Of "powers" and "procedure" we have already said (i) that, as to the Dominion parliament and provincial legislatures, this clause of the Colonial Laws Validity Act, 1865, is still in force to enable them (save where, as by section 18, the B. N. A. Act expressly limits its force) to define their powers, other than legislative, and to regulate their procedure.

It has at length been authoritatively enunciated by the highest tribunal in the Empire that the form of political organization in Canada is truly federal; that the B. N. A. Act had for its object "neither to weld the provinces into one, nor to subordinate provincial governments to a central authority, but to create a federal government in which they should all be represented, intrusted with the exclusive administration of affairs in which they had a common interest, each province retaining its independence and autonomy." The word "federal" can have significance only as between the parties to the federal union, and in no way can it have any bearing upon our relations to the government of the United Kingdom, although the agreement entered into by the provinces required, for its legal validity, to be clothed in the garb of an Imperial Act. While, however, the "constitution" of the federal government was thus matter of agreement between the provinces, and while the B. N. A. Act confers no general power (j) upon the parliament of Canada to make alteration therein, no limitation would have been proper in regard to the "constitutions" of the provincial governments-no restriction upon the manner in which the work of government should be carried on in relation to those matters in respect of which they retained their "independence and autonomy"-other than in regard to the position of the executive head, designed to be the connecting link, binding the provinces, through the Dominion executive, to the home government and the Empire. Apart from this new feature, the provincial "constitutions" were (i) See notes to ss. 35 and 69, ante.

etc.

(j) Special power is given, for obvious reasons, in relation to elections, See s. 40, et seq.

to continue as before the Union-employed, of course, upon a small range of matters-and no withdrawal of the powers which had been conferred by the Colonial Laws Validity Act was contemplated. By way of abundant caution, however, it was deemed advisable to enact that "notwithstanding anything in this Act" the provincial legislatures should have still the power to amend the provincial constitutions, save, for the reasons above indicated, “as regards the office of Lieutenant-Governor.”

We have, from time to time, in the notes to the various sections relating to the provinces and their form of government, pointed out alterations and amendments which have been made under the authority of this sub-section. Under it Manitoba has abolished her second chamber, and there are signs of a disposition on the part of some of the other provinces to follow suit to this lead on the part of our youngest province. There is no limit, however, to the extent to which the "amendment" may proceed, save in so far as it may be restrained by the exercise of the power of disallowance. No particular form of provincial government is "guaranteed" by our charter of government-beyond this, that its executive head must be the Queen, represented in each province by a Lieutenant-Governor, appointed by the federal executive, and through this representative she is entitled to share in all provincial legislation.

An Act of the Ontario legislature conferring upon the Lieutenant-Governor power to remit, by order in council, any fine or penalty, to which any person might have become liable through breach of any provincial law, was held (k) not to offend against the exception-not being an amendment of the constitution "as regards the office of LieutenantGovernor.

2. Direct Taxation within the Province in order to the raising of a Revenue for Provincial purposes.

(k) Atty.-Genl. for Canada v. Atty.-Genl. (Ont.), 20 C. R. 222; 19

O. A. R. 31. See notes to s. 53, ante, p. 305.

3. The borrowing of money on the

sole credit of the Province.

As to the other source of provincial revenue, see subsections 5, 9 and 15 of this section 92, and section 102 et seq., and notes thereto. See also notes to sub-sections 3 and 4 of section 91, ante, p. 376.

The operation of the power conveyed by sub-section 2 is limited-in order to the raising of a revenue for provincial purposes"-but, in Dow v. Black (1), it was held that this sub-section authorizes the imposition of “direct taxation for a local purpose upon a particular locality within the province," and is not to be limited to direct taxation, "only for the purpose of raising revenue for general provincial purposes, that is, taxation incident on the whole province for the general purposes of the whole province." In that case the tax necessary. to pay a local bonus was directly imposed by the Act impugned, but, bearing in mind the principle of Hodge v. The Queen, as to the delegation of power (see ante, p. 202), the decision in Dow v. Black is sufficient warrant for the whole system of municipal taxation now operative throughout Canada. Had the construction contended for prevailed, the taxing powers of a municipality would have been cut down to license fees under sub-section 9; and direct subsidies from the provincial governments must have been resorted to (m), if indeed that method could have been upheld as being for the general benefit and purposes of the whole province.

What is direct taxation? This question has been under consideration by the Judicial Committee of the Privy - Council in several cases, the last being Bank of Toronto v. Lambe (7), in which it was held that a tax imposed upon

(1) L. R. 6 P. C. 272.

(m) See, however, Lynch v. Canada N. W. Land Co., 19 S. C. R. 204, in which Chief Justice Ritchie speaks of the power of taxation as being essential to municipal institutions." See the notes to s. 92, s-s. 8, post.

66

(n) 12 App. Cas. 575.

banks which carry on business within the province, varying in amount with the paid-up capital, and with the number of its offices, is direct taxation.

First, is the tax a direct tax? For the argument of this question, the opinions of a great many writers on political economy have been cited. But it must not be forgotten that the question is a legal one, namely, what the words mean as used in this statute; whereas the economists are always seeking to trace the effects of taxation throughout the community, and are apt to use the words direct and indirect ' according as they find the burden of a tax abides more or less with the person who first pays it. This distinction is illustrated very clearly by the quotations from a very able and clear thinker, the late Mr. Fawcett, who after giving his tests of direct and indirect taxation, makes remarks to the effect that a tax may be made direct or indirect by the position of the tax-payers or by private bargains about its payment. Doubtless such remarks have their value in an economical discussion. Probably it is true of every indirect tax that some persons are both the first and the final payers of it; and of every direct tax that it affects persons other than the first payers; and the excellence of an economist's definition will be measured by the accuracy with which it contemplates and embraces every incident of the thing defined. But that very excellence impairs its value for the purposes of the lawyer. The legislature cannot possibly have meant to give a power of taxation valid or invalid according to its actual results in particular cases. It must have contemplated some tangible dividing line referable to and ascertainable by the general tendencies of the tax and the common understanding of men as to those tendencies.

"After some consideration, Mr. Kerr chose the definition of John Stuart Mill as the one he would prefer to abide by. The definition is as follows:

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Taxes are either direct or indirect. A direct tax is one which is demanded from the very persons who it is intended or desired should pay it. Indirect taxes are those which are demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another. Such are the excise or customs. The producer or importer of a commod

ity is called upon to pay a tax on it, not with the intention to levy a contribution upon him, but to tax through him the consumers of the commodity, from whom it is supposed he will recover the amount by means of an advance in price.'

"It is said that Mill adds a term, that, to be strictly direct, a tax must be general, and this condition was much pressed at the har. Their Lordships have not thought it necessary to examine Mill's works for the purpose of ascertaining precisely what he does say on this point, nor would they presume to say whether, for economical purposes, such a condition is sound or unsound, but they have no hesitation in rejecting it for legal purposes. It would deny the character of a direct tax to the income tax of this country, which is always spoken of as such, and is generally looked upon as a direct tax of the most obvious kind; and it would run counter to the common understanding of men on this subject, which is one main clue to the meaning of the legisla

ture.

"Their Lordships, then, take Mill's definition, above quoted, as a fair basis for testing the character of the tax in question, not only because it is chosen by the appellants' counsel, nor only because it is that of an eminent writer, nor with the intention that it should be considered a binding legal definition, but because it seems to them to embody with sufficient accuracy for this purpose an understanding of the most obvious indicia of direct and indirect taxation, which is a common understanding, and is likely to have been present to the minds of those who passed the Federation Act.

"Now, whether the probabilities of the case or the frame of the Quebec Act are considered, it appears to their Lordships that the Quebec Legislature must have intended and desired that the very corporations from whom the tax is demanded should pay and finally bear it. It is carefully designed for that purpose. It is not like a customs' duty, which enters at once into the price of the taxed commodity. There the tax is demanded of the importer, while nobody expects or intends that he shall finally bear it. All scientific economists teach that it is paid, and scientific financiers intend that it shall be paid, by the consumer; and even those who do not accept the conclusions of the economists maintain that it is paid and intended to be paid by the