Taxation: s 51 (ii) & 55 / Customs & Excise: s90

Section 51 (ii) Taxation Power
51 (ii). Taxation; but not so as to discriminate between the states

1. Restrictions to Form  - Section 55
55. Laws imposing taxation shall deal only with the imposition of taxation, and any provision therein dealing with any other matter shall be of no effect.
•    House of Reps initiates tax bill, & Senate can’t amend, only reject. This section stops the House of Reps from abusing the “non-amendment” power.
•    Power would stop Cth from passing omnibus tax acts that taxed income, legal transactions & retail sales for example.

Invalidity of amending acts Air Caledonie (1988)
•    S55 applies to composite legislation, as they stand after enactment
•    Requires that the amending act & the amended principle act deal only with the imposition of taxation
•    Correct to consider the effect of the amending act when combined with the principal act.
•    Amending act will be rendered invalid, & principal act will stand.
•    In this case, principal act dealt only with Migration matters & the amendment introduced a migration tax. HC held amending act invalid.

2. What is a tax?

Classic Definition Matthews v Chicory Marketing Board (1938)
•    “a compulsory exaction of money by a public authority for public purposes, enforceable by law, and not a payment for services rendered.” Latham CJ
•    not an exhaustive statement of what constitutes a tax (see below)

Collection by non-public authority Air Caledonie (1988)
•    Attribute of “fee for service” doesn’t preclude tax, if person is given no choice & amount has no discernible relationship to the value of what’s acquired.
•    At least, the portion above the value of the service will be considered a tax.
•    A levy can be a tax even if imposed for non-public purposes
•    The collection of the tax need not be taken by a public authority
•    Migration Act imposed an “immigration fee” for all airline passengers entering Australia, to be collected by the airlines & paid as debt owing to the Cth.
•    Australian citizens have a right to re-enter, without any fee, so couldn’t be a fee for a service. Held to be a tax

Fee not payable to Cth Australian Tape Manufacturers v Cth (1993)
•    Tax can include a fee that is not collected by the govt and is not remitted to the govt at any stage.
•    Public purpose includes a decision made by the Cth that money should be distributed in a certain way in the public interest.
•    Copright Act amended to impose a royalty on vendors of blank tapes. Fee paid to collecting society, which then distributed it to copyright holders.
•    Wasn’t illegal to copy tapes at home, so consumers were not acquiring any rights
•    Vendor initially paid fee, but didn’t acquire any rights.
•    “Did not fall within any of the well-recognised descriptions of fees or charges which fall outside the concept of a tax.” Held to be a tax.

Fee for service Airservices Australia v Canadian Airlines International (1998)
•    Airline paid compulsory air service charge
•    Complained that they paid for air services across the country, despite using only 6 of the 32 airports.
•    There was a system in place (although admittedly less than
ideal) to try & charge appropriate fee for services used.
•    Wasn’t intended to be revenue raising, rather intended only to cover the cost of providing the service.
•    Held to be a fee for service, not a tax.

Not arbitrary MacCormick v Federal Commissioner of Tax (1984)
•    For an impost to be a tax, it must be possible to differentiate it from an arbitrary exaction.
•    This can only be done if there are ascertainable criteria by reference to which the liability to pay the impost is imposed.

3. Characterisation & the Power to make laws w.r.t taxation

Leading case Fairfax v Federal Commissioner of Taxation (1965)
•    In characterising a law, court has regard to its operation, what rights & obligations it creates, & how it operates within the permitted area of power.
•    It matters not that the provisions which so operate may be intended to achieve some other purpose.
•    A tax doesn’t cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed.
•    “the substance of the enactment is the obligation which it imposes, and the only obligation imposed is to pay income tax. In substance as in form, therefore, the section is a law with respect to taxation.” Per Kitto J
•    exempted income of super funds from tax if they invested in govt securities. Obvious legislative policy to encourage investment in public securities.

Characterisation example Northern Suburbs General Cemetery Reserve (1993)
•    Claimed that Cth Act was invalid as it was not a tax, but was sufficiently akin to a fee for service to distinguish it from a tax. Also argued charge not for purpose of raising revenue.
•    Objects of the act were improvement of workforce, achieved by guaranteeing minimum expenditure on quality training. Employer liable to pay charge for shortfall of training expenditure per employee.
•    No particular benefit to be derived for individual employers → no fee for service
•    The fact that the revenue-raising burden is merely secondary to the attainment of other object isn’t reason for treating charge as other than a tax.
•    “If a law on its face, is one w.r.t taxation, the law does not cease to have that character simply because Parliament seeks to achieve, by its enactment, a purpose not within the Cth legislative power.” Mason CJ et al
•    HC held unanimously to be a tax, so valid under s 51(ii)

Section 90 - Excise
90. Exclusive power over customs, excise and bounties
•    Remembering the taxation power is concurrent, but this is exclusive. So a state law that is a tax, & held to be an excise duty will be automatically invalidated.
•    Question whether levy is an excise will probably arise to challenge the validity of state legislation, because s 90 prohibits them from levying such a duty.

Statement of broad view Parton v Milk Board (1949)
•    Broad view is that s90 was intended to give Cth broad financial control over the pricing of commodities. Any taxes affecting local & international production, when imposed by States, interfere with the Cth power.
•    Extends to a tax upon a commodity at any point in the course of its distribution before it reaches the consumer.
•    Vic Act required dairy operators to pay contributions into a fund at a set rate per gallon, to meet expenses of Vic Milk Noard. Board regulated milk supply & trade.
•    Charge held to be an excise duty
•    The board performed no particular service for the tax payers.

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