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should be granted.' The special reasons' which will satisfy the High Court must, of course, to a great extent be a matter of conjecture. But many conceivable cases as to the limits inter se' of the constitutional powers in question might depend upon principles of common application throughout the Empire, and upon which it is eminently desirable that there should be a uniform rule declared by a common authority. Again, a case in which the High Court is divided in opinion, or in which it disagrees with a previous decision of the Court, may furnish a special reason for certifying for an appeal to the Queen in Council."*

"The Commonwealth of Australia," p. 249.

CHAPTER XIII.

REVENUE.

In each Union of States one of the first concerns of those who are responsible for drafting the Act of Union is to secure to the Central Government an adequate revenue. In doing so, the difficulty has always been to secure the financial stability of the Governments of the several States whilst allotting sufficient revenue to the new Government that is set over them by the Constitution. Of all United States. the Union Constitutions, that of the United States deals with the question of revenue on the broadest lines and with the fewest safeguards to the financial position of the several States. SubSec. I, Sec. 8 of Article I. of the Constitution gives Congress power "to levy and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defence and general welfare of the United States," with the one limitation that "all duties, imposts and excises shall be uniform throughout the United States."* Thus "in the United States, revenue raised by Congress from customs and excise, or from any other source, is entirely at the disposal of the Federal Government, and the States are obliged to rely entirely on direct taxation to meet their own expenditure."†

Canada.

In Canada the respective powers of the Dominion and Provincial Legislatures to impose taxation for the raising of revenue are laid down by Sub-Sec. 3 of Sec. 91, and Sub-Secs. 2 and 9 of Sec. 92 of the British North America Act. Sub-Sec. 3 of Sec. 91 is one of the sub-sections detailing "for greater certainty, but not so as to restrict the generality of the foregoing terms of this section " the specific classes of subjects to which "the exclusive legislative authority of the Parliament of Canada extends." The subject enumerated in Sec. 3 is "the raising of money by any mode or system of taxation." Sub-Secs. 2 and 9 of Sec. 92, on the other hand, are two of the sub-sections enumerating the classes of subjects on which the Legislature in each Province may exclusively make laws. The subject enumerated in Sub-Sec. is: "Direct taxation within the Province in order to the raising of a revenue

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* Vide also Article I., Sec. X., Sub-sec. 2: No State shall, without the consent of Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws; and the net produce of all duties and imposts laid by any State on imports and exports shall be for the use of the treasury of the United States, and all such laws shall be subject to the revision and control of the Congress."

† Quick and Garran: “Annotated Const. Australian Comm.," p. 832.

for provincial purposes; and that enumerated in Sub-Sec. 9 is: "Shop, saloon, tavern, auctioneer, and other licences, in order to the raising of a revenue for provincial, local, or municipal purposes."

The apparent contradiction involved in the gift of exclusive legislative power to the Dominion and Provincial Legislatures respectively by these sub-sections was adduced as an illustration in the judgment in the case of Citizen Insurance Co. vs. Parsons, quoted above in the chapter on the distribution of legislative power. But it has also been the subject of decision in decided cases. Thus in the case of Dow vs. Black,* the Privy Council reversed the judgment of the Supreme Court of New Brunswick and held that an Act of the Legislature of that Province empowering the inhabitants of a parish in the Province to raise by local taxation a subsidy to advance the construction of a railway going beyond the frontier, already authorised by Statute, was within the power of the Provincial Legislature. In the judgment of Sir J. W. Colville, the following words were used:-t

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'Another question has been raised: whether there was power in the Provincial Legislature to pass an Act by which such an assessment as this could be imposed on the town of St. Stephen.

It has been argued that, whereas the 91st section reserves to the Parliament of Canada exclusive power of legislation in respect of, amongst other subjects, "the raising of money by any mode or system of taxation,' the only qualifications imposed on that general reservation are to be found in the 2nd and 9th sub-sections of Sec. 92. The latter has obviously no bearing on the present question. As to the former, it was contended that it authorises direct taxation only for the purpose of raising a revenue for general Provincial purposes, that is, taxation incident on the whole Province for the general purposes of the whole Province. Their Lordships see no reason for giving so limited a construction to this clause of the Statute. They think it must be taken to enable the Provincial Legislature, whenever it shall see fit, to impose direct taxation for a local purpose upon a particular locality within the Province. They conceive that Sub-Sec. 3 of Sec. 91 is to be reconciled with Sub-Sec. 2 of Sec. 92 by treating the former as empowering the supreme Legislature to raise revenue by any mode of taxation, whether direct or indirect; and the latter as confining the Provincial Legislature to direct taxation within the Province for Provincial purposes."

This judgment has been upheld, and its principle applied, in several subsequent cases. Thus, in what are known as the "Lambe cases," where "the Quebec Legislature had taxed every bank, insurance company and incorporated company. . . . in the Province of Quebec, banks paying a tax on the paid-up capital and an additional sum for each place of business, whilst insurance companies were taxed in a sum specified in the Act; the Judicial Committee [of the Privy Council] held that this Act was within the power of Sub-Sec. 2, Sec. 92, and was intra vires."§

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Confed. Law of Canada,” p. 67. 12 App. Cases, 575.

And vide the elaborate dis

§ Wheeler : 'Confed. Law of Canada," p. 68. cussion on Sub-Secs. 2 and 9 of Sec. 92 given by Wheeler at pages 113-122 and pages 126-224 respectively Vide also Lefroy : Legislative Power in Canada," on the whole question.

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Australia.

Customs and
Excise.

The Revenue Clauses of the Australian Constitution are of such an elaborate nature that-constituting as they do a experiment in the legislation of union-they demand detailed description, and offer, in the course of that description, ample opportunity of discussing the American and Canadian Constitutions wherever they have corresponding provisions. In the first place, then, the Australian Constitution follows that of Canada in establishing [Sec. 81] a Consolidated Revenue Fund. In Canada this is formed out of all the duties and revenues over which the States which are parties to the Union had the power of appropriation "except such portions thereof as are by this Act reserved to the respective Legislatures of the Provinces, or are raised by them in accordance with the special powers conferred on them by this Act" [Sec. 102, B.N.A. Act]. In Australia the Consolidated Revenue Fund consists of "all revenues or moneys raised or received by the Executive Government of the Commonwealth " [Sec. 81]. In both Canada and Australia the costs, charges, and expenses incidental to the collection, management and receipt of the Consolidated Revenue Fund form the first charge upon it; and in both, as in the United States, appropriation by Parliament is a necessary preliminary to the payment of any money from the Fund by the Treasury.

It is, however, in its dispositions for the collection and distribution of the revenue of the Commonwealth and the States that the Australian Constitution makes so daring an advance upon all prior Union Constitutions. Thus Sec. 86 gives "the collection and control of duties of customs and excise and the control of the payment of bounties" to the Commonwealth immediately upon its establishment; whilst Sec. 88 lays upon the Federal Parliament the duty of imposing uniform duties of customs within two years of that establishment; and upon the provisions of Sec. 88 being carried out, Sec. 90 comes into operation and makes the power of the Federal Parliament “to impose duties of customs and excise and to grant bounties on the production or export of goods" an exclusive power. That is to say, as Sec. 90 goes on to explain, that all laws of the several States imposing such duties or offering such bounties cease to have any effect, with the exception of grants of or agreements for bounties made before 30th June, 1898. To this exception Sec. 91 adds the further exceptions that:

"Nothing in this Constitution prohibits a State from granting any aid to or bounty on mining for gold, silver or other metals; nor from granting, with the consent of both Houses of the Parliament of the Commonwealth expressed by resolution, any aid to or bounty on the production or export of goods."

The effect of these provisions of the Australian Constitution is to place the whole revenue of the Commonwealth from customs and excise in the hands of the Federal Government. Duties of customs include all duties imposed by law on the importation or exportation of articles. As to the meaning of "duties of excise" in the Australian Constitution, Messrs. Quick and Garran point out [Ann. Const. Aust. Comm., p. 837] that in England:

"The list of Excise licences, which at first included only brewers, beerdealers, beer-retailers, distillers, spirit-dealers, spirit-retailers, tobacco and snuff manufacturers and dealers, wine-dealers and wine-retailers, was expanded by English usage until it embraced auctioneers, owners of armorial bearings dogs and game, gun-dealers, persons entitled to carry guns, hawkers, house-agents, patent medicine-sellers, owners of carriages, pawnbrokers, plate-dealers, refiners of gold and silver, refreshment-house-keepers, and carriers."

As far as Australia is concerned, however, they are of opinion that:

"The fundamental conception of the term [Excise] is that of a tax on articles produced or manufactured in the country. In the taxation of such articles of luxury as spirits, beer, tobacco and cigars, it has been the practice to place a certain duty on the importation of these articles and a corresponding or reduced duty on similar articles produced or manufactured in the country; and this is the sense in which Excise duties have been understood in the Australian Colonies, and in which the expression was intended to be used in the Constitution of the Commonwealth."

The point, however, that must be noted is that the placing of the whole revenue derived from customs and excise in the hands of the Federal Government gives that Government a far larger annual income than is required for its purpose. This point has been commented upon in the chapter on "the growth of the Australian Commonwealth," in which a sketch of the debates of the Conventions upon this matter has been given.

The solution finally embodied in the Constitution has two sides. In the first place, Sec. 87 embodies a guarantee against overexpenditure on the part of the Commonwealth Government. Known as the "Braddon Clause," it provides that :

"During a period of ten years after the establishment of the Commonwealth, and thereafter until the Parliament otherwise provides, of the net revenue of the Commonwealth from duties of Customs and Excise not more than one-fourth shall be applied annually by the Commonwealth towards its expenditure.

"The balance shall, in accordance with this Constitution, be paid to the several States, or applied towards the payment of interest on debts of the several States taken over by the Commonwealth."

In considering the effect of this section, it must be noted that the operation of the "Braddon Clause" is limited to ten years, and thereafter can be altered by the Federal Parliament; that it applies only to "net revenue from duties of customs and of excise

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i.e., not to revenue from other sources and to revenue from those sources only when the expenses of collection have been paid; and that the " one-fourth" which the Commonwealth is empowered to spend is one-fourth of the total net revenue, not onefourth of the net revenue collected in each State. The last point is one that appears to have been misunderstood at the time when the Constitution passed the electors. At any rate, it has been a grievance, on the part of Queensland at least, that she has had to contribute more than one-fourth of the net revenue from customs and excise collected within her borders; and it has been pointed out that the operation of the Clause as it stands may be very unfair to some States as compared with others; whereas it was the impression, at the time when the Constitution was before the

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