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Published online by Cambridge University Press: 24 January 2025
This paper asks whether much State taxation is currently avoiding proper constitutional scrutiny, including the issue of its compliance with s 90 of the Commonwealth Constitution. That provision gives sole power to the Commonwealth to levy duties of customs and excise. The second part of the paper argues that the current interpretation of s 90 is in any event not capable of a sensible application to State laws.
1 See the First and Second Uniform Tax Cases (1942) 65 CLR 373 and (1957) 99 CLR 575.
2 For example, in Western Australia, recurrent revenue for 1992-93 was $4,982,907,000 of which only $2,220,703,000 came from the Commonwealth: WesternAustralia, 1993-94 Budget Paper No 2, Consolidated Fund Estimates (1993) at 7.
3 $1,542,716,000 was raised in Western Australia from such taxes and licences in 1992-93. Western Australia, above n 2.
4 $1,219,488,000 was raised from such sources in Western Australia in 1992-93. Western Australia, above n 2.
5 See, for example, s 46(7) of the Constitution Acts Amendment Act 1899 (WA). While s 46(9) protects the validity of laws which do not conform with thatrequirement, it would nevertheless be inappropriate for Parliament to flout it.
6 See, for example, s 63 of the Constitution Act 1889 (WA) and compare that provision with the High Court’s interpretation of s 81 of the Commonwealth Constitution in AustralianTape Manufacturers Association v Commonwealth (1993) 112 ALR 53.
7 Australian Tape Manufacturers Association v Commonwealth (1993) 112 ALR 53 at 62.
8 Marsh v Shire of Serpentine-Jarrahdale (1966) 120 CLR 572.
9 Capital Duplicators Pty Ltd v ACT [No 1 ] (1992) 177 CLR 248.
10 (1993) 178 CLR 561.
11 R Musgrave and P Musgrave, Public Finance in Theory and Practice (5th ed 1989) at 212.
12 (1938) 60 CLR263 at 276.
13 Note that in Air Caledonie International v Commonwealth (1988) 165 CLR 462 at 467, the High Court held that “there is no reason in principle why a tax should not take a form other than the exaction of money.”
14 See generally Ryan v Clayton (1920) 20 SR (NSW) 524.
15 Sales Tax Assessment Act 1992 (Cth).
16 OECD, The Revenue Statistics of OECD Member Countries 1965-87 (1988) cited in M Wilkinson, Taxation (1992) at 2.
17 Ibid at 2-3.
18 See generally China Navigation Co Ltd v Attorney General [1932] 2 KB 197.
19 Harper v Minister for Sea Fisheries (1989) 168 CLR 314 at 333.
20 There is a similar provision in s 46(1) of the Constitution Acts Amendment Act 1899 (WA).
21 (1938) 60 CLR 263.
22 Ibid at 276.
23 (1980) 145 CLR 532.
24 Ibid at 562 per Gibbs J, and at 568 and, especially, at 571 per Aickin J.
25 (1989) 168 CLR 314.
26 Ibid at 335.
27 ”[A]n exaction may be so large that it could not reasonably be regarded as a fee”: General Practitioners Society v Commonwealth (1980) 145 CLR 532 at 562 per Gibbs J.
28 Air Caledonie International v Commonwealth (1988) 165 CLR 462 at 467.
29 (1989) 168 CLR 314 at 337 per Dawson, Toohey and McHugh JJ.
30 (1988) 165 CLR 462 at 467.
31 See also s 46(1) of the Constitution Acts Amendment Act 1899 (WA).
32 Above at 478.
33 Matthews v Chicory Marketing Board (Vic) (1938) 60 CLR 263 at 276.
34 However such earmarking may itself be improper: see below n 43.
35 (1988) 165 CLR 462 at 467.
36 (1993) 112 ALR 53.
37 Ibid at 62.
38 (1993) 112 ALJR 53.
39 (1988) 165 CLR 462.
40 Ibid at 467.
41 Australian Tape Manufacturers Association v Commonwealth (1993) 112 ALR 53 at 59.
42 In this respect, Air Caledonie International and Australian Tape Manufacturers appear to have greatly widened the definition of taxation from that used in Vacuum Oil Co Pty Ltd v Queensland (1934) 51 CLR 108. The latter case concerned a statute which compelled the purchase of power alcohol by the suppliers of petrol in proportion to the quantity of petrol they sold. The Court had no doubt that the net effect, and purpose, of the legislation was to levy suppliers of petrol as a way of funding the encouragement of power alcohol production. But the Court held that the liability imposed on petrol suppliers escaped characterisation as a tax because “[i]t is not a liability to the State, or to any public authority, or to any definite body or person authorised by law to demand or receive it” (at 125 per Dixon J; see also at 142 per McTiernan I and at 118-119 per Rich I).
43 See s 81 of the Commonwealth Constitution and the discussion of the effect of a breach of that provision in Australian Tape Manufacturers Association v Commonwealth (1993) 112 ALR 53 at 63. At the State level compare with the Constitution Act 1889 (WA) ss 63, 64 and 72 and see R D Lumb, The Constitution of the Australian States (5th ed 1991) at 69.
44 Cobb & Co Ltd v Kropp [1967] 1 AC 141.
45 (1966) 120 CLR 572.
46 Ibid at 580.
47 Wynne’s Pty Ltd and Others v Western Australian Meat Marketing Corporation, Supreme Court Matter No 1032 of 1993. The matter originated in the High Court and was referred to the Supreme Court of Western Australia for resolution of a dispute as to fact.
48 (1993) 178 CLR 561.
49 Ibid at 583.
50 Peterswald v Bartley (1904) 1 CLR 497 at 509 and 512.
51 The evidence is discussed at length in the judgment of Dawson J in Capital Duplicators Pty Ltd v ACT [No 2] (1993) 178 CLR 561 at 606-609.
52 Parton v Milk Board (Vic) (1949) 80 CLR 229 at 260 per Dixon J.
53 (1993) 178 CLR 561 at 587 and 590.
54 Ibid at 592-593.
55 Cole v Whitfield (1988) 165 CLR 360 and Mabo v Queensland [No 2] (1991-92) 175 CLR 1. Note also the remarks by Mason CJ to the effect that it is “no longer feasible to decide cases by reference to obsolete or unsound rules”: Australian 16 March 1994 at 1.
56 For a tax on consumption itself see Dickenson’s Arcade Pty Ltd v Tasmania (1974) 130 CLR 177.
57 See D J Collins writing in the Australian Tax Research Foundation, State Taxation: Assessing the NSW Tax Task Force Report (Conference Series No 9, 1989) at 10; Hematite Petroleum v Victoria (1982) 151 CLR 599 at 617-618 per Gibbs CJ and at 639 per Murphy J; and note also Capital Duplicators [No 2] (1993) 178 CLR 561 at 605-606 per Dawson J.
58 (1993) 178 CLR 561 at 559 Ibid at 591.
60 (1960) 104 CLR 529 at 576.
61 See the judgment of Toohey and Gaudron JJ in Capital Duplicators [No 2] (1993) 178 CLR 561 at 628: “There are of course judgments in this Court which have attributed particular qualities or characteristics to certain commodities, alcohol and tobacco in particular. The characteristics are said to invoke the need for their regulation, with the consequence that those commodities do not in any event fall within the operation of excise. There are, we suggest, considerable difficulties in that approach, particularly if a distinction is to be made on the basis of their harmfulness.”
62 (1993) 178 CLR 561 at 593.
63 (1977) 136 CLR 475.
64 (1974) 130 CLR 177.
65 (1993) 178 CLR 561 at 593.
66 Ibid at 596-597.
67 (1988) 165 CLR 462 at 467.
68 (1980) 145 CLR 532 at 568-9.
69 See Roberts v Business and Property Ltd (1934) SR (NSW) 483 at 487. In Dennis Hotels (1960)104 CLR 529 at 576-577, Taylor J did say that the value of licensed premises increased as a result of obtaining the licence. But he was not arguing that this amounted to requitement. After all,the increase in value results from the existence of the licence itself. If this were requitement, all licence fees could be said to be requited by the licences obtained in return for them.
70 (1966) 120 CLR 572.
71 (1989) 167 CLR 399.
72 Ibid at 500.
73 (1988)165 CLR 462 at 467.
74 (1989)168 CLR 314.
75 (1989)167 CLR 399 at 460 (emphasis added).
76 Northern Suburbs General Cemetery Reserve Trust v Commonwealth of Australia (1993) 112 ALR 87.
77 See, for example, R Musgrave and Musgrave p above n 11 at 6.68 69.
78 (1989) 167 CLR 437 at 500.
79 (1993) 178 CLR 561 at 593.
80 (1989) 167 CLR 437 at 500, quoted in Capital Duplicators [No 2] (1993) 178 CLR 561 at 593.
81 (1989) 167 CLR 437 at 461-462.
82 Capital Duplicators Pty Ltd v ACT [No 1 ] (1992) 177 CLR 248 at 278.
83 A direct tax is one borne by the person on whom it is imposed. (That is, its legal incidence coincides with its economic incidence). An indirect taxis one intended to be passed on to others. An excise is described as an indirect tax because it is assumed that it will be passed on to those who purchase the goods at points in the chain of distribution subsequent to the imposition of the tax (ultimately, the consumers).
84 (1989) 167 CLR 437 at 462.
85 (1993) 178 CLR 561 at 583.
86 (1964) 111 CLR 353 at 365.
87 (1983) 151 CLR 599 at 632.
88 The size of the tax faced by domestic wholesalers was the difference between the “distributor price” and the “producer price”.
89 Peterswald v Bartley (1904) 1 CLR 497.
90 One objection to this argument is that the existence of a ceiling is not, in fact, inconsistent with the scheme leading to higher domestic prices in Western Australia. Firstly, Western Australia has a peculiarly large domestic surplus of lamb and so one might ordinarily expect the domestic market price there to be lower than that in the east. Even were that not so, eastern State producers would face extra costs in terms of freight and market entry. These costs would present a buffer into which domestic lamb prices could be moved with relative impunity.
91 R Musgrave and P Musgrave, above n 11 at 237.
92 (1904) 1 CLR 497 at 509.
93 See Dennis Hotels, (1960) 104 CLR 529 at 554 per Fullagar J, cited in the judgment of Dawson J in Capital Duplicators [No 2] (1993) 178 CLR 561 at 616.
94 See Dawson J’s minority judgment in Capital Duplicators [No 2] (1993) 178 CLR 561 at 602 and 610, and the other judgments cited by him there, including Dennis Hotels (1960) 104 CLR 529 at 553-554 per Fullagar J and Philip Morris (1989) 167 CLR 437 at 445 per Mason CJ and Deane J and at 470-471 per Dawson J.
95 (1979) 79 ATC 4352.
96 Logan Downs Pty Ltd v Queensland (1977) 137 CLR 59 at 84 per Murphy J; Gosford Meats Pty Ltd v NSW (1985) 155 CLR 368 at 416 per Dawson J; G Pearson and G Lehmann, “Are State Payroll Taxes Unconstitutional?” (1990) 24 Taxation in Australia 864.
97 Commonwealth Grants Commission, Commonwealth Grants Commission Report on General Grant Relativities 1993 Appendix G.