Cutting tax concessions 'illegal’

Press, 28 January 1988, Page 1

Cutting tax concessions 'illegal’

By

CHRISTOPHER MOORE

A senior law lecturer at the University of Canterbury, Mr Philip Joseph, has questioned the legality of recent moves by the Minister of Finance to end tax concessions for most superannuation and life insurance schemes.

Mr Joseph, a specialist in constitutional and industrial law, believes that a 1976 Supreme Court case created a legal precedent which would make Mr Douglas’s statement ending tax concessions for superannuation schemes illegal. In December, 1975, the then Prime Minister and Minister of Finance, Sir Robert Muldoon, announced that compulsory deductions from employees for the New Zealand Superannuation Scheme would cease.

In 1976, an Education Department employee, Paul Fitzgerald, successfully brought a private action against Sir Robert over the statement. In his judgment in June, 1976, the Chief Justice, Sir Richard Wilde, ruled that the Prime Minister’s announcement was illegal and in breach of the 1688 Bill of Rights.

Mr Fitzgerald was subsequently awarded $2500 in costs.

The case produced a quick response from the Leader of the Labour Opposition, Sir Wallace Rowling, who said that the

Supreme Court ruling showed that no-one was above the law. “Parliament is there to make laws and only Parliament can change them,” Sir Wallace said. The legal precedent established in the Fitzgerald case still stands more than a decade later, said Mr Joseph yesterday. Despite the Minister’s assurances that Parliament would pass retrospective legislation when it sat later this year, laws could not be simply dismantled by a Ministerial statement. Mr Douglas’s actions were a clear breach of the 1688 Bill of Rights, law still governing the relationship between New Zealand and the executive.

“The Bill of Rights established a protection of our essential liberties — and the question of changes to taxation systems clearly comes within the auspices of Parliament. Parliament, not the Minister of Finance, approves or rejects New Zealand’s laws.

“Suspension by a Ministerial decree is unlawful, despite claims that the Government’s

majority in the House will mean that the new legislation will be passed. “In the Fitzgerald versus Muldoon case, there was no answer to the charge that the Prime Minister by virtue of his majority would obtain later retrospective legislation.” The entire question of deductions for superannuation schemes was included in the 1976 Income Tax Act. It involved a statutory entitlement and remained a question of the law rather than regulation. “The whole question of retrospective legislation was criticised in the Minister of Justice’s book, ‘Unbridled Power.’ Mr Palmer referred to the Fitzgerald case and attacked the National Opposition for its actions while the Government,” Mr Joseph added. “He has also frequently upheld the role of Parliament in passing or altering legislation.”

Mr Palmer would not comment last evening and referred “The Press” to Mr de Cleene, who was unavailable.