TAXING STATUTES ARE TAXING STATUTES: THE INTERPRETATION OF REVENUE LEGISLATION
| Published date | 01 July 1978 |
| Date | 01 July 1978 |
| DOI | http://doi.org/10.1111/j.1468-2230.1978.tb00808.x |
| Author | David W. Williams |
TAXING STATUTES ARE TAXING STATUTES
:
THE INTERPRETATION
OF
REVENUE
LEGISLATION
PARLIAMENT, in taking for its own use from the monarch the sole
power to legislate for the assessment and collection of taxes, did
not take control of the whole law-creating process in revenue
matters. The judges, acting as Parliament’s oracles, have
a
wide
discretion in such areas of melancholy obscurity as
tax
statutes.’
Any consistent line adopted
in
interpreting and applying revenue
laws will have widespread effects. Even the “cold impartiality of
a neutral judge” will affect the way taxes are administered and
controlled.
But judicial attitudes cannot be formed in isolation from the
legislative process. Nor does the drafting style and approach of
enactments ignore the judges’ likely attitude to the text. In this
article we discuss the legislative process applied to
a
Finance
Bill, the judicial attitudes to tax legislation, and then techniques
adopted in recent revenue legislation in order to explore the role
of
the judiciary in performing its interpretative functions and in
supervising revenue administration.
1.
THE
LEGISLATIVE
BACKGROUND
Although the courts adhere formally to the traditional principle
that extrinsic materials, such as parliamentary proceedings on
a
Finance Bill, cannot be used to aid construction,2 judges have none-
theless shown on a number of occasions that they are keenly aware
of the particular problems and purposes
of
tax statutes.
For
the
treatment accorded Finance Bills differs from that given to other
public bills. It is appropriate to start by examining the dserences.
Procedure
by
resolution
Ways and means resolutions are of crucial importance to Finance
Bill procedure. Annual financial legislation is set in motion by
the Budget Statement and Financial Review by the Chancellor
of the Exchequer. This puts on record reasons for any major changes
or reforms. The statement is followed invariably by the tabling
of
Budget Resolutions. These resolutions, usually many and lengthy,
__
1
See generally Easson,
Cases
and
Marerials
in
Revenue
Law,
Chaps. 1, 21;
Farnsworth,
‘‘
The Income Tax Act 1842:
A
century of Judicial Interpretation
”
(1940)
58 L.Q.R. 314 (although despite the name there are n:, cases before 1880)
and
Income
Tux
Case Law
(1946); Flesch, “Tax Avoidance (1968) 21
Current
Legal Problems
215
;
Wheatcroft,
“
The Attitude of the Legislature and the Courts
to Tax Avoidance” (1955) 18
M.L.R.
209;
The Preparation
of
Legislation,
Cmnd.
6053, Chap.
XVII.
2
Assam
Railways
v.
Z.R.C.
119351 A.C.
445.
However, the Revenue have been
known to cite Parliamentary proceedings before the appeal commissioners.
404
July
19783
TAXING STATUTES ARE TAXING STATUTES
405
determine the scope and content of the forthcoming Finance
Bill. They are
a
"
necessary preliminary
"
as,
by Standing Orders,
all
clauses of
a
Finance
Bill
must be covered
in
the terms of
a
resolution. Although the discussion that takes place traditionally
on one of the resolutions is often wide-ranging, the scope of the
Bill
is
deiined. Any clause not covered by a resolution
is
out of
order and cannot be di~cussed.~ Similarly, the scope for any
amendment is also limited.
Further, by Standing Order
94
the resolutions, with the
exception of the one debated, are put fofithwith and without oppor-
tunity for amendments. On being passed, these resolutions have
immediate statutory effe~f,~ providing the legal basis for levying
taxes in accordance with Budget policy until the Finance Bill
receives the Royal Assent.
Thus, collectively, the resolutions provide
a
precise series of
statements defining or limiting the contents of the resulting Bill.
Indeed, the resolutions could, it is suggested, be used
as
an
aid
in interpreting the resulting Act should an appropriate ambiguity
arise.' Although this point has never been discussed in
a
court, the
resolutions, as
a
sort of prior subordinate legislation, are part of
the context of the Act.
Exclusive government initiative
The requirements of Standing Order
89
curb the scope for
amendment of a Finance Bill even further. The House cannot
proceed
on
any motion for ways and means unless it
is
recom-
mended from the Crown. Thus the government has exclusive
initiative in delimiting the scope of resolutions, and thus of the
Bill. Moreover, once tabled there are other limi'ts on amend-
ments. The guiding principle in determining the effect, and therefore
the validity, of an amendment is that the sign5cation
of
Royal
wishes
"
must be treated
as
laying down once for all (unless with-
drawn or agreed) not only the amount of the charge, but also its
objects, purposes, conditions and qualifications."
'
Throughout the
present century the initiative has implied
and
implies the exclusive
right to define tax incidence as well as quantity.8 The scope for
other amendments-except in the negative form
of
voting proposals
down O-is restricted severely.
The power of the House of Lords to amend
a
Finance Bill is
almost non-existent. The Commons regard it as
a
breach of their
3
Erskine May,
Parliamentary Practice,
pp.
683, 759;
S.O.
90.
4
Ibid.
p.
695.
5
s.
1.
Provisional
Collection
of Taxes Act 1968.
6
Rain1
v.
Pay Board
[1974] 3 All
E.R.
263 (concerning the Fair Wages
Resolu-
8
Ibid.
p.
696.
9
But see the treatment accorded
the
bills which became the Finance Acts 1974,
1975 and 1977 resulting from
"
hung
''
parliients.
The
same treatment
was,
at
the
time of writing, being given to the 1978
Finance
Bill.
tion)
seems
to be the
only
modern case discussing a Parliamentary resolution.
Erskine May,
op.
cit.
p. 692.
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