The constitutional scheme as well as judicial interpretations have created a vertical fiscal imbalance, whereby the Commonwealth has the revenue-raising abilities while the States have major spending responsibilities.
[5] As a result, the sphere of Commonwealth power has expanded through dictating policy through conditional grants.
[1] The non-discrimination limitation repeats the more general prohibition found in section 99 that the Commonwealth cannot discriminate between states in laws on trade, commerce, or revenue.
[2] Before 1942, consistent with the concurrent power in section 51(ii), both the states and the Commonwealth levied income taxes.
Section 90 gives the Commonwealth the exclusive, as opposed to concurrent with the States, power to impose "duties of customs and of excise".
The definition of "customs and excise" has been considered by the High Court of Australia on a number of occasions.
In the case of local council rates, the Commonwealth claims exemption from rates, but "contributes" to local government in the form of grants to at least cover services provided, such as electricity, sewerage, rubbish disposal and the like, but not for road works, parks, general administrative expenses, etc.
Section 96 (as still effective) provides: The High Court has interpreted "terms and conditions" very broadly.
The scheme was again upheld in 1957 on the basis of section 96, in Victoria v Commonwealth (the Second Uniform Tax case).
Section 53, in part, prevents the Senate from introducing or amending any bill dealing with taxation, revenues or appropriation.
Section 53 does not apply to bills imposing or appropriating fines or other pecuniary penalties, or fees for licensing or services.
Thus, without the restrictions imposed by section 55, the House of Representatives could prevent the Senate from amending any bill simply by putting something into it concerning taxation.