Gavin R. Putland,  BE PhD

Friday, December 21, 2012 (Comment)

Does the GST breach Section 55 of the Constitution?

Under s.90 of the Constitution, only the Federal Parliament can impose duties of customs or excise...

In Ha v. NSW (1997), the High Court held by a 4-3 majority that an excise is "an inland tax on a step in production, manufacture, sale or distribution of goods"... The minority preferred a narrower definition, arguing that the purpose of s.90 was to "prevent impairment by the States of the common external tariff," so that "A State tax which fell selectively upon goods manufactured or produced in that State would be an excise duty..."

... On importation of goods, the GST is a duty of customs. On all other purchases of goods, except perhaps retail purchases (see below), it is a duty of excise according to the majority definition. On services and property, it is neither. None of this offends s.90, because the GST is a Federal tax. But a problem arises under s.55, which says:

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.

Laws imposing taxation, except laws imposing duties of customs or of excise, shall deal with one subject of taxation only; but 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.

On account of s.55, the assessment of the GST is in a separate act from the imposition, and the imposition is split into three acts: a customs-imposition act, an excise-imposition act, and a general-imposition act purporting to impose all aspects of the GST that are not customs or excise. But if the general-imposition act is to comply with s.55, all aspects of the GST other than customs and excise must be a single "subject of taxation". That's a big call for the following reasons...

Read the full article at Prosper Australia.

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