Is the Resource Super Profits Tax unconstitutional?

There is an interesting letter from John Penhallurick in the June 19 Economist arguing the Resource Super Profits Tax (RSPT) is unconstitutional:

Constitutional powers over minerals and mining lie with the states, which have levied royalties on mining companies for many years. Some argue that the federal government’s power over corporations gives it the power to levy such a tax, but if the matter comes to the High Court it will almost certainly be ruled unconstitutional. The issue is the conflict between a broad commonwealth power and a narrowly defined state power, and a federal government trying to levy a tax on an industry that falls under the states’ purview.

It’s certainly possible that the RSPT is unconstitutional.  However, since the early 1980s the High Court has taken a generous, expansive view of the powers of the Commonwealth (e.g., in the Tasmanian Dams case and the more recent Labor States’ challenge to WorkChoices).  I’m guessing, too, that the Treasury would have obtained legal advice regarding the RSPT’s legality from the Australian Government Solicitor.  Hence, my feeling is that the High Court would decide, in favour of the Commonwealth, that the RSPT is constitutional.

Of course, I’m not a lawyer, so I’m unqualified to offer this as a professional opinion.  A number of constitutional law experts, however, have no doubt about its legality:

RSPT court challenge likely to fail: analysts

Of course, with the new PM calling a temporary cease-fire with the mining industry, we may have to wait some time for the constitutional issues to be resolved.

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