Recently we were asked to examine whether or not a levy, charged by a local council for environmental reasons met the definition of a tax.
Firstly, what is a tax? The necessary attributes for a Tax were defined by Lathan CJ in Matthews v Chicory Marketing Board (Vict) (1938) 60 CLR 263.
In that case Lathan CJ said that a tax “…is a compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered…”
Secondly, can a levy meet this definition of tax? The question of whether or not a levy is a tax was considered inAustralian Tape Manufactures Assocaiton Ltd & Ors V The Commonwealth of Australia (1993) 176 CLR 480.
In that case the Full High Court of Mason Cj, Brennan, Deane, Dawson, Toohey, Gaudron and Mchugh JJ stated. “…we are of the opinion that the levy is a tax. It does not fall within any of the well recognized descriptions of fees or charge which stand outside the concept of a tax. It is not a fee for a licence or privilege or for a service rendered; it is not a charge for the acquisition or use of property; and it is certainly not a fine or penalty. Moreover, it has the characteristics of an excise; it is imposes upon the vendor in respect of the sale and it is a charge which the vendor will, in the ordinary course of business, pass onto the purchaser…”
They also considered that the purpose for which the money had been paid did not have to be a “government purpose” but for a “public purpose”
Finally, we were are able to determine that as the council levy, is compulsory, enforceable by law and no services were rendered it should be considered a tax.