts were suggested whether the restriction that tax bills should deal only with the imposition of taxation might not be read so as to exclude from tax bills the ordinary machinery clauses, providing for the assessment and valuation of property, the subject of taxation, and for the enforcement and collection of the tax.

Referring to this point, Sir Samuel Griffith wrote: "A more serious question is whether provisions regulating the collection of taxes should be allowed to form part of the same laws by which the amount of the tax is fixed. This point should be clearly settled and expressed." (Notes on the Draft Federal Constitution, 1897, p.9.) Mr. Isaacs understood this note to mean that "imposing taxation" does not include collection and machinery. (Conv. Deb., Melb., p.2049.) Mr. Barton was inclined to think that, according to the well-known principle that the grant of a power includes all the necessary means for its effective exercise, the exclusive power given to the House of Representatives to originate bills "imposing taxation" would carry with it the subsidiary power to provide machinery in the same Bill for the collection of the taxes. It was pointed out that according to the practice observed in some constitutionally governed countries, taxing bills, fixing the nature, amount, and incidence of proposed taxes, were kept separate and distinct from machinery bills, dealing with such details as collection, assessment, and valuation. "Would not the power of collection be embraced in the power to impose taxation?" asked Sir Edward Braddon. (Conv. Deb., Melb., p.2056.) Mr. Barton said that power to collect would be, ordinarily, included in the power to impose taxation, but in a section such as this, so strong in its intention to restrict laws imposing taxation to the mere imposition of taxation, it might be as well to remove doubt by adding after "imposition" the words "and collection." It was pointed out, however, that as the Senate was prohibited from amending proposed laws imposing taxation, the addition of the words "and collection" would have the effect of depriving the Senate of the power to amend matters in a tax Bill, relating to its method of collection.

"I confess that when I first proposed the amendment I did not see the extent to which it went. But, having appreciated the extent to which it goes, I still feel bound to adhere to it. The difficulty that would arise unless you allowed the House of Representatives to include in these Bills the ordinary powers of assessment and collection would be, that, while you might have a certain tax imposed in the Bill fixing the amount of the tax, the machinery Bill might be so subject to amendment by the Senate that the whole financial policy of the Government which introduced it, with a majority of the House of Representatives behind them, might be entirely subverted. That is a difficulty which, I think, none of us wish to create. Therefore, I am prepared to take the responsibility of adhering to the amendment. Holding the position I have always held, that the Senate should be a real body and not a mockery of State interests—while it should be a Second Chamber holding definite powers and rights as expressing the will of the people within the States which it represents—I have also held that we should only carry responsible Government into effect by making it real and effective, and a power of amending a machinery Bill to the extent of making a tax not worth collecting would be equal to the power of amending a Bill imposing taxation." (Mr. E. Barton, Conv. Deb., Melb., p.2060.)

"All I am endeavouring to do is to attribute a meaning to words in this Constitution, which I believed in Adelaide—and I explained my belief as I have read—that they did convey, which I am inclined to believe now they do convey, without a special explanation; but as to which I am in serious doubt, because of the very strong express nature of the words `shall deal with the imposition of taxation only.' It is in order to remove that doubt, and for that purpose only, that I wish these words to be inserted, and I really do believe that the insertion of the words will carry out the real spirit of the understanding of 1891." (Id. p. 2067.)

Mr. Barton's amendment to add the words "and collection" was rejected by 26 votes to 16. But see Note, 248, supra.

255. "Shall be of No Effect."

The next important point discussed was whether a law violating the rule forbidding the combination of taxation with any other matter, or the rule forbidding a tax Act to contain more than one subject of taxation, should be void in toto, or should be void only to the extent of the irrelevancy, or to the extent of the additional subjects. Mr. G. H. Reid moved that the prohibition should not invalidate any part of the law which did not infringe the provisions of the Constitution, and that if any law imposing taxation contained more than one subject of taxation, the tax first in order of enactment should be taken to be properly passed. (Conv. Deb., Melb., p.2089.) This amendment was negatived by 27 to 15 votes. The feeling, however, prevailed in the Convention that some provision should be made in the Constitution, to the effect that only the parts of the Act in which the forbidden matter existed should be invalid. At a later stage Mr. Reid moved the insertion of the words "and any provision therein dealing with any other matter shall be of no effect." This amendment was accepted without a division. (Conv. Deb., Melb., 2415.)

256. "One Subject of Taxation Only."

By the first paragraph of the section, laws imposing taxation must deal only with the imposition of taxation. If the section contained no other limitation regulating and restricting the exercising of the taxing power there would be nothing to prevent the House of Representatives from sending to the Senate a bill containing a number of separate and independent taxes. The section, however, goes on to enact that laws imposing taxation shall, with the exception of those relating to customs and excise, deal with one subject of taxation only. It is necessary to explain the object of this limitation. By the second paragraph of sec. 53, the Senate is deprived of the power to amend tax bills, but it may constitutionally reject them. In order to maintain its right to veto, in detail, each specific tax to which it objects, without thereby involving the rejection of other taxes of which it approved, the Constitution prohibits the combination of taxation proposals; it requires each proposed tax to be submitted by the House of Representatives to the Senate, in a separate bill. This procedure being followed, the Senate can exercise its discretion with respect to each tax, without being coerced to pass a tax to which it objects, in order to carry a tax which it desires. In this respect the Senate will have greater control over taxation than the House of Lords enjoys.

The Papers Duties Precedent may be here referred to in illustration of the manner in which sec. 55 will operate in strengthening the Senate. In 1860, the Commons determined to balance the year's ways and means by an increase of the property tax and stamp duties, and the repeal of the duties on paper. The increased taxation had already received the assent of Parliament, when the Lords rejected the Paper Duties Repeal Bill, and thus overruled the financial arrangements voted by the Commons. That House was naturally sensitive to this encroachment upon its privileges; but the Lords had exercised a legal right, and their vote was irrevocable during that session. The Commons, therefore, to maintain their privileges, recorded upon their journal, 6th July, resolutions affirming that the right of granting aids and supplies to the Crown is in the Commons alone; that the power of the Lords to reject bills relating to taxation "is justly regarded by this House with peculiar jealousy, as affecting the right of the Commons to grant the Supplies, and to provide the ways and means for the service of the year; and that to guard, for the future, against an undue exercise of that power by the Lords, and to secure to the Commons their rightful control over taxation and supply, this House has in its own hands the power so to impose and remit taxes, and to frame bills of supply, that the right of the Commons as to the matter, manner, measure, and time may be maintained inviolate." In accordance with these resolutions, during the next session, the financial scheme of the year was presented to the Lords for acceptance or rejection as a whole. The Commons again resolved that the paper duties should be repealed; but, instead of seeking the concurrence of the Lords to a separate bill for that purpose, they included in one bill the repeal of those duties with the property tax, the tea and sugar duties, and other ways and means for the service of the year; and this bill the Lords were constrained to accept. The budget of each year has since that occasion been comprised in a general and composite Act—a proceeding supported by precedent. In 1787, Mr. Pitt's entire budget was comprised in a single bill; and during many subsequent years great varieties of taxes were imposed and continued in the same Acts. (May's Parl. Prac. 10th ed. pp. 550-1.)

From this precedent it appears that the Commons have the right to send to the Lords a single scheme of taxation embodying the repeal of old taxes and the imposition of new taxes; the functions of the Lords being, in such a case, limited to a simple assent to the whole scheme or a simple negative of the whole scheme. Such a composite or general tax bill could not be submitted by the House of Representatives to the Senate; it would be unconstitutional, the maxim being "one tax one bill," except in the case of bills dealing with customs and excise.

We have now to consider what will be the consequence if Parliament should, whether by accident or design, pass a law imposing taxation, yet dealing with more than one subject of taxation—a law, say, imposing an income tax and a stamp duty. A proposal that the tax standing first in order in the enactment should be valid, whilst the other, or others, next in order should be null and void, was rejected by the Convention. No provision is made in the Constitution, therefore, for segregating the taxes and providing for the validity of one and the nullity of the others. Where the Constitution intends that one portion of an Act only shall be of no effect and the rest operative it is so expressed. The only conclusion is that an Act embodying a plurality of taxes would be absolutely and completely ultra vires.


Senator MARGETTS —I thank the Senate. I would be very interested in responses from the minister in relation to the carriage of the bill.