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This paper presents a scalable to lossless compression scheme that allows scalability in terms of sampling rate as well as quantization resolution. The scheme presented is perceptually scalable and it also allows lossless compression. The scheme produces smooth objective scalability, in terms of SNR, until lossless compression is achieved. The scheme is built around the perceptual SPIHT algorithm, which is a modification of the SPIHT algorithm. Objective and subjective results are given that show perceptual as well as objective scalability. The subjective results given also show that the proposed scheme performs comparably with the MPEG-4 AAC coder at 16, 32 and 64 kbps.