International Research Collaboration on Federalism and Tax Harmonisation

25 February 2013

The Ross Parson's Centre, represented by Dr Peter Gerangelos, Professor of Constitutional Law at Sydney Law School, was recently involved in a major international research program entitled "Horizontal Tax Coordination within the EU and within States: the Role of the Courts" that was conducted by the Institute for Austrian and International Tax Law at the University of Vienna and supported by the European Science Funds. The book Horizontal Tax Coordination (Lang, Pistone et al (eds), IBDF, 2013) has just been published to set out the findings of this research project. Professor Gerangelos' contribution has been published as Chapter 2 of the new book.

A principal purpose of the project was to provide guidance to the European Union with respect to achieving tax harmonization amongst the member States of the Union and to examine the role of the European Court of Justice in this regard. The role of constitutional courts and their techniques of constitutional interpretation relating to taxation was a primary concern. This project was inaugurated with an international colloquium and thence an international conference at the University of Vienna which was attended by European Union jurists, lawyers and legal scholars, as well as legal scholars and jurists from all nations whose systems were the object of study. The project involved an international collaboration between constitutional and tax scholars of the European Union and those from individual European federal states (Belgium, Spain, Austria) and from major non-European Union federations (Australia, United States, Russia, Switzerland, India, Mexico and Brazil). Professor Gerangelos was the representative from Australia.

The Australian contribution was of particular interest to the European Union representatives. The experience in Australia uniquely reveals how a degree of harmonization is achievable in circumstances where it is not possible to impose by federal law harmonised local taxation regimes as between the component parts of a federation, at least without their collaboration. In Australia, this has been achieved indirectly by the use of a combination of a constitutionally prescribed discretionary grants power (s 96) in the hands of the central government combined with the taxation power (s 51 (ii).) That is, by the use of s 96 grants to the States "on such terms and conditions as the [Commonwealth] Parliament thinks fit", a phrase interpreted very liberally by the High Court, it has been possible for the central government to ameliorate, to a degree and albeit indirectly, the consequences of an absence of harmonisation as between the regions. They were also particularly interested in the fact that harmonisation as between the States own taxation regimes is a matter more of inter-governmental cooperation than legal and constitutional enforcement; given that at Commonwealth level, the Constitution prohibits Commonwealth taxes which discriminate between States or which give preference to one State over another. The working of the GST was of particular interest. This remains of significant interest to all national representatives at the conference in addition to those jurists who represented the European Union.

Contact: Greg Sherington

Phone: +61 2 9351 0202

Email: 093330175b672b283e302f063629272f1103140c2c3a400e0c224c0844