Opinion Number. 411



Key Legislation

CONSTITUTION, ss. 7, 12, 13, 28. 32, 51, 51 (ii), (xxxi), (xxxix), 53, 55. 99. 114 : CUSTOMS ACT 1901-1910, s. 161 : LAND TAX ACT 1910. s. 2 : LAND TAX ASSESSMENT ACT 1910, ss. 10. 11. 13. 17. 30. 38. 39. 40, 41. 48. 63. 66. 69, 70. 71 : THE MEETING OF PARLIAMENT ACT 1797 (IMP.), s. 3 : DEMISE OF THE CROWN ACT 1901 (IMP.)



Grounds of invalidity that may be raised

  1. That the Acts(2) are not in substance taxing Acts.
  2. That the Commonwealth has no power to tax land.
  3. That there is no power to exempt holdings below a certain value, and tax holdings above that value.
  4. That there is no power to impose graduated taxation.
  5. That there is no power to discriminate between residents and absentees.
  6. That there is no power to discriminate between joint owners and individuals.
  7. That there is no power to discriminate between companies and individuals.
  8. That the Parliament of 1907–1910 was not a Parliament.
  9. That the Land Tax Act 1910 was passed before the Land Tax Assessment Act 1910.
  10. That certain provisions of the Land Tax Assessment Act 1910 are ultra vires and not severable.
  11. That the Acts deal with more than one subject of taxation (Constitution, section 55).
  12. That the Acts discriminate between States and parts of States.
  13. That the Acts purport to tax State property.
  1. Are these Acts an exercise of the taxing power?
  2. Presumably the chief contention of the plaintiff will be that the Acts come within the principle of/?, v. Barger 6 C.L.R. 41, as being in substance not an exercise of the taxing power, but an attempt to directly regulate land tenure and settlement, a matter not included in Commonwealth powers of legislation, and therefore reserved to the States.

    It is therefore necessary to consider fully the principle of the decision in Barger's Case, and to distinguish it from this case. 'The primary meaning of "taxation" is raising money for the purposes of government by means of contributions from individual persons': R. v. Barger, at p. 68.

    The Court will be guided by the substance, not the form: R. v. Barger, at p. 65. See also: Peterswald v. Bartley 1 C.L.R. 497, at 511; Guy v. Baltimore 100 U.S. 434, at 443; Attorney–General for Quebec v. Queen Insurance Company 3 App. Cas. 1090 (The Provinces have power to legislate in respect of licences for the purpose of raising revenue. The Province of Quebec passed a so–called Licence Act, which purported to require assurers to be licensed, but the effect of which was merely to make unstamped policies etc. void, the provision as to a licence being nugatory. Held, that it was in substance a Stamp Act, not a Licence Act, and was ultra vires the Province); Russell v. The Queen 7 App. Cas. 829 (The Canada Temperance Act 1878 is intra vires the Dominion–and does not encroach on the exclusive provincial power 'property and civil rights'. It deals primarily with public order and safety, not with property and civil rights, and its incidental interference with the latter does not alter its character. 'The true nature and character of the legislation in the particular instance under discussion must always be determined, in order to ascertain the class of subject to which it really belongs').

    The fact that a tax indirectly effects something which the Commonwealth has no power to directly effect is irrelevant: R. v. Barger, at pp. 66–7; Russell v. The Queen, at p. 839; McCray v. U.S. 195 U.S. 27, at 59 (excise on adulterated goods held valid, though so heavy as to be prohibitive of adulteration).

    Motive of legislature, and ultimate end aimed at, are irrelevant: R. v. Barger, at p. 67; McCray \. U.S., at p. 56.

    Expediency is irrelevant: R. v. Barger, at p. 64; McCray v. U.S., at p. 60.

    Effect is irrelevant: McCray v. U.S., at p. 63.

    But the substance of the legislation–the purpose of the Act, apparent on its face, is material: R. v. Barger, at p. 75 (in that case, it was found that the purpose of the Act was not to raise revenue, but to regulate directly the conditions of labour); McCray v. L/.S., at p. 59.

    Power to tax is plenary, within the ambit of the power–and having regard to any express or implied limits which circumscribe the ambit of the power: R. v. Barger, at p. 66.

    Power to tax involves power to select subjects of taxation: R. v. Barger, at p. 68; oleomargarine cases–In re Kollock 165 U.S. 526; Dougherty v. U.S. 108 Fed. Rep. 56; McCray v. U.S.–cited by Isaacs J., at pp. 88–94.

    Under a unitary constitution, the power of selection and differentiation is absolute; but under a federal constitution, it is subject to the limitation that the mode of differen–tiation must not be one which is forbidden, impliedly or expressly by the constitution: R. v. Barger, at pp. 64,69.

    Taxation power cannot be exercised so as to operate as a direct regulation of mat–ters reserved to the States: R. v. Barger, at pp. 72,76.

    The Excise Tariff 1906 operates as a direct interference with the conditions to be observed in the industry, and is not in substance an exercise of the taxation power: R. v. Barger, at pp. 72, 75.

    Barger's Case distinguished

    In Burger's Case, the Court held that, looking at the Act itself, it could be seen that what purported to be a tax was in substance a penalty on manufacturers for not complying with certain conditions in the employment of labour, and so was a direct regulation of conditions of labour–a matter by implication reserved to the States except so far as it might be included in some express Commonwealth power.

    But the distinction between direct regulation and indirect effect was clearly made (Barger's Case, at pp. 67, 69–70, 73); and it was pointed out that indirect effect, even though it might in effect be prohibitive, was irrelevant to the validity of the exercise of power.

    In this case, the tax is clearly a real tax, and not a direct regulation of any matter exclusively reserved to the States.

    The fact that the rate of taxation rises as the value of the estate increases is not a di–rect regulation of the amount of land which a person may own. The fact that it may in–directly affect the size of holdings–even though it may in effect prohibit the holding of land above a certain value–is irrelevant; just as the fact that a heavy excise duty may in effect prohibit the manufacture of an article is irrelevant.

    If, as is confidently submitted, the power to tax allows graduated taxation, the steepness of the graduation is obviously immaterial.

    It is submitted that there is nothing whatever in the selection of the subjects of tax–ation, or in the differentiation between different classes of owners and different classes of holdings, which brings the matter within the principle of R. v. Barger.

    Motive or effect

    It has been seen that the motive of the legislature, and the effect of the legislation, are irrelevant. If this is essentially a land tax, the fact that the legislature may have intended, or that the effect may be, to 'burst up large estates' does not affect its validity (see Harrison Moore, Commonwealth of Australia, 2nd edn, p. 381).

    The legislature is entitled to consider the social and economic effects of any scheme of taxation, and to select that scheme of raising revenue which will, incidentally, pro–duce the effects which it desires. The power is to make laws 'for the peace, order, and good government of the Commonwealth with respect to . . . Taxation'. The fact that some of those effects relate to matters which the Commonwealth cannot directly regulate is immaterial, so long as the Commonwealth legislation does not amount to di–rect regulation under the guise of taxation.

    The Commonwealth has no power to regulate manufacture; but it may impose cus–toms and excise tariffs which may affect manufacture either favourably or unfavourably–to the extent of either preventing Australian manufacture altogether, or giving it such effective protection as to destroy outside competition (see Harrison Moore, p. 381; American Law Review, Vol. 27, pp. 33, 95). And so with every con–ceivable kind of taxation.

    Limitation of the taxing power

    The taxing power (like other Federal powers) has no limitations other than those expressed or necessarily implied in the Constitution itself: R. v. Barger, at p. 71 etc.; Gibbons v. Ogden 9 Wheat. 1, at 196; License Tax Cases 5 Wall. 462, at 471; Pacific Insurance Company v. Soule 7 Wall. 433, at 443; Austin v. the Aldermen 7 Wall. 694, at 699; Knowlton v. Moore 178 U.S. 41, at 58.

    The express limitations are the following:

    Section 51 (ii) (Taxation): 'but so as not to discriminate between States or parts of States';

    Section 99: 'The Commonwealth shall not, by any law of . . . revenue, give preference to one State or any part thereof over another State or any part thereof;

    Section 114:'. . . nor shall the Commonwealth impose any tax on property of any kind belonging to a State'.

    The only implied limitations for which there is any judicial authority are:

    1. The rule laid down in the Railway Servants Case(3) 4 C.L.R. 488 (the converse of the rule in D'Emden v. Pedder 1 C.L.R. 91) that when the Commonwealth attempts to give to its legislative or executive authority an operation, which, if valid, would fet–ter, control, or interfere with the free exercise of the legislative or executive power of a State, the attempt, unless expressly authorised by the Constitution, is to that extent invalid and inoperative.
    2. The rule laid down in R. v. Barger, Attorney–General for New South Wales v. Brewery Employees Union 6 C.L.R. 469 and Huddart, Parker & Co. Proprietary Ltd v. Moorehead 8 C.L.R. 330 that, though the grant of power in respect of each subject–matter of Federal legislation is a separate and independent grant of power, yet the con–tent of each must be interpreted, not only with reference to other separate and indepen–dent grants, but also with reference to the reserve powers of the States.

    Submitted, that neither of these limitations is applicable to this case.

    As regards (1), it is submitted–

    1. that the Acts do not in any way fetter, control, or interfere with the free exercise of the legislative or executive power of the States;
    2. that, even if they do, they are expressly authorised by the Constitution, under the grant of power with respect to taxation.

    As regards (2), it may be pointed out that the reserve powers of the States are re–siduary only–and therefore do not include anything which comes within the ambit of an express power of the Commonwealth. This is explicitly recognised in the three cases cited in which the rule is laid down. For example, in Burger's Case, at p. 69, the Court says that 'regulation of the conditions of labour is . . . reserved to the States . . . except so far as it can be brought within one of the thirty–nine powers enumerated in sec. 51'. So in the Brewery Employees Case, at p. 503, Griffith C.J. says:

    . . . that the power to legislate as to internal trade and commerce is reserved to the State by the operation of sec. 107, to the exclusion of the Commonwealth, and this as fully and effectively as if sec. 51 (i) had contained negative words prohibiting the exercise of such powers by the Commonwealth Parliament, except only, in the words of Chase C.J., 'as a necessary and proper means for carrying into execution some other power expressly granted'.

    And in Huddart, Parker & Co. Proprietary Ltd v. Moorehead, at p. 352, Griffith C.J. again said that the power as to internal commerce was reserved to the States 'except so far as the exercise of that power by the Commonwealth is necessary for or incidental to the execution of some other power conferred on the Parliament'.

    In Barger's Case, the Court held that the taxation power did not extend to author–ise a direct regulation of conditions of labour by means of a penalty disguised as a tax. In the Brewery Employees Case, the Court found that the word 'trade marks', as to which the Commonwealth has power to legislate, was capable in itself of either a wider construction (which would comprise the workers' trade mark) or of a narrower con–struction (which would not); and they were led to the narrower construction by (inter alia) the reservation of internal trade to the States. In Huddart, Parker's Case, the Court found a similar ambiguity in the Federal power to make laws in respect of cor–porations, and were led by similar reasoning to the construction which invalidated sec–tions 5 and 8 of the Australian Industries Preservation Acts 1906–1907.

    In the present case, none of this reasoning applies. There is no 'direct regulation' of any matter reserved to the States; there is no ambiguity in the word 'Taxation'.

    Granted that the subject of land tenure and settlement is reserved to the States (except, of course, so far as it comes within some express power of the Commonwealth) a tax which is undoubtedly in substance an exercise of the taxing power is not invalid because it affects land tenure and settlement. See the express words of the Court on this precise point in R. v. Barger, the last paragraph of p. 66.

  3. Power to tax land
  4. The word 'Taxation', in section 51 (ii) of the Constitution, must include every source of taxation (see License Tax Cases, at p. 471). There is nothing in the word itself or in the rest of the Constitution to exclude a tax on land. All property is subject to taxation, real as well as personal.

    All taxes are taxes on persons. A tax on land is a tax on persons in respect of their land (cf. 5 C.L.R. 818(4), at pp. 829, 830).

    Land is recognised as a subject of taxation by all economists.

    In 1900, taxes on land were in existence in the United Kingdom and in several of the Australian States.

    The power of the United States Congress to impose taxation admittedly includes land taxation–though the express provision of the United States Constitution that 'di–rect taxes shall be apportioned among the several States according to their respective numbers' makes the imposition of a land tax, or of any other direct tax, a matter of great difficulty. See Pollock v. Farmers' Loan and Trust Company 157 U.S. 429, at 557, 559, 567, 568, 570, 571, 577, 579, etc.; and on rehearing, 158 U.S. 601,.at 625, 628,634, etc.

    The argument that a tax on land amounts to a regulation of matters reserved to the States has been dealt with under ground (1). It would, if valid, apply to every other kind of taxation. The reserved powers of the States are only those which are not in–cluded in the express powers of the Commonwealth; and once it is granted that these Acts are in substance an exercise of the taxation power of the Commonwealth, it fol–lows that they do not encroach on the residuary powers of the States.

  5. Exemptions:
  6. Graduation
  7. In modern systems of direct taxation, the exemption of property or income below a certain value, and a graduated scale of increase of the rate of taxation as the value in–creases, are common: e.g. estate duty in the United Kingdom (Finance Act 1894); land tax in New Zealand, South Australia, Tasmania, etc.; income tax and death duties in several of the States.

    The principles of exemption and graduation have an economic basis in the classical 'canon of taxation' that taxes ought to be apportioned to the ability of the taxpayer to bear them, and in the economic truth that the utility of a man's possessions, in relation to their value, decreases as the value increases–e.g. that a sovereign means more to a poor man than to a rich man.

    So the aim of modern taxation is, as far as possible, to exempt subsistence and to tax superfluity.

    There is no limitation of the taxing power, express or implied, which excludes these principles. Such a limitation would be extraordinary and unheard of, and would impose a limitation upon the revenue–raising power of the Commonwealth which would cripple its resources and might, in any emergency, threaten its very existence.

    The modern extension of governmental activity, and the growing scale of expen–diture for national safety, make it imperative that the State should have at its com–mand the power to tax most heavily those who are best able to pay.

    Once the principle of graduation is admitted, the scale of graduation is one with which the Courts have no concern; that is a question of policy and expediency, not of law.

    It is admitted, that the power of taxing the people and their property, is essential to the very existence of government, and may be legitimately exercised on the objects to which it is applicable, to the utmost extent to which the government may choose to carry it. The only security against the abuse of this power, is found in the structure of the government itself. In imposing a tax, the legislature acts upon its constituents. This is, in general, a sufficient security against erroneous and oppressive taxation, (per Marshall C.J., McCulloch v. Maryland 4 Wheat. 316, at 428.)

    [And see] License Tax Cases, at p. 471; Pacific Insurance Company v. Soule, at p. 443; Khowlton v. Moore; Austin v. the Aldermen, at p. 699; Veazie Bank v. Fenno 8 Wall. 533, at 548; Spencer v. Merchant 125 U.S. 345, at 355.

  8. Discrimination against absentees
  9. This is a well–known principle of discrimination in modern taxation. There is nothing in the Constitution to forbid it.

    The Federal power of taxation, and of selection of subjects of taxation and conse–quent discrimination or differentiation between classes of persons or things, is as com–plete under a federal constitution as under a unitary constitution, except only so far as a limitation is expressed or implied in the constitution itself:J?, v. Barger, at pp. 68–9, 71.

  10. Joint owners:
  11. Companies
  12. The same arguments apply as under heading (5).

  13. Demise of the Crown
  14. The contention that the demise of the Crown, before the return of the writs for the new Parliament, revived the old Parliament, is apparently founded on 37 Geo. Ill c. 127(5), section 3.

    The whole of that Act obviously applies only to the Parliament of the United King–dom. As regards section 3, the provisions that the old Parliament 'shall immediately convene and sit at Westminster', and shall continue for six months 'subject to be sooner prorogued or dissolved by the person to whom the Crown of this realm of Great Britain shall come', make that application clear. Colonial legislatures do not sit at Westmin–ster, and are not prorogued or dissolved by the King.

    The reason for the statute was obviously to enable the Parliament of the United Kingdom to meet at once to deal with the emergency of the succession; the members of the new Parliament not yet having been ascertained by election, provision is made for the revival of the old Parliament.

    It is submitted that the demise of the Crown does not affect the Parliament of the Commonwealth. The writs for the election of members of the House of Representatives are issued by the Governor–General (Constitution, section 32), for the Senate by the Governors of the States (Constitution, section 12). See Demise of the Crown Act 1901, 1 Edw. VII c. 5. See also Devine v. Holloway 14 Moo.P.C. 290, where it was held that the authority of the Governor and Legislative Council of New South Wales, under 9 Geo. IV c. 83(6), was not determined by the demise of the Crown.

    The express provisions of the Constitution as to the term of office of members of both Houses, and as to the retirement of Senators in rotation, exclude the implication that the Parliament of the Commonwealth is dissolved by the death of the sovereign.

    It appears to have been assumed in Canada (prior to the Canadian Act of 1843(7)) that the demise of the Crown dissolved the legislature. See Bourinot, Parliamentary Procedure (2nd edn), p. 289. Devine v. Holloway is, however, a clear authority to the contrary.

    Granted that the Act 37 Geo. Ill c. 127 does not apply, the only possible conten–tions against the proper constitution of the Parliament of 1910 would seem to be–

    1. that the Senate was ipso facto dissolved by the demise of the Crown;
    2. that the writs issued by the Governor–General and the State Governors for the election of Senators and Members of the House of Representatives ceased to have effect on the death of King Edward. Both these contentions appear wholly unsupported by authority or reason.
  15. Order of passing the Acts
  16. The Land Tax Act 1910 was assented to by the Governor–General on 16 November 1910.

    The Land Tax Assessment Act 1910 was assented to on 17 November 1910. The plaintiff's contentions appear to be–

    1. that the provisions of the Tax Act by themselves are uncertain and unintelli–gible, and incapable of imposing taxation;
    2. that the provisions of the Tax Act, even read with the Assessment Act, are inconsistent, uncertain, and unintelligible, and incapable of imposing taxation;
    3. that, if the Acts are read together, the Assessment Act is a law imposing tax–ation, and deals with matters other than the imposition of taxation.

    It is submitted–

    1. that section 2 of the Tax Act refers to the Assessment Act passed practically contemporaneously;
    2. that, even if section 2 of the Tax Act could be given no meaning, sub–section (2) of section 10 of the Assessment Act incorporates the Tax Act by reference;
    3. that, even without incorporation, the statutes being in pari materia and part of the same system must be read and construed together;
    4. that the construction of the Acts is the same without incorporation as with it.

    'All Acts in pari materia are to be taken together, as if they were one law', per Lord

    Mansfield C.J., Earl of Ailesburyv. Pattison 1 Doug. 28, at 30(1778). In that case, a statute of Car. II was construed in the light of statutes of 5 Anne, 9 Anne and 3 Geo. I. And see R. v. Inhabitants of BownessA M. & S. 210 (1815), where a statute of Car. II was construed in the light of a statute of 9 & 10 Wm. Ill in pari materia. Where stat–utes are in pari materia, an incorporation clause is superfluous. 'That clause is fre–quently inserted in modern acts of parliament; but, if the two acts be in pari materia, the construction would be the same without it.', per Lord Campbell C.J., Waterlow v. Dobson 27 L.J.Q.B. 55 (1857).

    American cases

    . . . to ascertain the legislative will, courts not only search all the provisions of the particular statute, but may look out of that to others in pari materia, or of a similar pur–port, especially in respect to revenue laws, which, although made up of independent en–actments, are regarded as one system (Wood v. U.S. 16 Pet. [41 U.S.] 342, 363), in which the construction of any separate act may be aided by the examination of other parts and provisions which compose the system. (U.S. v. Collier 25 Fed. Cas. No. 14,833, p. 527, at 530(1855).)

    The correct rule of interpretation is, that if divers statutes relate to the same thing, they ought all to be taken into consideration in construing any one of them, and it is an established rule of law, that all acts in pari materia are to be taken together, as if they were one law. Doug., 30(8); 2 T.R., 387(9); 586(10); 4 Mau. & Sel., 210(11); . . . if it can be gathered from a subsequent statute in pari materia, what meaning the legislature attached to the words of a former statute, they will amount to a legislative declaration of its meaning, and will govern the construction of the first statute. Morris v. Mellin 6 Barn. & C. 454; 7 Id., 99(12);. (U.S. v. Freeman 3 How. 556, at 564 (1845).) In cases admitting of doubt the intention of the lawmaker is to be sought in the entire con–text of the section–statutes or series of statutes in pari materia. (Atkins v. The Disin–tegrating Company 18 Wall. 272, at 301 (1873).)

    See also Craies, Statute Law, pp. 126–191138; Maxwell, Interpretation of Statutes, pp. 48–52; Beal, Cardinal Rules, p. 165; Black, Construction of Statutes, pp. 204–212.

    It is submitted that in this case no difficulty of construction whatever arises. Owing to the provisions of the Constitution (section 53) defining the powers of the two Houses as to proposed laws imposing taxation, and (section 55) forbidding 'tacking', the impo–sition of the tax and the machinery for assessing and collecting the tax are provided in different measures. Two successive Acts are passed, forming together a complete scheme of taxation. The Tax Act refers to an Assessment Act; the Assessment Act re–fers to a Tax Act. There could not be a clearer case of two Acts which are to be read together. No material point turns on the order in which they were passed. The meaning of the contention that, when read together, the Acts are inconsistent and unintelligible is not apparent.

    The contention that, if the Acts are read together, the Assessment Act becomes an Act imposing taxation, within the meaning of section 55 of the Constitution requires a consideration of the meaning and objects of section 55. It is clear, not only from its terms, but from its place in the Constitution and from its history, that its object is to prevent 'tacking'–and thus to prevent the limitation on the Senate's powers with re–gard to tax bills being taken advantage of by the other House–in other words, to allow the Senate its right of 'independent vote' with regard to each tax. The section must be interpreted in the light of recognised parliamentary usage and procedure. See Stephens v. Abrahams (No. 2) 29 V.L.R. 229; R. v. Barger, at pp. 77–8, 82,105–191134.

    Although the Acts are, as a matter of construction, to be read as one, they are as a matter of fact two Acts–one which imposes the taxation and fixes its rate; and one which interprets, defines, denominates, and provides machinery for the assessment and collection of the tax.

    Submitted, that Stephens v. Abrahams (No. 2) was rightly decided, and is indis–tinguishable in principle. The plaintiff will attempt to distinguish it on the ground that in that case the Customs Tariff 1902 was passed after the Customs Act 1901. On that reasoning, an amendment of the Customs Act, which in any way involved a difference in the assessment or calculation of duties, would be an Act imposing taxation, and the Senate would have no power to amend it. Thus, the whole object of section 55 would be absolutely defeated, and a long Customs Bill, containing a number of clauses affecting in different ways the computation of duties under an existing Customs Tariff would be immune from amendment by the Senate. The absurdity of the result, which is contrary to the whole intention of the section of the Constitution, is conclusive against the reasoning which produces it.

    Submitted, that the order of passing the Acts is absolutely immaterial. Whatever technical refinements may be urged, it is clear that in a parliamentary and consti–tutional sense the Assessment Act is not an Act imposing taxation.

  17. Particular sections
  18. The sections specifically contended to be invalid are sections 11, 30, 38, 39, 40, 41, 48,63,66,69,70 and 71.

    Section 11

    The point here is presumably the differentiation against absentees. This has already been dealt with.

    Section 30

    The argument against this section will be that it is a law relating to contracts, and not to taxation. That the section relates to contracts is, of course, no objection, if it re–lates primarily or substantially to taxation; if it is reasonably incidental to the subject of taxation.

    The Parliament has power to make laws 'for the peace, order, and good government of the Commonwealth with respect to . . . Taxation'. It is concerned, not only with the amount of revenue which a tax produces, but also with its incidence on the people. Economic and political literature on taxation deals largely with matters of incidence–the extent to which taxes imposed on one class of persons can be passed on to another–and the extent to which, and the means by which, such passing on may be prevented.

    The Parliament has imposed a certain tax on lessors–and incidentally it declares that a contract between lessor and lessee, which purports to bind the lessee to pay the lessor's tax, shall be void. This is not only incidental to taxation, and so within section 51 (xxxix); it directly relates to taxation, and so is within section 51 (ii) even without recourse to paragraph (xxxix).

    It may be argued that this principle, if admitted, would go to extraordinary length; would enable the Commonwealth to prevent the passing on of customs and excise duties by fixing sale prices and wages of factory employees, etc., in the case of dutiable goods–i.e. to legislate directly and fully for the 'new protection'. The answer to this is that there is a well–known distinction between direct taxes and indirect taxes. A land tax is a direct tax; customs and excise duties are indirect taxes.

    A direct tax is one which is demanded from the very persons who it is intended or desired should pay it. Indirect taxes are those which are demanded from one person in the expec–tation and intention that he shall indemnify himself at the expense of another; such are the excise or customs. (John Stuart Mill; adopted by the Privy Council in Bank of Toronto v. Lambe 12 App. Cas. 575 and Brewers and Maltsters Association of Ontario v. Attorney–General for Ontario [1897] A.C. 231.)

    The distinction is material to the question whether a law dealing with the incidence of taxation is really incidental to the exercise of the taxing power. In this case it is submitted that it undoubtedly is so.

    Section 30 does not affect any contract except so far as it purports to alter the inci–dence of taxation. This is not a case in which it can be contended that the Parliament under the disguise of a tax is attempting to regulate a matter reserved to the States. Assuming the section to be ultra vires, it is submitted that it is clearly severable.

    For the principles adopted by the High Court in deciding whether an ultra vires en–actment is severable, see Railway Servants Case, at p. 546; Owners of S.S. Kalibia v. Wilson, S.M. Herald 19 December 1910.(13);

    If section 30 is struck out, the tax imposed remains the same; only the incidence is affected. But if the incidence has nothing to do with the taxation, then the omission of the section does not affect the taxing law; it does not make the law a substantially different one. The very argument for the invalidity of the section defeats the argument for its inseverability. If the section is irrelevant to the Act, it must be severable from it.

    Sections 38, 39, 40: Joint owners and companies

    These have already been dealt with.

    Section 41: Insurance societies

    It is not apparent what special ground of invalidity is relied on as regards this sec–tion. Probably it is meant that it falls with section 39.

    Section 48: Acquisition of land

    The object of this section is to prevent the undervaluation of land for taxation pur–poses. The section is directly appappropriate to that object; it provides that in case of undervaluation to a certain extent, the owner may be taken at his word, and be bought out at his own value plus ten per cent for compulsory dispossession. The effect must be to discourage excessive undervaluation. The end is legitimate; the means are appropriate, and the Parliament has the right to employ any means which are appropriate to a legitimate end. This proposition is established elaborately and convincingly by Marshall C.J., in McCulloch v. Maryland, at pp. 407–424. It is summed up at p. 421:

    Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.

    It is immaterial that the acquisition may not come within the scope of the separate and independent power contained in section 51 (xxxi) to make laws in respect of 'the acquisition o f property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws'. Section 48 rests, not on that power, but on the taxation power. For a somewhat similar provision in case of undervaluation of goods at the Customs, see Customs A c t 1901–1910, section 161; and cf. 8 & 9 Vic. c. 86 [Imp.], section 22; 16 & 17 Vic. c. 107 [Imp.], section 57.

    But, assuming the section to be invalid, it is clearly severable (see cases as to severability cited above). It does not affect the scheme of taxation, or the substance of
    the Act; it merely provides an additional remedy against undervaluation.

    Section 63

    The arguments in relation to section 30 apply equally to this section.

    Section 66

    Until the plaintiff's argument has been heard, it is difficult to see what grounds can be urged against the validity of this section. It clearly relates to taxation; and it does
    not appear to contravene any provision of the Constitution.

    Section 60,70,71 Presumably the contention will be that forfeiture is unconstitutional. The arguments as to section 48 apply equally to this case—both as to validity and as to

  19. More than one subject o f taxation
  20. It is contended that the Acts violate section 55 (2) of the Constitution, as dealing with more than one subject o f taxation.

    They deal with only one subject o f taxation— land.

    It is submitted that the object of the section was to prevent different kinds of taxation being dealt with in one Act, so that the Senate should have an 'independent vote' on each kind of tax. But it was never meant that one scheme of taxation of one kind should have to be brought up in different bills in respect of each differentiation and each interest affected. For example, an income tax— providing for exemption, graduation, additional rates for absentees, differentiation between incomes from personal exertion and incomes from property, etc.—would deal with 'one subject of taxation'. To hold otherwise would be to hold that this provision introduced an entirely novel form of legislation, whereas it has reference merely to a recognised abuse of parliamentary procedure— the device of 'tacking' unrelated measures together.

  21. Discrimination between S tates or parts o f States
  22. It is not clear what provision of the Act the plaintiff means to rely on in support of this contention. But it is submitted that there is no discrimination. For decisions on this section, see Colonial Sugar Refining Company Limited v. Irving 1903 Q.S.R. 261, at pp. 275–7, 281 and on appeal, [1906] A.C. 360, at pp. 367–8; R. v. Barger, at pp. 7 0 –7 1 ,7 8 –8 0 , 105–11 1, 130–133.

    A discrimination, to invalidate an Act, must appear on the face of the Act; it cannot depend upon extrinsic facts—nor upon the fact that, owing to the operation of State laws, the incidence o f taxation may be unequal in the different States: per Griffith C.J., Colonial Sugar Refining Company Limited v. Irving, at p. 277; R. v. Barger, at pp. 70–71.

    The facts that, owing to the differences in the Crown Lands Acts of the several States, the tax may bear more hardly on holders of Crown lands in one State than in another; that the incidence may be considered unfair as between urban and rural land, or pastoral and agricultural land, or improved and unimproved land, or land in different Land Districts or held under different tenure— are all irrelevant. The Acts prescribe rules which do not discriminate in any way between States or localities, but are uniformly applicable throughout the Commonwealth, and apply in the same way to the same kind of estate or interest wherever found.

    Note: 'States or parts of States' in section 51 (ii) is synonymous with 'parts of the Commonwealth', or 'different localities within the Commonwealth': R. v. Barger, at p. 78. But, per Isaacs J., dissentiente, 'discriminate between parts of States' refers to discrimination between localities considered as parts o f States, and may or may not be restricted to discriminations between parts of different States. Higgins J. appears to agree with Isaacs J. (p. 132).

    It is also contended by the plaintiff that the Assessment Act gives power to the Commissioner under section 17, and to the Board mentioned in section 66 to discriminate between States and parts of States. It is not enough, however, to show that an Act may possibly be administered in such a way as to discriminate. If that were the case, every power to assess lands throughout the Commonwealth would necessarily be a discrimination— because it might be exercised partially.

    To be invalid, the Act must either itself discriminate, or contemplate and intend discrimination. See R. v. Barger, at pp. 80,132.

    The power in section 17 for the Commissioner to make use of State valuations has no taint of discrimination whatever. The Commissioner is given the power to base his valuations upon any material whatever; but without an express power, he might have had no access to State valuations. Valuations by local authorities are presumably fair valuations, and there is no ground for assuming the existence o f any discrimination between localities. But in any case, the Act gives an appeal from any assessment; so that, if there is anything amiss with the valuation, it can be corrected.

    As to section 66, the Act states definitely the ground of remission of taxation—bankruptcy or serious losses. There is no suggestion of local discrimination. If it is alleged that the Board might so misconduct itself as to grant a remission, not on the grounds that*the taxpayer was insolvent but on the ground that he lived in a certain locality— the answer is that that would be a violation of the Act, not a result of it. That a violation of the Act may produce a discrimination is not a ground o f invalidity.

  23. Tax on property of States
  24. The plaintiff contends that the Acts purport to impose a tax on property belonging to the States, arid are invalid. It is difficult to conceive what provision of the Acts this can refer to. Section 13 of the Assessment Act expressly exempts 'all land owned by a State, or by a municipal, local, or other public authority of a State'.

    If the meaning of the contention is that private interests in Crown land are taxed—the answer is that the tax is not upon the interest of the State, but the estate or interest of the holder from the State.

    If the argument is that all land is held from the State, and is therefore the property of the State, and i.e. not taxable by the Commonwealth—so that the Commonwealth has no power to tax lands— it is obviously mere juggling with words. 'Land', within the meaning o f the Act, is land as the subject of ownership, proprietary rights in land. The proprietary rights of the Crown, as represented by the State, are expressly excluded from taxation.

[Vol. 8, p. 346]

(1) Osborne v. The Commonwealth 12C.L.R. 321.

(2) Land Tax Act 1910 and Land Tax Assessment Act 1910.

(3) The Federated Amalgamated Government Railway and Tramway Service Association v. The New South Wales Railway Traffic Employees Association.

(4) Attorney–General o f New South Wales v. Collector o f Customs for New South Wales.

(5) The Meeting o f Parliament Act 1797 (Imp.).

(6) The Australian Courts Act 1828 (Imp.).

(7) 7 Vic. c. 3, section 1, from time to time re–enacted in consolidations and now appearing in Senate and House o f Commons Act (Can.), R.S.C. 1970,c. S–8, sections 2 and 3.

(8) Earl o f Ailesbury v. Pattison.

(9) R. v. Commissioners o f Excise.

(10) R.v. Mason.

(11) R. v. Inhabitants o f Bowness.

(12) Sandiman v. Breach 7B. & C.99.

(13) Subsequently reported in 11 C.L.R. 689.