Posted on December 21, 2009 - by J Lane

Legality of HST (reprise)

I had blogged previously about whether the HST can legally exist based on the Canadian Constitution. Seems that a few others have noticed this now too, I just received this e-mail from “Fight HST”:

From: Rustad.MLA, John
Subject: RE: Harmonized Sales Tax
To: “jack kortmeyer” < *redacted*>
Received: Tuesday, December 15, 2009, 2:08 PM

Hi Jack,

This is the response from the Attorney General’s office:

This is from the Ministry of Finance:

The concerns which have been raised that the harmonized sales tax is an unconstitutional delegation of provincial legislative authority reflect a fundamental misunderstanding of the tax.

The harmonized sales tax is a federal tax. It is imposed by the federal government under the Excise Tax Act. The constitutional authority for the Excise Tax Act is found in section 91(3) of the Constitution Act, 1867 which provides exclusive legislative authority to the Parliament of Canada for “the raising of money by any mode or system of taxation.”

Under section 92 of the Constitution Act, 1967, the province of British Columbia has exclusive legislative authority for “direct taxation within the province in order to the raising of a revenue for provincial purposes.” This is the constitutional authority for the provincial sales tax imposed under the Social Service Tax Act.

Under harmonization, British Columbia is not delegating its legislative authority for direct taxation to the federal government but agreeing not to exercise that authority in exchange for a share of the federal tax. If British Columbia no longer receives that share of the federal tax there is nothing to prevent British Columbia from again exercising its legislative authority and imposing a provincial sales tax.

Sincerely,

John Rustad, MLA, Nechako-Lakes

From: jack kortmeyer [mailto:*redacted*]
Sent: Tuesday, December 08, 2009 12:02 PM
To: Rustad.MLA, John
Subject: Harmonized Sales Tax

John

On Oct 14 2009 I attended a meeting with local merchants and yourself at the Chamber of Commerce meeting room in Burns Lake . During this meeting I made a brief presentation on my position as to why I felt the Harmonized Sales Tax in its present form is unconstitutional. With my presentation I also provided you with excerpts from the Lord Nelson Hotel Supreme Court Case, the Statute of Westminster 1931, the British North America Act 1867-1982 and even a comment on taxation by W.A.C. Bennett. You mentioned to me at this meeting that you did not know much about this Constitutional topic, however you assured me you would pass my information onto the Attorney General for his opinion, I have not to date received a reply. When may I expect an answer from the Attorney General on this very important Constitutional question?

As a Citizen of Canada and British Columbia I ask you our Member of the Legislative Assembly, the Attorney General and the Premier of British Columbia as elected officials to be absolutely certain my Constitutional Rights are protected on this subject of taxation.

Regards,

Jack Kortmeyer
Decker Lake

That’s interesting, the HST is simply “misunderstood”. I take issue with the idea that “British Columbia is not delegating its legislative authority for direct taxation to the federal government but agreeing not to exercise that authority in exchange for a share of the federal tax”. Is the Constitution not present to lay out the rights of the people, not legislative bodies? This doesn’t just seem like a different interpretation of the constitution, but rather the Government of BC is choosing to give up rights on our behalf. That doesn’t sit right with me.

This example was given in the e-mail from Fight HST:

Vander Zalm explained, “That is like the Feds agreeing to let BC legalize capital punishment by saying they are not delegating their legislative authority for criminal law to the Provincial Government, but agreeing not to exercise that authority in exchange for a share of the revenues saved from executing criminals instead of jailing them.”

It seems a bit extreme, but those parts of the constitution are there to specifically divide the responsibilities of the levels of government. Personally, I don’t think it’s right that provinces and the feds can choose to selectively exercise authority when it suits them. I would home that the courts would agree.

It might sound silly arguing about “our right to be taxed”, but in implementing the HST, the Government of Canada and the Government of BC are creating a very real problem: BC no longer has control over it’s own taxation that is used to fund real things within the province.Under the terms of the agreement, if the federal government should ever decided to stop transfer payments to BC, then BC will have the authority to once again implement their own PST (Hon. John Rustad said so himself in the last paragraph of his e-mail).

So if the federal government runs a little low on cash (I can’t imagine that ever happening!), and they decide to cut the money that they’re generously collecting and then “gifting” back to us, we can expect to enjoy both an HST and a PST in BC. Either there is a formal delegation of authority going on here, which is most likely unconstitutional, or BC is being sold into a very tenuous position where we’re having provincial affairs decided in Ottawa. Scary stuff.