Australian Financial Review http://www.afr.com.au/content/990611/news/news1.html June 11, 1999 Government Solicitor queries GST legislation By Paul Cleary The spectre of a High Court challenge to the GST has been raised in confidential legal advice from the Australian Government Solicitor, which says the validity of the proposed tax is contingent upon "a more generous approach" in the court's interpretation of the Australian Constitution. The Australian Financial Review has obtained a copy of the Government's highly confidential legal opinion on the GST bills, which it refused to table in the Senate when demands were made by Labor and the Australian Democrats in April this year. In its advice to the Federal Treasurer, Mr Peter Costello, the AGS said in a one-sentence summary that "it does" conform with the Constitution. However, the detailed discussion revealed that this was premised on the High Court not adopting a narrow interpretation of section 55 of the Constitution. The High Court ruled against the Commonwealth on section 55 in the 1992 Mutual Pools case in the early 1990s. The AGS noted that this judgement had been criticised as "overly legalistic", but it did not dismiss a challenge. It concluded in regard to the court's most recent interpretation: "Be that as it may, the court in the present matter would, we think, adopt a more generous approach in determining whether the General Imposition Bill deals with more than one subject of taxation only." An associate professor at Melbourne University, Mr Geoff Lindell, who lectures in constitutional law, said he believed there could be a serious constitutional problem in the way the GST bills were designed. "The imposition in the same act of a tax on goods and services raises a serious question under section 55 which could lead to a High Court challenge." A successful challenge would not terminate the right of the Federal Government to impose a GST, but it would be forced to redesign the GST bills so that they are in accord with section 55. The Government would be required to go back to Parliament, where it could face a more hostile Senate after the GST's introduction. The Government could face this dilemma because section 55 says an act for taxation can have only one "subject", whereas the GST will be applied to goods, services, property, financial services and intellectual property and the like. The Government has defined the items taxable under the GST as "supply", which will be taxed under a single general imposition bill. It is possible the High Court could determine, as it did in the Mutual Pools case, that the GST has more than one subject and is therefore invalid under the Constitution. The AGS's legal advice appears to be based almost on wishful thinking that this will not happen again. The briefing to the Treasurer says the High Court has declined to give the expression "one subject of taxation" in section 55 a narrow or inflexible application. In Mutual Pools, the High Court found that sales tax was invalid because it was a tax on land and goods. The Tasmanian independent, Senator Brian Harradine, raised the constitutional validity of the GST and the Mutual Pools case in April this year. The Senate demanded that the Government table its legal advice, which might not have existed at the time. When asked if the advice would be made available before the Senate votes, the Treasurer's office would say only that the Government's legal advice confirmed the GST validity. Senator Harradine this week put further questions on this issue to the Senate economics legislation committee. He asked the Government to give details of its legal advice on the GST. c This material is subject to copyright and any unauthorised use, copying or mirroring is prohibited. ************************************************************************* This posting is provided to the individual members of this group without permission from the copyright owner for purposes of criticism, comment, scholarship and research under the "fair use" provisions of the Federal copyright laws and it may not be distributed further without permission of the copyright owner, except for "fair use." -- Leftlink - Australia's Broad Left Mailing List mailto:[EMAIL PROTECTED] http://www.alexia.net.au/~www/mhutton/index.html Sponsored by Melbourne's New International Bookshop Subscribe: mailto:[EMAIL PROTECTED]?Body=subscribe%20leftlink Unsubscribe: mailto:[EMAIL PROTECTED]?Body=unsubscribe%20leftlink
