TAXING FEDERAL SALARIES

New Zealand Herald, Volume XLV, Issue 13648, 16 January 1908, Page 5

TAXING FEDERAL SALARIES

PRIVY COUNCIL'S DECISION.

LEAVE TO APPEAL REFUSED.

By Telegraph.—Preus Aisociation Copyright.

(Eeceived January 16, 12.15 a.m.)

London, January 13. The Judicial Committee of the Privy Council has now dealt finally with the cases' of Webb v. Crouch and Flint, and the Commissioner of Taxation of New South Wales v. Baxter. In these cases the State Taxation Commissioners applied for leave to appeal from the decision of the High Court of Australia, which held that the salaries paid by the Federal authority were not liable to State taxation for income tax purposes.

Without calling on counsel for the Commonwealth, the committee on November 29 refused leave to appeal, announcing that their reasons would be given later. When the Judicial Committee met to-day Baron Loreburo, in a brief speech, said that before the petitions referred to could be heard the Commonwealth had passed an Act expressly authorising the States to impose a tax of the kind in question, so that the controversy could not be raised again. The sums actually in dispute or indirectly affected were inconsiderable in amount, and for these reasons it would not be in accordance with the practice of the committee to advise His Majesty to grant the special leave to appeal. HISTORY OF THE CASES. In May last, the High Court, consisting of five judges, beard the appeal of Arthur Loftus Flint, a federal officer, against the decision of the Court of Petty Sessions, requiring him to pay income tax. The respondent was Thomas Prout Webb, Commissioner of Taxes for Victoria. The grounds of appeal were that the appellant's income was noo liable for taxation under the Victorian Income Tax Acts; that being a public servant of the Commonwealth of Australia, his salary was exempt from taxation, and that the Court of Petty Sessions had no jurisdiction to make an order against him. The other cases, being on all-fours with that of Flint, were talken with it. A majority of the judges, consisting of the Chief Justice (Sir Samuel Griffith), Mr. Justice Barton, and Mr. Justice O'Connor, refused to recognise the decision of the Privy Council in Webb v. Outtrim as binding, and adhered to the former view of the High Court, that Federal public servants were not liable for State income tax. Mr. James Isaacs and Mr. Justice Hijgins dissented in separate judgments. Leave to appeal to the Privy Council was refused.

The petition to the Privy Council to appeal from the judgment of the High Court set out that there was no provision in the Commonwealth Constitution Act exclusively vesting in the Parliament of the Commonwealth, or withdrawing from the Parliament of New South Wales, the power of levying an. income tax upon income earned within the State by persons resident within it. It had, however, been contended on behalf of the respondent and so held by the High Court, that " when a Stat© attempts to give to its legislative or executive authority an operation which if valid would fetter control or interfere with the free exercise of the legislative or executive power of the Commonwealth, the attempt, unless expressly authorised by the Constitution, is to that extent invalid and inoperative," and that " an income tax of a State in so far as it attempts to tax the salaries of officers of the Commonwealth is within the above principle." The petition further stated that the same point as that in dispute in this case, viz., the power of a State to tax officers of the Commonwealth, was decided in favour of the States by the Judicial Committee of the Privy Council in tho case of Webb v. Outtrim, on appeal from the Supreme Court of Victoria; but it had been contended on behalf of the respondent,' and so held by the High Court, that that Court was not bound by the deoision of the Privy Council in any matters affecting the interpretation of the Constitution, but on suoh matters had coordinate jurisdiction with the Judicial Committee of the Privy Council.