THE FIRST PARAGRAPH OF SECTION 55
P G Sharp *
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. 1
I
INTRODUCTION
The Commonwealth's legislative power with respect to taxation is subject, among
other things, to the first paragraph of s 55 of the Constitution which prescribes that laws
imposing taxation must deal only with the imposition of taxation. The section is closely
linked with s 53 and must be understood in the context of the constitutional history in
the United Kingdom and Australia that preceded its drafting and enactment. 2 Indeed,
the failure to appreciate this context is the reason why the section has, until recently,
been largely misconstrued.
Since federation, parliamentary drafters have adopted the practice of splitting tax
initiatives into separate Acts to avoid possible invalidity under s 55. As a result, the
Senate has enjoyed a broader power of amendment than it would otherwise have had
if tax provisions were enacted in a single Act. In Permanent Trustee Australia Limited v
Commissioner of State Revenue, 3 the High Court rejected the literal construction of s 55
upon which the practice of splitting tax Bills has been justified. A reason for rejecting
the practice, not raised in that case, is that it is incongruous with the system of
responsible government embodied within the Constitution. This rationale also supports
the view, advanced later, that the expression 'laws imposing taxation' appearing in the
first paragraph of s 55 should not be limited to provisions that declare a tax to be
imposed, but should also include laws that specify the rate and incidence of taxation.
Parts one and two of this paper consider the parliamentary disputes over financial
powers that occurred in the United Kingdom and in the Australian colonies prior to
federation. Part three considers the financial powers of the Senate and, in particular,
the 'Compromise of 1891'. Part four considers the purpose of the first paragraph of s 55
and part five considers the parliamentary drafting practice with respect to tax
_____________________________________________________________________________________
*
BA, LLB (Hons) (QUT); Associate to Justice I D F Callinan, High Court of Australia. The
views expressed in this paper and any errors contained therein are entirely my own. I wish
to thank the anonymous referee who provided helpful comments on an earlier draft of this
paper.
1
The first paragraph of s 55 of the Constitution.
2
Luton v Lessels (2002) 210 CLR 333, 365 [96] (Kirby J).
3
(2004) 79 ALJR 146 ('Permanent Trustee').
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legislation. Part six examines the meaning of 'laws imposing taxation' and part seven
concludes.
II
DISPUTES OVER FINANCIAL POWERS
A
The United Kingdom Parliament
By the end of the nineteenth century, the House of Commons had monopolised fiscal
control within the United Kingdom Parliament. The 'privilege' of initiating and
amending financial legislation belonged to the Commons. It had been established by
parliamentary custom tracing back to the grants of feudal aid made by the tenants of
the Crown in the late thirteenth century. 4
As the political strength of the Commons increased, and as its supply became more
financially important to the Crown, a practice developed whereby grants from the
Commons were made first in deliberation with and later subject to the assent of the
Lords. 5 This practice was acknowledged by Henry IV in 1407 who stated that subsidies
were 'granted by the Commons and assented to by the Lords.'6
For nearly three centuries, no dispute arose over the financial powers of the
Houses. Although the Commons had claimed that the Lords could not amend Bills
imposing charges upon the people, the Lords made several alterations to money Bills 7
during this period which were not objected to by the Commons. 8 In 1671, however, the
Lords provoked the Commons by reducing the amount of an imposition on sugar. In
response, the Commons resolved that 'in all aids given to the King by the Commons,
the rate or tax ought not to be altered by the Lords.' 9 A similar assertion was repeated
in a resolution on 3 July 1678:
That all aids and supplies, and aids to his Majesty in Parliament, are the sole gift of the
Commons; and all bills for the granting of any such aids and supplies ought to begin
with the Commons; and that it is the undoubted and sole right of the Commons to direct,
limit, and appoint in such bills the ends, purposes, considerations, conditions, limitations,
and qualifications of such grants, which ought not be changed or altered by the House of
Lords. 10
Subsequently, the Lords were rendered unable to alter the amount of a tax or
charge upon the people including 'its duration, mode of assessment; or the persons
who pay, receive, manage, or control it; or the limits within which it is leviable.' 11
Consequently, almost complete fiscal control became vested in the Commons.
In 1860, the Commons resolved to increase property tax and stamp duties and to
abolish duties on paper. The Lords assented to the Property Tax and the Stamp Duties
Bills but rejected the Paper Duties Repeal Bill. In protest, the Commons resolved that
the power of the Lords to reject taxation Bills:
_____________________________________________________________________________________
4
Sir William Anson, Law and Custom of the Constitution (4th ed, 1909) 28-9.
5
Ibid 269; Henry Hallam, The Constitutional History of England (1846) vol 2, 192.
6
Anson, above n 4, 269; Sir Thomas Erskine May, A Treatise on the Law, Privileges, Proceedings
and Usage of Parliament (10th ed, 1893) 554.
7
'Money Bills' is a collective reference to Bills that impose taxation or appropriate revenue.
8
Hallam, above n 5, 194.
9
May, above n 6, 541.
10
Ibid 542.
11
Ibid.
2005
The First Paragraph of Section 55
571
____________________________________________________________________________________
was justly regarded by this house with peculiar jealousy … 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. 12
In the next session, the Commons passed a bill repealing the paper duties and
imposing other annual taxes that were necessary for the operation of government. The
Lords were forced to pass the Bill. From this time on, the Commons adopted the
practice of including all annual taxation measures within a general Finance Bill, thus
compelling the Lords to pass the Bill or otherwise risk destroying the financial
provision for that year. 13 The rejection of the Finance Bill 1909 by the Lords resulted in
the enactment of the Parliament Act 1911 (UK), under which money Bills could be
presented for Royal Assent without first being assented to by the Lords. 14 The
subjugation of the Lords in matters of finance was complete.
B
The Australian colonial legislatures
Soon after the establishment of responsible government in Australia, the colonial
legislatures became embroiled in bitter inter-cameral disputes over the financial
powers. The constitutional Acts of each colony, with the exception of Victoria's, did not
clearly define the financial powers of the Houses; it was simply assumed that the
conventions and practice of the Lords and the Commons would apply to, and be
adopted by, the colonial legislatures. 15 The various legislative councils, however, were
reluctant to submit to the limitations recognised by the House of Lords. As a result,
'the battle had to be fought again.' 16
In Queensland, the Constitution Act 1867 (Qld) provided that taxation and
appropriation Bills should originate in the Legislative Assembly but was otherwise
silent as to the respective powers of the Houses in respect of money Bills. 17 On several
occasions, the Legislative Council insisted on making amendments to money Bills 18
but the Assembly maintained that the functions of the Council corresponded to those
of the House of Lords and therefore the Council had no power of amendment. 19 A row
erupted in 1885 when the Assembly made provision for the payment of its members in
the Appropriation Bill. The Council, which was opposed to this measure, 20 rejected the
'tack' as 'unparliamentary' and deleted the item from the Bill. 21 Both Houses agreed to
seek an opinion from the Privy Council, which decided, without giving reasons, that
the Council did not have the right to amend money Bills. 22 Presumably, the Privy
_____________________________________________________________________________________
12
Ibid 551.
13
Maurice Gwyer (ed), Anson's Law and Custom of the Constitution (5th ed, 1922) vol 1, 283.
14
Sir William McKay et al (eds), Erskine May's Treatise on the Law, Privileges, Proceedings and
Usage of Parliament (23rd ed, 2004) 928.
15
W G McMinn, A Constitutional History of Australia (1979) 65; A C V Melbourne, Early
Constitutional Development in Australia (2nd ed, 1963) 466.
16
Melbourne, above n 15, 466.
17
Constitution Act 1867 (Qld) s 1.
18
McMinn, above n 15, 77.
19
Melbourne, above n 15, 469; Official Report of the National Australasian Convention Debates,
Sydney, 16 March 1891, 377 (Sir Samuel Griffith).
20
See McMinn, above n 15, 77; Melbourne, above n 15, 468–9.
21
Melbourne, above n 15, 469.
22
See McMinn, above n 15, 77; Melbourne, above n 15, 471.
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Council's decision rested upon a strict analogy between legislative powers in the
Queensland Parliament and Westminster. 23 Despite the Privy Council's decision, a
further dispute arose over Council amendments to the Income Tax Bill 1902 (Qld). 24
The most serious political conflagrations occurred in Victoria. 25 Unlike the
constitutions of the other colonies, Victoria's expressly empowered the Legislative
Council to reject, but forbad it to amend, taxation and appropriation Bills. 26 On two
occasions between 1865–68 and again in 1877–78, the Legislative Assembly tacked
measures on to appropriation Bills which were opposed by the Council and which, if
passed separately, would have been defeated in the Council. On each occasion, the
Council rejected the Bills and left the government without supply. On the last occasion,
the government was forced to dismiss a large number of public servants to preserve
supply. 27 The crisis was resolved by the withdrawal of the objectionable measure from
the appropriation Bill and passing it as a separate item, however the question of the
Houses' financial powers remained unanswered. The matter was referred to the
Imperial Government which advised that the Council was entitled to reject any Bill,
whether containing money grants or not, and that the Assembly was not justified in
tacking 'questions of principle' on to ordinary administrative measures and covering
them 'with a money vote.' 28
In South Australia, a novel procedure was devised to resolve inter-cameral disputes
over money Bills. Tension between the Houses surfaced almost immediately after the
establishment of responsible government. 29 The Constitution Act provided that money
Bills were to originate in the House of Assembly, 30 but remained silent on the question
of whether the Legislative Council could amend such Bills. The Council sought to
amend the Tonnage Duties Repeal Bill by striking out the clause repealing the tonnage
duty. The Assembly protested and a conference between the Houses was convened. It
was agreed, under the 'compact of 1857', that the Council could suggest alterations to
any money Bill except appropriation Bills providing for the ordinary annual expenses
of government. If the Assembly did not accept its suggestions, the Council would then
be required to assent to or reject the Bill in its original form. The procedure was
without precedent in any of the other colonies or in the United Kingdom, and accorded
considerable influence to the Council in financial matters.
The inter-cameral conflicts that had troubled the colonies led Professor Harrison
Moore to observe that 'the attempt to translate to the Colonies the traditions of the
Lords and Commons has hardly succeeded, even where the Legislative Council has
_____________________________________________________________________________________
23
Official Report of the National Australasian Convention Debates, Sydney, 16 March 1891, 377
(Sir Samuel Griffith); see also Baxter v Commissioners of Taxation (NSW) (1907) 4 CLR 1087,
1107 (Griffith CJ, Barton and O'Connor JJ).
24
See Melbourne, above n 15, 473.
25
See Edward Jenks, The Government of Victoria (Australia) (1897) 256–8; Arthur Keith,
Responsible Government in the Dominions (2nd ed, 1928) vol 1, 474–83; McMinn, above n 15,
65–72.
26
Constitution Act 1855 (Vic) s 56.
27
Jenks, above n 25, 257; McMinn, above n 15, 70.
28
Jenks, above n 25, 257.
29
See Edwin Gordon Blackmore, Manual of the Practice, Procedure and Usage of the Legislative
Council of the Province of South Australia (1889) 164–87; Boyle Travers Finniss, The
Constitutional History of South Australia (1886) 493–555; McMinn, above n 15, 72–3.
30
Constitution Act 1855-56 (No 2) (SA) s 1.
2005
The First Paragraph of Section 55
573
____________________________________________________________________________________
been a nominee body.' 31 Such conflicts were an inevitable consequence of the failure
clearly to stipulate in their constitutions the powers of the Houses. They were also a
product of the reluctance of the Upper Houses, particularly those that were elected, to
accept the limitations imposed upon the House of Lords. A desire to avoid such
conflicts in the new federal Parliament no doubt motivated the framers to define, with
careful precision, the financial powers of the Houses within the new constitution. 32
III
THE SENATE'S FINANCIAL POWERS
The question of the Senate's powers over money Bills proved to be one of the main
obstacles in the path to federation. The problem was how to incorporate a system of
responsible government into a federal Constitution. Responsible government described
the system of government that had developed in the United Kingdom whereby
executive power was exercised by Ministers who held office so long as they possessed
the confidence of the Lower House. Accountability to the electorate was ensured by the
election of members to that House. An essential feature of responsible government was
that the Lower House had absolute control over money Bills, as the power to govern
required power over the purse. Although this principle was entrenched in the United
Kingdom Parliament it never became firmly established in the colonial Parliaments.
Many delegates from the smaller colonies were reluctant to incorporate responsible
government into the Constitution because it would accord supremacy to the House of
Representatives in matters of finance and thereby enable representatives from New
South Wales and Victoria to dominate the federation. They argued that true federation
required the creation of a powerful Senate, in which the States would be equally
represented, and which could safeguard 'State' interests by possessing a coordinate
power over matters of finance. 33
During a debate to resolve the principles upon which federation might be achieved,
Sir Samuel Griffith urged the conferral of a 'veto in detail' upon the Senate under
which it could delete objectionable items from a money Bill whilst agreeing to others.34
With few exceptions, the delegates from the smaller colonies favoured a veto in detail
as a necessary check upon the power of the House of Representatives; otherwise it
could use its legislative power to cripple the smaller colonies. 35 Delegates from New
South Wales and Victoria were opposed to the proposal as it would enable a 'minority
[to] govern the majority'. 36 They warned that a power of veto in detail would create
friction and undermine the smooth operation of government. The debate was not
resolved and it was agreed that the matter would be referred to the drafting committee
for consideration. 37
_____________________________________________________________________________________
31
William Harrison Moore, The Constitution of the Commonwealth of Australia (2nd ed, 1910) 141.
32
Official Report of the National Australasian Convention Debates, Sydney, 4 March 1891, 26 (Sir
Henry Parkes); 16 March 1891, 378 (Sir Samuel Griffith); Moore, above n 31, 140–1.
33
Official Report of the National Australasian Convention Debates, Sydney, 3 April 1891, 726–7
(Thynne); 733 (Forrest); 748–9 (Sir John Downer).
34
Official Report of the National Australasian Convention Debates, Sydney, 4 March 1891, 39–40.
35
For example, Playford (SA), did not support a veto in detail whereas Barton (NSW) did; see
Official Report of the National Australasian Convention Debates, Sydney, 5 March 1891, 57–9; 6
March 1891, 92–3.
36
Ibid 48 (Munro); 17 March 1891, 421 (Wrixon).
37
Official Report of the National Australasian Convention Debates, Sydney, 17 March 1891, 463.
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The Committee formulated the 'Compromise of 1891'. 38 Under it, the sole power of
originating and amending appropriation and taxation Bills would be reserved to the
House of Representatives, thus ensuring power over the purse. 39 As a compromise, the
Senate would be entitled to suggest amendments to these Bills. This mechanism was
borrowed from the South Australian compact of 1857 40 and was designed to enable the
Senate to return a Bill to the House of Representatives with a message requesting an
omission or amendment. In all other respects, the legislative powers of the Houses
would be equal. As a further compensation, the House of Representatives would be
prohibited from tacking measures on to Bills imposing taxation or appropriating
revenue.
The Compromise embodied the system of responsible government by reserving the
financial initiative to the House of Representatives. It was the House in which a
majority of the executive would sit, and to which it would be (largely) responsible. 41
The Compromise also gave effect to the principle of representative government which
required the power of taxation to be exercised by the chamber that was more directly
representative of the electorate. The shorter tenure of the House of Representatives,
combined with the requirement that it be dissolved every three years, would render it
more answerable to the electorate and, arguably, more representative of its current
wishes. 42 The Compromise was approved by 22 votes to 16. 43 In adopting the
Compromise, the delegates recognised that conferring equal financial power upon the
Houses would produce an unworkable legislature. Deakin predicted that to do so
would 'provoke an internecine conflict on a more colossal scale than anything which
has ever been witnessed in a constitutionally governed country.' 44
IV
THE FIRST PARAGRAPH OF S 55
Section 55 is inextricably linked with the operation of s 53. The distinction between the
reference to 'proposed laws' in s 53 and 'laws' in s 55 is significant in that the
obligations imposed by s 53 are non-justiciable 45 whereas s 55 is subject to review by
the High Court. 46 The first paragraph of s 55 was intended to prevent the House of
Representatives from exploiting the Senate's inability to amend proposed Bills
imposing taxation by tacking unrelated measures onto such Bills and forcing the
Senate to accept or reject them as a whole. 47 Without such protection, the House of
Representatives would be at liberty to coerce the Senate into passing Bills containing
_____________________________________________________________________________________
38
Official Report of the National Australasian Convention Debates, Sydney, 31 March 1891, 526.
39
See also John Quick and Robert Garran, The Annotated Constitution of the Australian
Commonwealth (1901) 667, 671.
40
Official Report of the National Australasian Convention Debates, Sydney, 31 March 1891, 526.
41
Brian Galligan and James Warden, 'The Design of the Senate' in Gregory Craven (ed), The
Convention Debates 1891–1898: Commentaries, Indices and Guide (1986) 89, 92, 102–4.
42
P H Lane, The Australian Political System (2nd ed, 1979) 31.
43
Official Report of the National Australasian Convention Debates, Sydney, 6 April 1891, 755.
44
Official Report of the National Australasian Convention Debates, Sydney, 3 April 1891, 710.
45
Western Australia v Commonwealth (Second Native Title Act Case) (1995) 183 CLR 373, 482.
46
Osborne v Commonwealth (1911) 12 CLR 321, 336.
47
Official Report of the National Australasian Convention Debates, Sydney, 31 March 1891, 526
(Sir Samuel Griffith); Permanent Trustee (2004) 79 ALJR 146, 157–8 [60], 158 [63] (Gleeson CJ,
Gummow, Hayne, Callinan and Heydon JJ).
2005
The First Paragraph of Section 55
575
____________________________________________________________________________________
measures that it might object to and would otherwise not pass but for the inclusion of a
necessary financial measure such as the imposition of a tax.
An issue that emerged during the Conventions was whether the first paragraph of
s 55 would prevent the House of Representatives including assessment, collection and
recovery provisions within a law imposing taxation. There was no suggestion by
Griffith that such a consequence was intended when he introduced the draft Bill to the
Sydney Convention in 1891. At the Adelaide Convention, Barton explained that the
first paragraph of s 55 was not intended to prohibit the House of Representatives from
including machinery provisions within a law imposing taxation. He said that a tax Act
would be unconstitutional if it dealt with 'any question except the imposition of
taxation and the necessary machinery therefor.' 48
At the Melbourne Convention, Isaacs queried whether a tax Act that contained
assessment and collection provisions would be construed as an Act dealing with
matters other than the imposition of taxation. 49 Concerned that the expression 'laws
dealing with the imposition of taxation' in cl 55 (as it then was) might be narrowly
interpreted to exclude machinery provisions for the collection of tax, Barton proposed
that the clause be amended to read 'laws imposing taxation shall deal only with the
imposition of taxation and collection'. 50 Barton realised that a literal construction of cl 55
would confer upon the Senate a de facto right to control taxation policy. He said:
… I am afraid that the power to make substantial amendments in the machinery clauses
of a Taxation Bill would be equal to the power of amending taxation proposals. The
exercise of such a power might cripple the financial policy of a Government, and might
have the effect of driving a Government and House of Representatives to adopt a totally
different scheme of taxation from that for which they had the support of the electors
generally. 51
Representatives from the smaller colonies, however, were concerned to avoid any
further limitations upon Senate power. Symon acknowledged that the clause, as it
stood, permitted the inclusion of machinery provisions within laws imposing taxation.
He argued, however, that it would be better to leave the clause as it was, and leave its
determination to the High Court, rather than to re-open the debate at the 'eleventh
hour'. 52 Barton's motion was lost by a margin of 26 votes to 16.53
The rejection of Barton's proposed amendment suggests that the first paragraph of
s 55 was intended to prohibit the inclusion of collection and machinery provisions in
laws imposing taxation, so as to confer upon the Senate power to originate and amend
such laws. In Permanent Trustee however, a majority of the Court said that the result of
the failure of Barton's motion 'was to leave for the future an authoritative
pronouncement as to the construction of s 55.' 54 Their Honours' conclusion is
supported by the fact that no positive amendment was made to the Compromise of
_____________________________________________________________________________________
48
Official Report of the National Australasian Convention Debates, Adelaide, 14 April 1897, 576–7.
49
Official Record of the Debates of the Australasian Federal Convention, Melbourne, 8 March 1898,
2002.
50
Ibid 1999, 2056 (emphasis added).
51
Ibid 2060.
52
Ibid 2058, 2062.
53
Ibid 2070.
54
(2004) 79 ALJR 146, 158 [64] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).
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1891 and as Symon acknowledged, 55 the Compromise was, even without the
clarification that Barton proposed to insert, broad enough to permit the inclusion of
collection and machinery provisions in Bills imposing taxation. Barton indicated at the
Adelaide Convention that cl 55 was not intended to preclude the House of
Representatives from passing a taxing Act that included all of the necessary machinery
provisions for its assessment and collection.
V
SPLITTING TAX BILLS
A
Parliamentary practice
In order to avoid possible invalidity under s 55, it has hitherto been the practice of the
Commonwealth Parliament to split taxation legislation into separate Acts: a 'Taxing
Act' imposing taxation and an 'Assessment Act' providing for the assessment,
collection and recovery of the tax. Parliamentary drafters adopted the view that
provisions setting the rate of tax payable dealt with the imposition of taxation, and
could be included within a law imposing taxation, whereas provisions for the
assessment, collection and recovery of a tax did not deal with its imposition, and
therefore had to be separated from the law that imposed taxation. 56 One of the earliest
examples of this practice is provided by the Customs Tariff Act 1902 (Cth) which
imposed duty on goods and set out the rates at which duty was payable. Section 5 of
that Act imposed tax by declaring that: 'The Duties of Customs specified in the
Schedule are hereby imposed according to the Schedule'. Administrative provisions
facilitating collection of the duty, and penalties for attempts to evade duty, were
separately enacted in the Customs Act 1901 (Cth). The practice was followed in the
drafting and enactment of the Payroll Tax Act 1941 (Cth) and the Payroll Tax Assessment
Act 1941 (Cth). More recently, the implementation of the Goods and Services Tax
('GST') was effected by the enactment of three imposition Acts, which each specified
the rate of GST payable. 57 The assessment, collection and recovery provisions are
contained in the A New Tax System (Goods and Services) Act 1999 (Cth) and the Taxation
Administration Act 1953 (Cth). While the practice of splitting tax Bills has been
consistently adhered to by government drafters, the method employed has not. In
some cases, provisions establishing the rate of tax payable have been separated from
the Taxing Act and the Assessment Act. 58 According to guidelines published by the
_____________________________________________________________________________________
55
Official Record of the Debates of the Australasian Federal Convention, Melbourne, 8 March 1898,
2063.
56
Re Dymond (1959) 101 CLR 11, 18 (Fullagar J); see also Harry Evans (ed), Odgers' Australian
Senate Practice (10th ed, 2001) 299; Anne Twomey, The Constitution of New South Wales (2004)
554; Dennis Rose, Opinion on the Taxation (Deficit Reduction) Bill 1993, tabled in the Senate
on 31 August 1993.
57
A New Tax System (Goods and Services Tax Imposition — Customs) Act 1999 (Cth); A New Tax
System (Goods and Services Tax Imposition — Excise) Act 1999 (Cth); A New Tax System (Goods
and Services Tax Imposition — General) Act 1999 (Cth).
58
For example, the Income Tax Act 1986 (Cth) imposes income tax, the Income Tax Rates Act
1986 (Cth) sets the rates of income tax, and the Income Tax Assessment Act 1936 (Cth)
contains the necessary machinery provisions for collection of income tax. See also the Sales
Tax (Exemptions and Classifications) Act 1992 (Cth), which sets out the rates of sales tax. The
tax itself is imposed by the Sales Tax Imposition (Customs) Act 1992 (Cth), the Sales Tax
Imposition (Excise) Act 1992 (Cth) and the Sales Tax Imposition (General) Act 1992 (Cth).
2005
The First Paragraph of Section 55
577
____________________________________________________________________________________
Office of Parliamentary Counsel, Bills containing provisions increasing rates of tax are
to be treated as if they are laws imposing taxation for the purpose of s 55. 59 Provisions
contained in Bills that otherwise expand the incidence of an existing tax, by for
instance removing a tax exemption, removing or reducing a tax rebate or increasing a
taxable amount, are to be treated as not imposing taxation. 60
B
The High Court's jurisprudence
The constitutional validity of the practice of splitting tax Bills has been confirmed by
the High Court in a number of cases. 61 In Re Dymond, 62 the Court clarified the
constitutional position of provisions dealing with the rate or incidence of taxation. A
bankrupt argued that the Sales Tax Assessment Act (No 2) 1930–1956 (Cth), under which
he was liable to the Commissioner for unpaid sales tax, was largely invalid because it
imposed taxation within the meaning of s 55, and dealt with matters foreign to its
imposition. Fullagar J, with whom Dixon CJ, Kitto and Windeyer JJ agreed, held that
the impugned provision said to impose a tax was in fact a penalty. Hence s 55 had no
application and the observations of Fullagar J in relation to the first limb of s 55 must
be considered obiter dicta. Fullagar J was of the view that provisions dealing with the
incidence of taxation, such as provisions specifying the rate of taxation and the persons
liable to pay the tax do not impose taxation, but are part of the denotation of the term
'imposition of taxation' and can therefore be included with a law imposing taxation. 63
His Honour also affirmed Isaacs J's view in Munro that machinery provisions did not
'deal with the imposition of taxation' and could not be validly incorporated within an
Act imposing taxation. 64 In doing so, Fullagar J did not expressly consider whether it
was legitimate for the Senate to alter taxation machinery Bills.
Menzies J, dissenting, and with whom McTiernan J agreed, said that the English
parliamentary convention upon which ss 53 to 55 of the Constitution were based
prevented the Lords from amending money Bills so as to alter the amount of a rate or
its assessment, collection or the persons who pay it. His Honour also said that the
parliamentary practice of splitting tax Acts 'goes beyond what is necessary to avoid
invalidity under s 55' and secures to the Senate 'a wider power of amendment than it
would have' if taxation provisions were combined in a single Act. 65 With respect, the
force of Menzies J's dissent is compelling. Although Fullagar J's view of s 55 was
accepted by a majority of the Court in State Chamber of Commerce and Industry v
Commonwealth (Fringe Benefits Tax Case (No 2)), 66 Menzies J's dissenting view in Re
Dymond was accepted by a majority of the Court in Permanent Trustee.
_____________________________________________________________________________________
59
Australian Government, Office of Parliamentary Counsel, Form of Taxing Legislation,
Drafting Direction No 9 (1994) [7]-[9].
60
Ibid [15]-[16].
61
See, eg, Osborne v Commonwealth (1911) 12 CLR 321; Federal Commissioner of Taxation v
Munro (1926) 38 CLR 153 ('Munro'); Resch v Federal Commissioner of Taxation (1942) 66 CLR
198; Cadbury-Fry-Pascall Pty Ltd v Federal Commissioner of Taxation (1944) 70 CLR 362; Moore
v Commonwealth (1951) 82 CLR 547.
62
(1959) 101 CLR 11.
63
Ibid 20-1.
64
Ibid 21.
65
(1959) 101 CLR 11, 27-8.
66
(1987) 163 CLR 329, 341 (Mason CJ, Wilson, Dawson, Toohey and Gaudron JJ).
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In Permanent Trustee, the High Court affirmed the validity of the practice of splitting
tax Bills but qualified its affirmation by rejecting the literal construction of s 55 upon
which the practice is based. Question 2 of the case stated asked whether the
Commonwealth Places (Mirror Taxes) Act 1998 (Cth) ('the Act') breached s 55 on the
ground that it was a law imposing taxation and dealt with subject matter other than
the imposition of taxation. The Act was enacted in response to the Court's decision in
Allders International Pty Ltd v Commissioner of State Revenue 67 and was designed to
enable the States to continue to collect stamp duty and other State taxes in respect of
Commonwealth places by imposing a 'mirror version' of the taxes in relation to those
places. Revenue collected by the Commonwealth was then returned to the States.
Perhaps for reasons of economy, the practice of splitting tax legislation into separate
Acts was not adopted in the case of the Act, otherwise the Commonwealth Parliament
would have been required to pass 48 separate Acts to achieve the same end.
The majority 68 held that the Act did not fall foul of s 55. After reviewing the
drafting history of s 55, the majority identified tacking as the mischief which the first
paragraph of s 55 was designed to cure, rather than the separation of provisions
imposing a tax from provisions relating to the assessment, collection and recovery of a
tax. Their Honours said:
How, one might ask, is the mischief of 'tacking', with which the first limb of s 55 is
particularly concerned, involved at all by denying a power of amendment of provisions
for the assessment and collection of revenue raised by the one legislative measure? 69 ...
'Tacking' is quite a different matter to the insertion in a taxing statute of provisions for
the assessment, collection and recovery of that tax. 70
The majority accepted that provisions for the assessment, collection and recovery of
tax dealt with the imposition of taxation and could be included within a law imposing
taxation without offending the first paragraph of s 55. 71 This result, their Honours
said, was 'consistent with the evident purpose of s 55'. 72 Accordingly, the Act, though
dealing with the imposition, collection and recovery of taxes by the Commonwealth,
did not contravene s 55. 73 The majority's construction of the first paragraph of s 55
vindicates the dissenting opinions of a number of Justices of the Court. 74
Interestingly, their Honours said that despite the construction which should be
accepted, their view did not preclude the Commonwealth from continuing the practice
of splitting Bills. Their Honours said:
_____________________________________________________________________________________
67
(1996) 186 CLR 630.
68
Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ. McHugh J and Kirby J decided the
case on different grounds.
69
(2004) 79 ALJR 146, 158 [63].
70
Ibid 159 [69].
71
Ibid 159 [68]–[69].
72
Ibid 159 [69].
73
Ibid 155 [51].
74
Munro (1926) 38 CLR 153, 209, 215–16 (Higgins J); Osborne v Commonwealth (1911) 12 CLR
321, 336 (Griffith CJ), 373 (Higgins J); Resch v Federal Commissioner of Taxation (1942) 66 CLR
198, 213 (Starke J); Moore v Commonwealth (1951) 82 CLR 547, 563 (Latham CJ), 573
(McTiernan J); Re Dymond (1959) 101 CLR 11, 17 (McTiernan J), 24-5 (Taylor J), 27 (Menzies
J); Mutual Pools & Staff Pty Ltd v Federal Commissioner of Taxation (Swimming Pools Sales Tax
Case) (1992) 173 CLR 450, 457 (Deane J).
2005
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579
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However, the construction of the first limb of s 55 which should be accepted does not
foreclose further observance of a practice or convention of splitting Bills between a taxing
Act and an assessment Act. An assessment Act of the character of those in the numerous
decisions of this court discussed earlier in these reasons will not be a law imposing
taxation with respect to which s 53 will restrict the powers of the Senate. 75
In one stroke, their Honours abandoned the received wisdom of the Court
regarding the characterisation of assessment, collection and recovery provisions, but
also reinforced the validity of the practice of splitting tax Bills. The majority's view,
that the first paragraph of s 55 does not prohibit the combination of taxing and
assessment provisions into a single Act, is consistent with the view expressed by
Barton at the Adelaide Convention in 1897. 76 On the one hand, the majority's refusal to
proscribe the practice of splitting tax Bills is curious because such a practice leaves the
Senate at liberty to do that which the majority was concerned to guard against, that is,
to 'frustrate the enactment of effective taxation laws.' 77 On the other hand, the
majority's decision to 'leave the door open' is understandable given the Court's general
reluctance to interfere with intra-mural activities; 78 proscribing this practice would
remove a privilege from the Senate of being able directly to amend Assessment Acts
which it has enjoyed since federation. A pronouncement of this kind would no doubt
be viewed by the Senate as an unwelcome intrusion into its affairs. The result of not
traversing such delicate terrain is that parliamentary drafters are now faced with a
choice of implementing new tax initiatives in a single measure, or separating them, as
previously, into two Bills. Either method has a markedly different effect upon the
Senate's ability to deal with tax Bills.
C
Abolishing the practice
In my view, there are three reasons for discontinuing the practice of splitting tax Bills.
First, the practice is no longer defensible upon a literal construction of the first
paragraph of s 55. The textual argument in support of the practice has been rejected by
the High Court.
Secondly, the policy argument in favour of the practice lacks sound historical
foundation. The practice is predicated upon a view that the Senate is constitutionally
entitled to amend provisions that deal with the assessment, collection and recovery of
a tax. No more clearly is this assumption expressed than in the judgment of Isaacs J in
Munro, 79 in which his Honour rejected the proposition that provisions regulating the
assessment, levying, collection and enforcement of tax deal with the imposition of tax.
His Honour said that if maintained, such a proposition would 'emasculate the Senate's
coordinate power over taxation machinery Bills.' 80 Isaacs J was of the view that
combining the provisions of a Taxing Act and an Assessment Act in the one Bill would
be a 'radical error' and would 'cut away a right [to amend machinery provisions]
_____________________________________________________________________________________
75
(2004) 79 ALJR 146, 159 [70].
76
Official Record of the Debates of the Australasian Federal Convention, Adelaide, 14 April 1897,
576–7; see above n 48.
77
(2004) 79 ALJR 146, 157-8 [60].
78
Western Australia v Commonwealth (Second Native Title Act Case) (1995) 183 CLR 373, 482
(Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ); Permanent Trustee (2004) 79
ALJR 146, 153–4 [41] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).
79
(1926) 38 CLR 153, 190.
80
Ibid.
580
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which, on the well-understood meaning of parliamentary terms, is conserved to the
Senate by the words of the Constitution.' 81 With respect to Isaacs J, no such intention
was expressed by the drafters when the proposed operation of the clause was
explained during the Federal Conventions. In fact, Barton had clarified that the House
of Representatives' power to initiate and amend taxation Bills extended to machinery
provisions as well as those imposing taxation. Of what use is the latter without the
former? The bitter colonial disputes over Upper House claims to amend money Bills
had been instructive; they had sharpened the resolve of the framers to reserve the
financial initiative to the House of Representatives, as demonstrated by the framers'
decision to deny to the Senate a power of veto in detail (Sydney 1891) as well as a
power of amendment (Adelaide 1897) with respect to taxation and appropriation Bills.
Had either power been conferred upon the Senate, it could claim
a primary constitutional right to initiate substantial and extensive changes to government
finance and in so doing effectively assume financial power without bearing concomitant
financial responsibility which responsible government would require. 82
Thirdly, the splitting of tax Acts is, in theory, inimical to the system of responsible
government embodied within the Constitution. By splitting tax Acts, and reserving to
the Assessment Act provisions that are essential to the effective imposition of the tax,
the Senate remains at liberty directly to amend those provisions and thus interfere with
the financial policy of the House of Representatives. Such liberty, if exercised, would
undermine the preservation of the financial initiative in the House of Representatives.
This argument must be balanced against the fact that the Senate has never directly
amended an Assessment Act wholly to emasculate a tax levied by a Taxing Act. That
the Senate has refrained from doing so to date does not preclude the possibility that it
may do so in the future if the practice of splitting Bills is continued. The apocalyptic
crisis that Barton and others prophesied would occur has not eventuated. Fears that an
obstructive Senate might interfere with taxation machinery Bills to make the tax sought
to be imposed not worth collecting have turned out to be unwarranted. 83 This can be
explained by the willingness of governments to compromise taxation initiatives in
order to coax the Senate to accept and pass them, rather than by any reticence on the
part of the Senate to interfere with such initiatives. An example of this is provided by
the passage of the GST in 1999. The Senate's agreement to pass the legislation
implementing the tax was obtained only after protracted negotiations between it and
the government, the outcome of which was the exclusion of certain goods upon which
the tax would fall. Another example is provided by the withdrawal and recasting of
the Taxation (Deficit Reduction) Bill 1993 (Cth) by the government as a result of Senate
pressure.
Abolishing the practice of splitting tax Bills will not obstruct the Senate from
performing its valuable function of reviewing and scrutinising legislation, including
taxation initiatives. The Senate's role of acting as a check upon the House of
Representatives is achieved through its power of veto and its power to suggest
amendments, which is, as I discuss below, nearly equivalent, in practical terms, to a
power to make direct amendments to a Bill. These important powers and functions are
_____________________________________________________________________________________
81
Ibid.
82
Galligan and Warden, above n 41, 89, 104.
83
Cf Official Record of the Debates of the Australasian Federal Convention, Melbourne, 8 March
1898, 2058 (Kingston).
2005
The First Paragraph of Section 55
581
____________________________________________________________________________________
in no way affected by excluding from the field of legislation which the Senate may
directly amend provisions for the assessment, collection and recovery of a tax.
Accordingly, it would be wrong to equate criticism of the practice of splitting tax Bills
with condemnation of bicameralism. Rather, the aim of this section has been to
demonstrate that the practice of splitting tax Bills, which has, in theory, if not in
practice, expanded the Senate's power to deal with financial matters, is without
constitutional foundation. The practice of splitting tax Bills is designed to overcome the
limitations upon the Senate's power that were devised and debated over by the
framers, agreed to in the Compromise of 1891, and enacted in s 53.
VI
LAWS IMPOSING TAXATION
A
Broadening the construction
A consequence of the High Court's sanctioning of the practice of splitting tax Bills has
been the creation of a narrow category of laws that impose taxation. The category is
confined to those laws that contain a provision declaring that a tax or levy is
imposed. 84 This narrow construction has conveniently rendered all Commonwealth
Assessment Acts immune from constitutional challenge on the basis that they impose
taxation and deal with matters other than the imposition of taxation. In fact, it is the
only construction of 'laws imposing taxation' that does not threaten the validity of
Assessment Acts; that is, so long as Taxing Acts contain a declaration imposing tax,
and Assessment Acts do not, then the latter will not be regarded as laws imposing
taxation. This realisation no doubt prompted Dixon J's reference to the 'hitherto
ineffectual menaces of s 55' in Moore v Commonwealth. 85
It is obvious why the Court has adopted a construction that affirms the validity of
the numerous Assessment Acts that have been enacted by the Commonwealth
Parliament. The avoidance of uncertainty is a compelling reason for preserving the
status quo. Prior to Permanent Trustee, this consideration rendered moot the possibility
of the Court reconsidering its approach to the construction of the expression 'laws
imposing taxation'. But given that the Court has expanded the category of laws that
deal with the imposition of taxation to include most, if not all, of the provisions that
are commonly found in an Assessment Act, the risk of invalidating such an Act on the
basis that it is a law imposing taxation has now disappeared. It is timely therefore to
reconsider the Court's approach to the meaning of 'laws imposing taxation'. There is a
caveat; such an inquiry will be unnecessary if parliamentary drafters choose to
combine taxing and machinery provisions in the one Act. But if the practice of splitting
Bills is maintained, then in my view, the expression 'laws imposing taxation' should be
broadened to include all provisions that form a condition precedent to liability to pay
tax. Such provisions would include those that identify the incidence of taxation and
specify the rate of tax payable. Whether these provisions properly belong to the
category of laws imposing taxation is important because it will determine: (1) the form
such Bills should take; for instance, if such laws do not impose taxation, then the
House of Representatives may combine these laws with other non-tax related laws in
an omnibus Bill as it attempted to do with the Taxation (Deficit Reduction) Bill 1993
_____________________________________________________________________________________
84
Munro (1926) 38 CLR 153, 189, 194 (Isaacs J); Moore v Commonwealth (1951) 82 CLR 547, 564
(Latham CJ); Re Dymond (1959) 101 CLR 11, 19 (Fullagar J), 25 (Taylor J).
85
(1951) 82 CLR 547, 569.
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(Cth); (2) whether the Senate has power to originate such Bills; and (3) whether the
Senate can amend such Bills directly or by way of request only.
There are two reasons why the Court should adopt a broader construction of 'laws
imposing taxation'. First, a broad construction of the first paragraph of s 55 is more
consistent with the system of responsible government embodied within the
Constitution. The Compromise was struck to confer upon the House of Representatives
power over taxation measures generally, rather than power over a narrow category of
taxation laws that merely declare a tax to be imposed. Why confer power upon the
House of Representatives over such a limited category of taxation laws if doing so
would leave the Senate free to circumvent that power through direct amendment of
provisions that specify the rate or incidence of taxation? If the expression 'laws
imposing taxation' comprehends nothing more than an Act declaring that a tax be
imposed, then any supplementary Act specifying the rate of taxation or which affects
the incidence of taxation would not be a 'law imposing taxation' and could either
originate in or be directly amended by the Senate. For example, the Senate would be at
liberty to originate a law increasing the rate of the GST from 10% to 50%. And if the
House of Representatives passed a Bill increasing the GST from 10% to 20%, the Senate
could directly amend it by increasing the rate to 50%. Additionally, the Senate would
be entitled to originate a Bill creating a tax, specifying the rate, the persons liable and
the machinery provisions, but leave its imposition for a subsequent Act. Alternatively,
if such a Bill were initiated in the House of Representatives, it could be directly
amended in the Senate. How can this result be consistent with the principle embodied
in s 53 that gives to the House of Representatives the power over the purse? It is
difficult, if not impossible, to reconcile these consequences which follow from the
Court's construction of the expression 'laws imposing taxation' with the policy
embodied in s 53.
Secondly, a narrow construction ignores the reality of how tax is, in fact, imposed.
As Barton pointed out at the Adelaide Convention, 86 a legislature cannot implement a
taxation initiative by merely passing an Act declaring that a tax is imposed. It must
also identify the persons upon whom the burden will fall and specify the rate or
amount of tax payable. If the tax is on property, then that too must be identified. A
Taxing Act does not, of itself, create a 'liability to taxation' 87 if the persons liable and
the extent of the liability are provided for in a separate Act. Liability to taxation cannot
exist unless it is quantified by legislative enactment and attaches to an actor. In my
view, a law imposing taxation describes a law, which either alone or in concert with
another Act, will comprise a necessary step in laying the burden to pay upon the
taxpayer. Because taxation can only be imposed upon a taxpayer if the taxpayer and
the liability are specified, then a law containing any one of these essential components
will be a law imposing taxation.
For the reasons identified above, laws that increase the rate of taxation should also
be regarded as laws imposing taxation. 88 Let it be assumed, for example, that the GST
is imposed by a Taxing Act at the rate of 10% and the government wishes to increase
the rate to 50%. An Amending Act is passed effecting this increase. Does it impose
_____________________________________________________________________________________
86
Official Report of the National Australasian Convention Debates, Adelaide, 14 April 1897, 576.
87
Re Dymond (1959) 101 CLR 11, 19 (Fullagar J).
88
Cf House of Representatives Standing Committee on Legal and Constitutional Affairs,
Parliament of Australia, The Third Paragraph of Section 53 of the Constitution (1995) 107.
2005
The First Paragraph of Section 55
583
____________________________________________________________________________________
taxation within the meaning of s 55? The liability for the additional 40% burden has
been created by the enactment of the Amending Act. In a technical sense, the tax
remains exigible by reason of the Taxing Act and the Amending Act merely aids the
determination of the taxpayer's increased liability. Yet it is difficult to see how the
Amending Act, in substance, does anything other than impose taxation; it has the effect
of imposing an additional liability upon the taxpayer. Alternatively, consider the
example of an Act that removes an exemption to liability for income tax, causing the
tax to fall upon persons who were not previously liable. Or an Act that broadens the
definition of a 'taxpayer' to include persons who were not previously liable to the tax.
It is difficult to see how such Acts do not impose taxation when they are clearly
responsible, in a causative sense, for laying a tax burden upon the taxpayer. To deny
that an Act, which defines a tax liability, is a necessary part of the imposition of
taxation is illogical as it divorces the meaning of the words 'imposition of taxation'
from an ordinary understanding of how tax is imposed. In my view, provisions that
establish the rate or incidence of taxation are laws imposing taxation because they
result in a liability for the payment of taxation where it was not previously payable;
that is, they are a condition precedent to the creation of the taxation liability.
B
The Senate's power to suggest an amendment
There is a further matter that requires consideration. If provisions that identify the rate
or incidence of taxation are deemed to impose taxation, then the Senate will be unable
to amend them directly but may request the House of Representatives to amend them.
Does this consequence have any real effect upon the Senate's ability to alter such a
provision? The answer is probably 'no' as there is little practical distinction between
the Senate's power to amend and its power to request an amendment. 89 In one case,
the Senate will amend a Bill directly, in the other it requests the House of
Representatives to amend the Bill. In both cases, the Bill will be sent back to the House
to be either passed in its amended form or amended as suggested. If the House rejects
the suggestion, the Senate may refuse to pass the Bill. Accordingly, if a government
wishes its legislation to pass, it may have to accede to Senate demands regardless of
whether they are formulated directly or as a suggestion. 90 If a government is prepared
to accede to Senate demands, then the consequence of requesting an amendment, as
opposed to making a direct amendment, is that the Bill makes an extra journey
between the Senate and the House of Representatives. 91 In practice, the Senate can
exercise considerable influence over taxation initiatives because it can decline to pass
any Bill until its amendments or suggestions are agreed to by the House. 92 It would
seem then that even if the Court embraced a broader definition of 'laws imposing
taxation' to include provisions identifying the rate or incidence of taxation, this may
have little or no consequence upon the Senate's ability to amend such a provision if it
wished to.
There is, however, a theoretical distinction between a power to amend a Bill
directly and a power to request an amendment which may still provide a good reason
_____________________________________________________________________________________
89
Evans, above n 56, 292; Galligan and Warden, above n 41, 89, 104; Dennis Pearce,
'Legislative Power of the Senate' in Leslie Zines (ed), Commentaries on the Australian
Constitution: A Tribute to Geoffrey Sawyer (1977) 119, 125–6.
90
Ibid 119, 126.
91
Evans, above n 56, 292.
92
Ibid 327.
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to argue for a broader definition of 'laws imposing taxation'. The distinction exists by
reason of the different effect that each power has on the question of responsibility for
the loss of a Bill. In the case of Bills that are amendable by the Senate, the Bill will be
returned to the House of Representatives with a schedule of amendments. 93 If the
House does not agree to the amendments, the Senate can force the House to accept the
amendments or sacrifice the Bill. Thus, the responsibility for determining whether the
Bill passes will lie with the House. 94 If the Senate can only request an amendment,
then the Bill will be sent back to the House with the request for amendment. 95 If the
House declines to accept the request, then the Senate must decide whether to pass or
reject the Bill in its original form. 96 The importance of this distinction for the meaning
of 'laws imposing taxation' can be illustrated as follows. If the Senate wishes to amend
a Bill, such as a Bill to amend an existing Assessment Act, so as to alter the rate or
incidence of taxation, then it can do so directly and the responsibility for determining
whether the amended Bill should pass will rest with the House of Representatives. On
the other hand, if provisions specifying the rate or incidence of taxation are deemed to
impose tax and the Senate requests to amend such a provision, then it will be held
responsible for the loss of the Bill in the event that its request is declined by the House
of Representatives.
C
The Taxation (Deficit Reduction) Bill 1993 (Cth)
Similar questions concerning the meaning of the expression 'laws imposing taxation'
arose for consideration in the debate over the validity of the Taxation (Deficit
Reduction) Bill 1993 (Cth). The Bill purported, among other things, to increase the rate
of sales tax and fringe benefits tax, and to reduce the rate of income tax. 97 The validity
of the Bill was questioned in the Senate and the Bill was referred to the Senate Standing
Committee on Legal and Constitutional Affairs which reported that there was a real
risk that the High Court would find the Bill to be a law imposing taxation within the
meaning of s 55. 98
The Bill was withdrawn and eight separate Bills were introduced in its place. Two
of these were also referred to the Committee for consideration. 99 The first included
provisions increasing the incidence of taxation in relation to different subjects of
taxation and the second increased the rate of fringe benefits tax as well as the rate of
tax payable by friendly societies. It was vulnerable to the operation of the second
paragraph of s 55 and had been deliberately drafted to provoke a High Court challenge
because the Court had not (and still has not) been required to decide whether a
provision increasing tax rates imposed taxation. The Committee was divided about the
_____________________________________________________________________________________
93
Ibid 273–4; I C Harris et al (eds), House of Representatives Practice (4th ed, 2001) 424.
94
Quick and Garran, above n 39, 671; Standing Committee on Legal and Constitutional
Affairs, above n 88, xi; Official Report of the National Australasian Convention Debates,
Adelaide, 14 April 1897, 557 (Barton).
95
Evans, above n 56, 321; I C Harris et al (eds), House of Representatives Practice (4th ed, 2001)
427.
96
Galligan and Warden, above n 41, 89, 104.
97
See Evans, above n 56, 300–1; I C Harris et al (eds), above n 95, 418.
98
Senate Standing Committee on Legal and Constitutional Affairs, Parliament of Australia,
Constitutional Aspects of the Taxation (Deficit Reduction) Bill 1993, September 1993, 1.
99
Taxation (Deficit Reduction) Bill (No 1) 1993 (Cth), Taxation (Deficit Reduction) Bill (No 2)
1993 (Cth).
2005
The First Paragraph of Section 55
585
____________________________________________________________________________________
validity of both of the Bills, but recommended that they be passed. 100 No challenge
was mounted to either Bill and the question of whether a statute increasing a rate of tax
is a law imposing taxation was not resolved.
VII
CONCLUSION
An examination of the history that preceded the framing and enactment of ss 53 and 55
reveals that the first paragraph of s 55 was not designed to compel the splitting of tax
Bills but rather was intended to prevent the House of Representatives from exploiting
the Senate's inability to amend Bills imposing taxation by tacking unrelated measures
to such a Bill. The parliamentary experience in the United Kingdom and in
Queensland, Victoria and South Australia showed that absent an express provision in
the Constitution prohibiting the use of this device, the House of Representatives would
sooner or later tempt fate.
The convention of splitting tax Bills is based upon a literal construction of the first
paragraph of s 55 which has now been rejected by the High Court in Permanent Trustee.
However, given that the practice dates back to federation, and still has the tacit
approval of the Court, it is unlikely to be abandoned soon. Nevertheless, Permanent
Trustee has, in theory, freed the government to be more aggressive in implementing
taxation policy and therefore, in pursuing its financial agenda. As a result, that
decision may have significant ramifications for the powers of the Houses in relation to
taxation legislation. A holistic approach to the drafting of tax legislation would ensure
that the financial initiative remains the sole preserve of the House and would therefore
be more consonant with the principles of responsible and representative government
that are embedded within the Constitution.
Finally, it may be argued that the practice of splitting tax Bills has been successful
in avoiding the perils of the first paragraph of s 55, as few Acts have fallen foul of it.
But to favour this argument is to lose sight of the fact that the section was intended to
prevent tacking by the House of Representatives. As the section has rarely, if ever,
been invoked to remedy a genuine case of tacking by the House, the better view is that
its mere presence in the Constitution has been an entirely adequate deterrent. On this
basis, it may be observed that the menace of the first paragraph of s 55 has been wholly
effectual.
_____________________________________________________________________________________
100 Senate Standing Committee on Legal and Constitutional Affairs, Parliament of Australia,
Taxation (Deficit Reduction) Bill (No 1) 1993; Taxation (Deficit Reduction) Bill (No 2) 1993 (1993)
4.