Chapter 13 - Financial legislation

Retrospectivity of tax legislation

The Customs Act 1901 (ss 226 and 273EA) and the Excise Act 1901 (ss 114 and 160B) contain provisions which allow the collection of customs duties and excise duties from the time of the announcement of proposals by the government, within a period of 12 months before the passage of legislation to validate the duties. The purpose of these provisions is to ensure that windfall profits may not be made between the time of announcement of duties and the enactment of legislation to levy the duties.

The Senate has not declined to pass a bill validating increases in duties, and there has long been speculation about the remedial action which might be taken in such a case. In June 2000 the Senate passed a resolution expressing opposition to rates of excise contained in an excise tariff proposal tabled in the House of Representatives (29/6/2000, J.2980). A compromise by the government avoided rejection by the Senate of the measure.

On 12 August 2003 the Senate deferred consideration of two customs and excise tariff bills to give effect to an ethanol subsidy scheme until the government produced documents required by various Senate orders relating to the scheme. The documents were not initially produced and the bills were not passed until documents were subsequently tabled. (12/8/2003, J.2089-90; 1/4/2004, J.3324-5)

On 17 June 2008 the Senate passed a resolution declaring its opposition to excise increases on certain alcoholic beverages in the absence of a more comprehensive plan to deal with alcohol abuse, foreshadowing a possible rejection of excise increases already being collected (17/6/2008, J.498). (See Supplement)

An amendment made by the Senate to the Taxation Laws Amendment (Budget Measures) Bill 1995 required public notification of any intention of the government to introduce changes to the sales tax law then in effect (29/6/1995, J.3591-3).

In relation to other taxes, the Senate in 1988 passed a declaratory resolution, as part of an amendment to the motion for the second reading of a bill, to the effect that if more that six months elapses between a government announcement of a taxation proposal and the introduction or publication of a bill, the Senate will amend the bill to reduce the period of retrospectivity to the time since the introduction or publication of the bill (8/11/1988, J.1104; precedents for removal of retrospective provisions: 22/5/1990, J.121; 31/5/1990, J.195).

The Scrutiny of Bills Committee draws the attention of the Senate to retrospective legislation, particularly tax legislation, and has been critical of the practice of backdating tax legislation to the date of a ministerial announcement (see Report on the Operations of the Committee 1990-1993, October 1993, PP 208/1993, pp 16-20).

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