Anti-HST campaign takes BC government to court



Gary Oakes for The Lawyers Weekly

August 27, 2010

Former B.C. Premier Bill Vander Zalm has gone to court in a bid to have the Harmonized Sales Tax (HST) thrown out, arguing that it amounts to taxation without representation because the agreement establishing it was never approved by the provincial legislature.

But the province disagreed, countering in B.C. Supreme Court that the agreement is not unconstitutional and is in fact a fine example of administrative co-operative federalism.

The provincial government, through the cabinet, gave the B.C. finance minister the authority to enter into a Comprehensive Integrated Tax Coordination Agreement (CITCA) with the federal government on Nov. 30, 2009.

The following month Vander Zalm filed an application with Elections BC to launch an anti-HST petition under the Recall and Initiative Act. In February of this year, the chief electoral officer (CEO) gave approval in principle and issued official public notice of "An Initiative to End the Harmonized Sales Tax."

On June 30, the day before the HST came into effect, Vander Zalm presented to the CEO the petition with more than 700,000 signatures, surpassing the requirement to have 10 per cent of the total number of registered voters in every riding of the province.

In a separate application, lawyers for the B.C. Chamber of Commerce and other business groups have asked the court to quash the CEO's decision approving the initiative bill because in their view he incorrectly ruled that it is within the province's jurisdiction and that it is clear and unambiguous.

"It is well established[...]that the Parliament of Canada has the jurisdiction to enact an HST in B.C. as well as in the other provinces."

In their written submissions to the court, counsel for Vander Zalm maintained that the people are entitled "to have issues concerning taxation debated by their elected representatives. In the field of taxation, the Constitution, through the operation of s. 53 [of the Constitution Act, 1867], demands that there should be no taxation without representation[...]The [government] must be held accountable to the [legislature] for its decision to adopt the HST model of provincial taxation. This requirement of accountability meant that the Executive Branch needed to obtain clear and plain legislative approval for its decision to enter into the CITC Agreement."

But the province's lawyers insisted that CITCA does not impose a new tax in B.C. and s. 53 does not therefore apply.

"What CITCA does is provide the Province with the assurance that it will realize the benefits to be obtained from a harmonized value-added tax structure[...]

"What the history and practice of administrative cooperative federalism demonstrates is that from the perspective of the federal government there is a national interest in promoting various policy initiatives which it often encourages through various funding mechanisms[...]The revenue raised and so allocated [under this legislation] is taxation for a national purpose[...]?-?in particular, a stronger economic foundation for Canada. Accordingly, the exclusive legislative authority of the province[...]is not engaged."

Chief Justice Robert Bauman reserved judgment.
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