The First Paragraph of Section 55
| Published date | 01 September 2005 |
| Author | P G Sharp |
| Date | 01 September 2005 |
| DOI | 10.22145/flr.33.3.7 |
| Subject Matter | Article |
THE FIRST PARAGRAPH OF SECTION 55
P G Sharp*
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.1
I INTRODUCTION
The Commonwealth's legislative power with respect to taxation is subject, among
other things, to the first paragraph of s 55 of the Constitution which prescribes that laws
imposing taxation must deal only with the imposition of taxation. The section is closely
linked with s 53 and must be understood in the context of the constitutional history in
the United Kingdom and Australia that preceded its drafting and enactment.2 Indeed,
the failure to appreciate this context is the reason why the section has, until recently,
been largely misconstrued.
Since federation, parliamentary drafters have adopted the practice of splitting tax
initiatives into separate Acts to avoid possible invalidity under s 55. As a result, the
Senate has enjoyed a broader power of amendment than it would otherwise have had
if tax provisions were enacted in a single Act. In Permanent Trustee Australia Limited v
Commissioner of State Revenue,3 the High Court rejected the literal construction of s 55
upon which the practice of splitting tax Bills has been justified. A reason for rejecting
the practice, not raised in that case, is that it is incongruous with the system of
responsible government embodied within the Constitution. This rationale also supports
the view, advanced later, that the expression 'laws imposing taxation' appearing in the
first paragraph of s 55 should not be limited to provisions that declare a tax to be
imposed, but should also include laws that specify the rate and incidence of taxation.
Parts one and two of this paper consider the parliamentary disputes over financial
powers that occurred in the United Kingdom and in the Australian colonies prior to
federation. Part three considers the financial powers of the Senate and, in particular,
the 'Compromise of 1891'. Part four considers the purpose of the first paragraph of s 55
and part five considers the parliamentary drafting practice with respect to tax
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* BA, LLB (Hons) (QUT); Associate to Justice I D F Callinan, High Court of Australia. The
views expressed in this paper and any errors contained therein are entirely my own. I wish
to thank the anonymous referee who provided helpful comments on an earlier draft of this
paper.
1 The first paragraph of s 55 of the Constitution.
2 Luton v Lessels (2002) 210 CLR 333, 365 [96] (Kirby J).
3 (2004) 79 ALJR 146 ('Permanent Trustee').
570 Federal Law Review Volume 33
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legislation. Part six examines the meaning of 'laws imposing taxation' and part seven
concludes.
II DISPUTES OVER FINANCIAL POWERS
A The United Kingdom Parliament
By the end of the nineteenth century, the House of Commons had monopolised fiscal
control within the United Kingdom Parliament. The 'privilege' of initiating and
amending financial legislation belonged to the Commons. It had been established by
parliamentary custom tracing back to the grants of feudal aid made by the tenants of
the Crown in the late thirteenth century.4
As the political strength of the Commons increased, and as its supply became more
financially important to the Crown, a practice developed whereby grants from the
Commons were made first in deliberation with and later subject to the assent of the
Lords.5 This practice was acknowledged by Henry IV in 1407 who stated that subsidies
were 'granted by the Commons and assented to by the Lords.'6
For nearly three centuries, no dispute arose over the financial powers of the
Houses. Although the Commons had claimed that the Lords could not amend Bills
imposing charges upon the people, the Lords made several alterations to money Bills7
during this period which were not objected to by the Commons.8 In 1671, however, the
Lords provoked the Commons by reducing the amount of an imposition on sugar. In
response, the Commons resolved that 'in all aids given to the King by the Commons,
the rate or tax ought not to be altered by the Lords.'9 A similar assertion was repeated
in a resolution on 3 July 1678:
That all aids and supplies, and aids to his Majesty in Parliament, are the sole gift of the
Commons; and all bills for the granting of any such aids and supplies ought to begin
with the Commons; and that it is the undoubted and sole right of the Commons to direct,
limit, and appoint in such bills the ends, purposes, considerations, conditions, limitations,
and qualifications of such grants, which ought not be changed or altered by the House of
Lords.10
Subsequently, the Lords were rendered unable to alter the amount of a tax or
charge upon the people including 'its duration, mode of assessment; or the persons
who pay, receive, manage, or control it; or the limits within which it is leviable.'11
Consequently, almost complete fiscal control became vested in the Commons.
In 1860, the Commons resolved to increase property tax and stamp duties and to
abolish duties on paper. The Lords assented to the Property Tax and the Stamp Duties
Bills but rejected the Paper Duties Repeal Bill. In protest, the Commons resolved that
the power of the Lords to reject taxation Bills:
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4 Sir William Anson, Law and Custom of the Constitution (4th ed, 1909) 28-9.
5 Ibid 269; Henry Hallam, The Constitutional History of England (1846) vol 2, 192.
6 Anson, above n 4, 269; Sir Thomas Erskine May, A Treatise on the Law, Privileges, Proceedings
and Usage of Parliament (10th ed, 1893) 554.
7 'Money Bills' is a collective reference to Bills that impose taxation or appropriate revenue.
8 Hallam, above n 5, 194.
9 May, above n 6, 541.
10 Ibid 542.
11 Ibid.
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