The previous thread on Tuesday’s Newspoll result took a turn to matters constitutional. What’s it all about? Beats the hell out of me. The important thing is that esteemed constitutional authority George Williams has put his two cents in, and anything he has to say deserves a better fate than delayed moderation and position 484 in a thread that should have been put out of its misery days ago. So here it is:
In answer to Fulvio’s question re State taxing powers, the Constitution was meant to secure the Statesâ€™ financial position and independence. At federation in 1901, it was the States and not the Commonwealth that levied income tax. However, the demands of two world wars and changes to the economy, as well as some canny manoeuvring by the Commonwealth, have left the States with no revenue from income taxation.
The High Court decisions in the Uniform Tax Cases of 1942 and 1957 upheld a Commonwealth takeover of the income tax system. Not only that, the decisions also gave a wide interpretation to the ability of the Commonwealth to attach conditions to money granted to the States. Section 96 of the Constitution allows the Commonwealth to make grants on â€œsuch terms and conditionsâ€ as it thinks fit.
The States today could levy income tax, but it would be in addition to federal tax and so it would mean taxing people twice. The Commonwealth could even insist that its share is collected first. As a result, the States have turned to new sources of taxation, such as on gambling. Hence the rise of casinos â€¦