Strictly, taxation bills are those which impose a tax or charge in the nature of a tax. They cannot originate in, or be amended by, the Senate. The form of a bill in this class is governed by section 55 of the Constitution which provides that laws imposing taxation shall deal only with the imposition of taxation (to avoid what is known as ‘tacking’—see page 418), and, except laws imposing duties of customs or of excise, shall deal with one subject of taxation only; laws imposing duties of customs shall deal with duties of customs only and laws imposing duties of excise shall deal with duties of excise only. Examples of taxation bills are income tax bills, customs tariff bills and excise tariff bills. Certain bills imposing fees may be considered as taxation bills if the fees involved are revenue raising measures rather than charges having a discernible relationship with the value of services rendered (see below).
Reflecting the requirements of the Constitution, House practice distinguishes between bills dealing with taxation, such as tax assessment bills, and tax bills. Tax assessment bills provide the means for assessing and collecting tax. Tax bills, which impose the burden upon the people, are the bills which have been regarded as imposing taxation, and are therefore not capable of originating in the Senate or of being amended by the Senate. This practice has been recognised by the High Court as carrying out the constitutional provisions on a correct basis. It has also been reviewed and accepted by the House’s Standing Committee on Legal and Constitutional Affairs.
A former Chief General Counsel of the Attorney-General’s Department advised that bills dealing with taxation can be further categorised as follows:
provisions imposing taxation;
other provisions dealing with the imposition of taxation (e.g. provisions removing or adding exemptions or deductions, increasing or reducing rates or otherwise defining a taxable amount); and
provisions not dealing with the imposition of taxation (e.g. provisions for the assessment, collection and recovery of tax and provisions providing for penalties).
It has been held by the High Court:
that Part VIII of the Customs Act 1901, which dealt with the payment and computation of duties payable under the Customs Tariff, was not a law imposing taxation within the meaning of section 55 of the Constitution;
that the Act imposing taxation is not the Customs Act 1901–1910 (which is a Customs Regulation Act) but the Customs Tariff Act. To hold that a Customs Regulation Act was a law imposing taxation would deny the power of the Senate to originate or amend it;
that the Income Tax Assessment Act 1936–1939 was not a law imposing taxation within the meaning of section 55 of the Constitution;
that the Land Tax Assessment Act 1910 was not an Act imposing taxation within the meaning of section 55 of the Constitution. It is not every statute dealing with the imposition of taxation that is a taxing law. The Land Tax Assessment Act is certainly a law relating to taxation; that is, it deals with the imposition, assessment and collection of a land tax. That does not make it a law imposing taxation;
that the provisions of the Sales Tax Assessment Act (No. 2) 1930–1936, imposing liability for an amount by way of additional tax in case of default, imposed penalties, not taxes, and did not make the Act a law imposing taxation; and
that the Sales Tax Assessment Act (No. 5) 1930–1953 was not a law imposing taxation and section 55 of the Constitution had no relation to it.
A Sales Tax (Exemptions and Classifications) Bill is not a bill imposing taxation within the meaning of section 55 of the Constitution as the bill merely states goods which are exempt and classifies others for the purpose of imposition of sales tax. Such a bill may be amended by the Senate and amendments to such legislation have been moved by private Members in the House of Representatives (provided they satisfy the requirements of the standing orders).
The High Court held in 1987 that:
… The test under the second paragraph of s. 55 in deciding whether the subject of taxation imposed by an Act is single is whether, looking at the subject matter which is dealt with as if it were a unit by Parliament, it can then, in the aspect in which it has been so dealt with, be fairly regarded as a unit, or whether it then consists of matters necessarily distinct and separate.
It considered that, in applying this test, weight should be given to Parliament’s understanding that the Act in question dealt with one subject of taxation only and that the Court should not resolve the question against Parliament’s understanding unless the answer was clear. The decision in this case reflected the established division between a tax Act and an assessment Act, the former being the Act imposing the tax. In this the Court held that adding a new category of fringe benefit did not amount to the imposition of taxation.
The High Court, in holding that section 34 of the Migration Act 1958, inserted by the Migration Amendment Act 1987, was invalid, said that the provision (which concerned the imposition of charges on certain passengers travelling to Australia), although purportedly exacting a fee for immigration clearance, was to be characterised as a tax and that the provisions of the section were a law ‘imposing taxation’. It held that the expression ‘fees for services’ ‘should be read as referring to a fee or charge exacted for particular identified services provided or rendered individually to, or at the request or direction of, the particular person required to make the payment’. The Court held that section 55 required that both an amending Act imposing taxation and the amended principal Act deal only with the imposition of taxation and that it was not within the competence of Parliament to purport to insert by an amending Act a provision imposing taxation in an existing valid Act which contained provisions dealing only with other matters.
The Court similarly ruled that provisions in the Copyright Amendment Act 1989, amending the Copyright Act 1968 to provide for a scheme to raise a fund to compensate copyright owners, imposed taxation and were therefore invalid.
In the Northern Suburbs General Cemetery Reserve Trust v. The Commonwealth the High Court rejected a challenge to the Commonwealth’s training guarantee legislation. The Court again recognised the distinction between laws imposing taxation and those dealing with the imposition of taxation.
The traditional view, that the setting of rates or the increasing of taxation is not the imposition of taxation, was questioned in proceedings following the introduction of the Taxation (Deficit Reduction) Bill 1993. Contrary to previous practice, this bill introduced budget measures increasing a range of taxes, and including amendments to several principal Acts, in the one ‘omnibus’ bill. Nevertheless, the bill had been prepared with regard to the distinction recognised by the High Court between bills imposing taxation and those dealing with taxation, and the Chief General Counsel of the Attorney-General’s Department was of the view that, applying the reasoning expounded by the High Court, none of the provisions actually imposed taxation. The constitutional validity of the bill was however queried in the Senate and the matter was referred to its Standing Committee on Legal and Constitutional Affairs. The committee received conflicting evidence, but reported that in its view there was a real risk which was significant that the High Court would find the bill, if enacted, to be a law imposing taxation within the meaning of section 55 of the Constitution. In response the Government, rejecting the report’s conclusions but to avoid uncertainty, withdrew the bill and replaced it with a package of eight separate bills. To allow the issue to be settled, one of the bills, the Taxation (Deficit Reduction) Bill (No.2) 1993, was deliberately drafted as a test bill (by combining two minor rate increases involving different subjects of taxation) in order to facilitate a High Court challenge; however, a challenge was not mounted.
In 2004 the High Court held that section 55 does not prevent the Commonwealth Parliament from combining provisions that impose taxation with (at least) provisions for the assessment, collection and recovery of taxation.
Procedures peculiar to taxation bills
The principle of the financial initiative of the Executive (see page 415) also plays an important part in the procedure of the House in relation to taxation bills. Standing order 179 provides that only a Minister may introduce a bill which proposes to impose, increase, or decrease a tax or duty, or change the scope of any charge. It is considered that this requirement extends not only to taxation rates but also to proposals which would increase or decrease the total sum of tax payable.
In 1988, following presentation of a private Member’s bill concerning certain taxation deductions, the Chair noted that the bill sought only to ensure that an earlier interpretation of certain provisions prevailed, and not to alleviate tax. In 2011 the Speaker ruled that a bill that had been introduced by a private Member could not be proceeded with because it was found to impose a charge (as well as appropriate moneys).
In November 2011 a private Member moved to suspend standing orders to permit him to move amendments to the Minerals Resource Rent Tax Bill 2011 which would extend its scope by including additional minerals. The Speaker ruled that the proposed motion was out of order as it would allow an action contrary to a fundamental principle of the scheme of government established by the Constitution.
In response to the restrictions imposed on them by standing order 179, private Members have employed a range of alternative approaches to make their views known in relation to taxation proposals. In 2002 a private Member’s bill made provision for the Taxation Commissioner to assess certain amounts, which were stated in the objects clause of the bill as intended to be used in the calculation of a tax to be imposed and administered by another Act (and in the calculation of increased expenditure to be appropriated by another Act). In the same year, having introduced a bill providing for the assessment and collection of a levy, a Member presented as a document a copy of a proposed companion bill providing for the imposition of the levy, as the standing orders prevented him from introducing the companion bill.
A Member, wishing to have the Income Tax Assessment Act amended in respect of certain deductions, has given a notice of motion expressing his views and calling on the Government to introduce legislation. Private Members’ bills have been introduced which sought to amend the Customs and Excise Tariff Acts to provide for mechanisms by which a decrease in duty could be effected by subsequent parliamentary action. Another option open to a private Member wishing to achieve a reduction in a tax rate or burden would be to introduce an amendment to a government bill (see ‘Consideration in detail’ at page 439).
In order to protect the revenue by not giving advance notice of the Government’s intention, a tax bill is invariably submitted to the House without notice as permitted by standing order 178. Bills dealing with (but not imposing) taxation are treated procedurally as ordinary bills, with the exception that they may also be introduced without notice. Bills relating to taxation and appropriating revenue fall into a dual category. Such composite bills have been introduced pursuant to notice, without notice, and by leave.
Second reading amendment
As with special appropriation bills, a reasoned amendment may be moved to a taxation bill which could not be moved as a detail stage amendment because of the principle of the financial initiative of the Executive. Thus in respect of the Government’s legislative proposal to curtail a certain tax avoidance measure with effect from 17 August 1977, and others with effect from 7 April 1978, an amendment by a private Member to curtail such measures from 1 July 1977 would not have been in order, as it would have had the effect of producing an additional sum (charge) from taxation. However, a private Member’s reasoned amendment to the effect that, while not denying the bill a second reading, the House was of the opinion that the operative date for all clauses in the bill terminating tax avoidance schemes should be 1 July 1977, was in order.
Consideration in detail
The order of consideration of taxation bills at this stage, as with appropriation or supply bills, differs from ordinary non-amending bills in that, when the bill is considered clause by clause, any schedule is considered before the authorising clauses.
Only a Minister may move an amendment to increase or extend the scope of the charge proposed beyond the total already existing under any Act of Parliament. A Member prevented by the standing orders from moving an amendment may still wish to propose it, even though it will be ruled out of order. Alternatively, the Member may choose to express the matter in general terms in a second reading amendment, or to read into the Hansard record the text of the amendment he or she would have liked to move. An amendment to a customs tariff proposal which sought to impose a duty on a date sooner than that stated in the legislative proposal, thereby having the effect of producing an additional sum (charge) from customs duties, has been ruled out of order. In 2013 amendments which sought to bring forward the date, under current legislation, on which a fixed carbon price (carbon tax) would be replaced by an emissions trading scheme were ruled out of order. The Speaker noted that while the expected and likely effect of the resulting liability might not exceed that set by the current law, it would be legally possible that the amendments could have the effect that the liability would exceed it, and that in her view the uncertainty was too great to allow the amendments to proceed. The Speaker later ruled the same amendments to the [No. 2] bill of the same title acceptable, after they had been modified to provide that the relevant charge should not exceed the sum contained in existing legislation, and thus removing any uncertainty about the legal effect of the amendments.
A Member who is not a Minister may move an amendment which does not increase or extend the scope of the charge proposed beyond the total already existing under any Act of Parliament. An amendment to decrease the tax imposed by a bill would therefore be in order and thus, in moving an amendment to a government bill a private Member may do what he or she cannot do by introducing a private Member’s bill—that is, propose the reduction of a tax (for example, by the exclusion of items or by the insertion of provisions for lower rates).
Customs and excise tariff proposals
Customs duties (levied on imports and exports) and excise duties (charged on goods produced in Australia) are imposed by the Customs Tariff Act 1995 and Excise Tariff Act 1921, respectively.
Customs and excise tariff measures are usually not initiated by a bill, as considerations relating to timing and drafting make a bill an unsuitable vehicle to initiate the variety and number of tariff proposals that come before the House. Such measures are generally introduced by way of motion, in the form of custom tariff and excise tariff proposals. As ‘proposals dealing with taxation’, these may be submitted to the House without notice. Bass Strait freight adjustment levy proposals were regarded as duties of excise.
The moving of a customs tariff (or excise tariff) proposal is normally treated as a formal procedure for the purpose of initiating the collection of the duty. It may be debated and an amendment may be moved, although a private Member’s amendment cannot have the effect of increasing or extending the scope of the charge proposed beyond the total already existing in any Acts. It is usual for the debate to be adjourned by an opposition Member and for all tariff proposals to be listed together on the Notice Paper under the one order of the day. Debate on a proposal may be resumed on a later day but this is a rare occurrence. Collection of duties is thus commenced on the authority of an unresolved motion, and this has been accepted as a convention.
When the Parliament is prorogued or when the House has expired by effluxion of time or been dissolved or is adjourned for a period exceeding seven days, a notice of a customs or excise tariff proposal may be published in the Gazette and the proposal is deemed to have effect as from such time after the publication of the notice as is specified in the notice. Any proposals given notice in this way must be proposed in the Parliament within seven sitting days of the next meeting of the House.
Customs officers are provided with protection by the Customs and Excise Acts from commencement of proceedings for anything done by them for the protection of the revenue in relation to a tariff or tariff alteration:
until the close of a parliamentary session in which a customs or excise tariff or tariff alteration is moved, or until the expiry of 12 months, whichever happens first; or
where a notice of a tariff proposal has been published in the Gazette, under section 273EA of the Customs Act or section 160B of the Excise Act, within seven sitting days of the House or six months from the date of publication of the notice, whichever happens first. Where the details of the notice are subsequently proposed in the Parliament within seven sitting days, the protection outlined in the first paragraph applies.
The effective life of a tariff proposal is limited to these specified periods. When the Parliament was unexpectedly dissolved in November 1975, action was taken to publish a notice in the Gazette of those tariff proposals which were before the House at the time of dissolution. Some of these proposals had been in operation since September 1974. The proposals listed in the Gazette notice were moved in the House on the third day of the new Parliament.
Consolidation and validation of tariff proposals
The duties proposed in custom and excise tariff proposals must ultimately be levied by legislation. A customs tariff amendment bill or an excise tariff amendment bill, as the case may be, is usually introduced at an appropriate time to consolidate most of the outstanding proposals introduced into the House and incorporate them in the schedules of the Customs Tariff and Excise Tariff Acts. These bills are retrospective in operation, in respect of each proposal, to the date on which collection commenced.
After a tariff amendment bill has received assent, unless a prorogation or dissolution has intervened causing the motions on the proposals to lapse, the Minister or Parliamentary Secretary usually moves to discharge the orders of the day in respect of those proposals now contained in the Act. For convenience this is usually done on the next occasion that tariff proposals are moved in the House.
In the absence of a tariff amendment bill, tariff proposals then before the House may be affirmed towards the end of a period of sittings by means of a tariff validation bill. Validation bills have also been introduced after tariff amendment bills have not been passed by the Senate, covering the measures in the rejected bills. A validation bill provides that duties demanded or collected because of the tariff proposal are taken to have been lawfully imposed and lawfully demanded or collected. When a validation bill is passed the related proposals are not discharged from the Notice Paper as they have not yet been incorporated in the tariff schedule by means of a tariff amendment Act.