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Chapter 13 - Financial legislation
(ii) taxation bills
A foundation of the
1903 debate in the Senate and the outcome of that debate was, as has been
noted, the observation that the third paragraph of section 53 must apply to
appropriation bills because it cannot apply to bills imposing taxation, which
cannot be amended in any way. Therefore, notwithstanding that the expression
“charge or burden” is suggestive of taxation, most senators on both sides of
the debate rejected any notion of any such application. Much of the speech of Senator Symon, who supported the
contention that the expression referred to appropriations, was taken up by
citations of persuasive authorities that the expression in fact historically
referred to appropriations (pp 2391-8).
There is obviously a profound logical difficulty in any attempted
application of the paragraph to taxation legislation. In order to fall within
the prescription of the paragraph, an amendment must increase a proposed
charge or burden contained in a bill. If a bill contains a proposed
charge or burden, it must, on any reasonable construction of that expression if
it is to have any application to taxation legislation, be a bill imposing
taxation, which therefore cannot be amended at all. If an amendment is to
increase a proposed charge or burden, there must be a proposed charge or
burden to increase, that is, there must be an imposition of taxation.
This logical analysis provided an equally profound difficulty for those
who wished to argue that the third paragraph has no application to
appropriations. They were compelled to look for something else which may be
referred to by the expression “charge or burden”, and which is not an
imposition of taxation or an appropriation. Perhaps, it was said, it refers to
fines or fees, which are excluded from the definition of appropriations by the
first paragraph of section 53. This argument has subsequently had appeal to
some (opinion of Bailey, 21 April 1950, presented to the Senate on 23 March 1994 with that of
Garran). Senator
Baker came to the
conclusion that the paragraph must refer to loan bills (SD, 1903, p. 1843).
Both of these arguments involve the difficulty that the kinds of bills
contemplated can be introduced in the Senate, a difficulty which Garran swept
aside by declaring that the paragraph refers only to bills first introduced
into the House, without considering the further difficulty arising from such a
view. These arguments were not convincing at the time, and have become less
convincing with the passage of time.
One senator in 1903 suggested that the paragraph could apply to bills
which do not impose taxation but which provide for “machinery”, an amendment to
which might widen the scope of the taxation. This suggestion, however, was made
in the context of a somewhat strange argument that the paragraph operated to
prevent both amendments and requests, and was immediately dismissed and not
taken up by any other speaker. It was thought, quite reasonably, and
consistently with the arguments advanced in the debate, that an amendment which
would have the effect of increasing tax would have to affect the imposition of
the tax and not merely the “machinery” provisions, and in any other case such
an amendment would be in effect a proposed law imposing taxation under the
first paragraph of section 53 (Senators Millen and Dobson, pp 2403-8;
Senator McGregor, p. 1845).
Thus the conclusion drawn in the 1903 debate is that the paragraph
applies to appropriation bills otherwise amendable by the Senate and could have
no application to taxation bills.
At first sight it may be thought that there is one obvious exception to
this rule. A bill which reduces or abolishes a tax may be regarded as a bill
which does not impose taxation. It may appear to be contrary to the third
paragraph for the Senate to amend such a bill to substitute a higher rate of
tax than that proposed. This apparent exception, however, conforms with the
interpretation of the third paragraph here expounded. While the Senate could
introduce its own bill to abolish a tax, when the question is posed: could the
Senate introduce its own bill to raise the level of a tax?, the answer is
clear: it could not, because such a bill would in that context clearly be a
bill imposing taxation. The Senate may not do by way of amendment that which it
may not do by initiating its own bill. Therefore an amendment may not be moved
in the Senate to raise the level of a tax. This is not an application of the
third paragraph of section 53 but an application of the first paragraph: such
an amendment to such a bill would indeed be a proposed law for imposing
taxation.
On occasions the Senate has made requests for the insertion of
appropriation provisions in bills originating in the House (4/10/1984, J.1153; 18/10/1995, J.3958-9). On
these precedents, it could be argued that it would be open to the Senate to
request the insertion in a bill originating in the House of a provision having
the effect of imposing taxation. The
better view, however, is that such amendments may not be moved in the Senate at
all, in that, by turning a bill into a bill imposing taxation, they are
contrary to the initiation provision of the first paragraph of section 53 of
the Constitution (statement by President Calvert, SD, 16/9/2003, p. 15275).
An argument has
been mounted from time to time that in the third paragraph the word “charge”
refers to taxation while the word “burden” refers to appropriations, an
argument which may appeal on linguistic ground alone, but there is no
historical basis for such a contention. It was well said in
the 1903 debate that “charge or burden” is a “drag-net” phrase (Senator Higgs,
p. 1829), and the historical analysis and argument then presented
sufficiently establish that “charge” historically referred to appropriations
and that both words refer to appropriations.
Prior to the
Taxation Laws Amendment Bill (No. 4) 1993, there were no precedents of the
Senate making requests for amendments to bills which did not impose taxation
for the reason only that the amendments would increase liability to pay a tax
imposed under another bill or act. The Senate declared in relation to that bill
that its action in making requests did not commit it to a view as to the
application of the third paragraph of section 53 to that bill or in
similar cases.
In debate on the Taxation Laws Amendment Bill (No. 4) 1993 on 22, 23
and 24 March 1994, it was pointed out that the bill was classified as a
bill not imposing taxation, but government amendments which were moved to the
bill were framed in the form of requests apparently because it was thought that
the amendments would increase the taxation liability of taxpayers. It was
suggested that this highlighted again the difficulties arising from the
government’s classification of taxation legislation, and the claim that a bill
can increase taxation without being a bill imposing taxation within the meaning
of section 53 of the Constitution, and that Senate amendments can increase
taxation without imposing taxation and should then take the form of requests.
This view was the basis of the dispute concerning the taxation legislation
arising from the 1993 budget, which resulted in the government withdrawing and
reframing its taxation bills (see above).
In
this case the Senate agreed to the requests for amendments but passed a declaratory
resolution, similar to resolutions used for the 1993 taxation legislation (see
above), declaring that in agreeing to the requests the Senate did not
necessarily accept that requests were appropriate and had not arrived at any
concluded view as to the application of sections 53 and 55 of the Constitution
to the bill. See also the
statements by the Chair of Committees
in relation to the Taxation Laws Amendment Bill (No. 4) 1994, SD, 8/12/1994, pp 4267-8;
and the Tax Law Improvement Bill 1997, SD, 26/6/1997, p. 5317.
The problems with the interpretation advanced by the government’s
advisers were also well illustrated by a bill introduced by the government in
the Senate and passed on 4 May 1994. The Customs Tariff Amendment Bill 1994 increased rates
of customs duties, but was classified as a bill which did not impose taxation
and was introduced in the Senate. According to the view of the government’s
advisers, the Senate could have amended the bill to increase further the rates
of duty. Thus the House of Representatives would not only receive from the
Senate a bill which increased taxation but which had been amended by the Senate
to increase the taxation beyond the level proposed by the government. This
would completely undermine the main purpose of section 53, which is to give the
House of Representatives the exclusive right to introduce taxation imposition
and appropriation measures.
The Chair of Committees has directed that government requests to bills
dealing with taxation be moved in the form of amendments where the amendments
have been proposed as requests apparently because of a view on the part of
government advisers that they might result in higher taxation by comparison
with the bill, as distinct from the status quo in the absence of the bill. The
chair has pointed out that the Senate has not accepted such a strained
interpretation of the charge or burden provision (SD, 22/11/1995, p. 3722;
1/12/1995, pp 4570-1; 20/11/1996, p. 5711; 10/2/1997, p. 277; SD,
25/5/1998, p. 3022; SD, 10/5/2000, p. 14265; SD, 7/12/2000, p. 21146).
In relation to amendments which might increase tax payable,
the constitutional provision refers to an amendment which would increase any
proposed charge or burden, and the view taken in the Senate since 1903 is that
a bill dealing with taxation does not contain a proposed charge or burden
unless it is a bill imposing taxation. Amendments of this kind are therefore
directed by the chair to be moved as amendments (New Business Tax System (Thin
Capitalisation) Bill 2001, SD, 27/9/2001, p. 28123). The claim that any amendment which
might be regarded as in any way disadvantageous to taxpayers should be a
request was also not accepted (statement by Chair of Committees, SD, 27/6/1996, pp 2367-8).
On the other hand, the government drafters have taken the view that
amendments which reduce the taxation payable should be requests on the
basis that appropriations may increase to compensate for the lost revenue! In
one case a Governor-General’s message was prepared (but not used) to recommend
the appropriation supposedly arising from the amendments (A New Tax System
(Indirect Tax and Consequential Amendments) Bill (No. 2) 1999: statements by Chair of
Committees, SD, 9/12/1999, pp 11654, 11691). Where it has been
indicated that an amendment will give rise to tax refunds payable out of a
standing appropriation, the Senate has accepted that the amendments should be
requests (statement by Chair of Committees, New Business Tax System
(Miscellaneous) Bill 1999, SD, 8/6/2000, p. 14923, 26/6/2000, p. 15633; this
case gave rise to a resolution of the Senate requiring explanations of government
amendments framed as requests: 26/6/2000, J.2899; Indirect Tax Legislation
Amendment Bill 2000, SD, 26/6/2000, p. 15556).
On occasions government amendments have been initially presented as
requests despite the explanatory memoranda indicating that they would have no
financial impact (Taxation Laws Amendment Bill (No. 1) 1997, SD, 27/6/1997, p.
5456; Superannuation Contributions Tax Bills, SD, 24/11/1997, p. 9289;
Ballast Water Research and Development Funding Levy Collection Bill, SD,
26/3/1998, p. 1392; Taxation Laws Amendment (Trust Loss and Other Deductions)
Bill 1997, SD, 23/3/1998, p. 1087. For other cases involving tax bills see New
Tax System Bills, SD, 30/4/1999, p. 4657; 24/6/1999, p. 6252; 25/6/1999, p.
6465; Telecommunications Bills, SD, 27/5/1999, p. 5549).
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