foreign producer. Nobody thinks that it is, or intends that it shall be, paid by the importer from whom it is demanded. But the tax now in question is demanded directly of the bank, apparently for the reasonable purpose of getting contributions for provincial purposes from those who are making profits by provincial business. It is not a tax on any commodity which the bank deals in and can sell at an enhanced price to its customers. It is not a tax on its profits, nor on its several transactions. It is a direct lump sum to be assessed by simple reference to its paid-up capital and its places of business. It may possibly happen that in the intricacies of mercantile dealings the bank may find a way to recoup itself out of the pockets of its Quebec customers. But the way must be an obscure and circuitous one. The amount of recoupment cannot bear any direct relation to the amount of tax paid, and, if the bank does manage it, the result will not improbably disappoint the intention and desire of the Quebec government. For these reasons, their Lordships

hold the tax to be direct taxation.'"

With this description of direct taxation may be compared that given by the same Committee in AttorneyGeneral (Quebec) v. Reed (0), where Mill's definition was also relied on in support of the holding that a stamp duty on "exhibits," filed in the course of judicial proceedings, is not "direct" taxation, and that the Act imposing such a duty was therefore ultra vires of the Quebec legislature:

"Can it be said that a tax of this nature, a stamp duty in the nature of a fee payable upon a step of a proceeding in the administration of justice, is one which is demanded from the very persons who it is intended or desired should pay it? It must be paid in the course of the legal proceeding, whether that is of a friendly or of a litigious nature. It must, unless in the case of the last and final proceeding after judgment, be paid when the ultimate termination of those proceedings is uncertain; and from the very nature of such proceedings until they terminate, as a rule, and speaking generally, tlie ultimate incidence of such a payment cannot be ascertained. In many proceedings of a friendly character, the person who pays it may be a trustee, an

(). 10 App. Cas. 141.

administrator, a person who will have to be indemnified by somebody else afterwards. In most proceedings of a contentious character, the person who pays it is a litigant, expecting or hoping for success in the suit, and whether he or his adversary will have to pay it in the end must depend on the ultimate termination of the controversy between them. The legislature in imposing the tax cannot have in contemplation, one way or the other, the ultimate determination of the suit, or the final incidence of the burden, whether upon the person who had to pay it at the moment when it was exigible, or upon anyone else. Therefore it cannot be a tax demanded from the very persons who it is intended or desired should pay it '; for, in truth, that is a matter of absolute indifference to the intention of the legislature. And, on the other hand, so far as relates to the knowledge which it is possible to have in a general way of the position of things at such a moment of time, it may be assumed that the person who pays it is in the expectation and intention that he may be indemnified; and the law which exacts it cannot assume that that expectation and intention may not be realized. As in all other cases of indirect taxation, in particular instances, by particular bargains and arrangements of individuals, that which is the generally presumable incidence may be altered. An importer may be himself a consumer. Where a stamp duty upon transactions of purchase and sale is payable, there may be special arrangements between the parties determining who shall bear it. The question whether it is a direct or indirect tax cannot depend upon those special events which may vary in particular cases; but the best general rule is to look to the time of payment; and if at the time the ultimate incidence is uncertain, then, as it appears to their Lordships, it cannot, in this view, be called direct taxation within the meaning of the second section of the ninety-second clause of the Act in question."

The legislature of Quebec passed, in 1875, an Act (39 Vic. c. 7) providing for the issue of licenses to insurance companies doing business in the province. Nothing was to be paid on the issue of the license, but, on the issue of any policy by an insurance company, stamps were to be affixed to an amount varying with the amount of the premium. This was held by the Judicial Committee of the Privy

Council in Attorney-General v. The Queen Insurance Company (p), to be not a license, but a stamp duty on policies. In the latter view it was held to be indirect taxation. In arriving at the meaning to be attributed to the words "direct taxation" the Committee point out that they may have a technical (economical or legal) or popular meaning. No attempt is made to decide this question, because it was held that, by whichever key interpreted, a stamp duty, such as was imposed by the Act, was not direct taxation.

The decision of the Supreme Court of Canada, in Severn v. The Queen (q), must upon this point be considered overruled. It was held in that case that a license fee required to be paid by brewers, under an Act of the legislative assembly of Ontario, was indirect taxation; applying, however, the considerations dwelt upon by the Privy Council, particularly in Bank of Toronto v. Lambe (7), such a license fee must be held to be direct taxation. It is intended to be paid by the very person on whom it is imposed, and if that person manages to recoup himself, it must be by some circuitous method, the amount of recoupment on each sale of beer bearing no relation whatever to the tax imposed. Even before Bank of Toronto v. Lambe was decided the Judges of the Supreme Court seem to have recognized that the authority of Severn v. The Queen had been seriously impugned. See, however, the observations of Gwynne, J., in Molson v. Lambe (s); but, so far as appears from the report of this case, Bank of Toronto v, Lambe was not referred to. The holding, too, of the Supreme Court that such a license fee upon brewers was a regulation of trade and commerce" cannot be supported, for reasons also set out in Bank of Toronto v. Lambe, as well as in earlier cases to which reference has already been made in the notes to sub-section 2 of section 91.

(p) 3 App. Cas. 1090.

(q) 2 S. C. R. 70.

(r) 12 App. Cas. 575.

(s) 15 S. C. R. at pp. 288-9.

In Longueuil Navigation Co. v. Montreal (†), an Act of the Quebec legislature authorizing the city of Montreal to impose an annual tax on ferrymen and ferry companies, was held to be intra vires. See notes to section 91, subsection 10, ante, p. 383.

Referring to the other sources of provincial revenue, and to the various institutions which a province has to maintain, the question arises, are the powers of provincial legislatures under those sub-sections limited to "direct" taxation? In Attorney-General (Quebec) v. Reed (u), above referred to, the Judicial Committee of the Privy Council declined to determine "whether, if a special fund had been created by a provincial Act for the maintenance of the administration of justice in the provincial courts, raised for that purpose, and not available as general revenue for general provincial purposes, in that case the limitation to direct taxation would still have been applicable." The point was considered by Mr. Justice Gwynne in the same case when before the Supreme Court of Canada (v). The contention was, that under sub-section 15 of section 92," the constitution, maintenance and organization of provincial courts" indirect taxation might be resorted to, and that, therefore, a stamp duty on "exhibits might be imposed under the authority of a provincial Act. Mr. Justice Gwynne says:

دو

"The express provision made by item 2, which, while it authorizes the legislatures to make laws in order to the raising of a revenue for provincial purposes by taxation, limits the exercise of the authority thus conferred to direct taxation, very clearly excludes, in my judgment, the power of raising a revenue by any species of taxation other than by direct. That

the maintenance of provincial courts and the administration of justice are provincial purposes, there can be no doubt. They are therefore comprehended within the purview of item 2 of section 92, which in express terms prescribes direct taxation as the mode

(t) 15 S. C. R, 566.

(u) 10 App. Cas. 141. (v) 8 S. C. R. 408; at p. 431.

of taxation to be adopted for raising revenue for provincial purposes, so that upon the principle of expressum facit cessare tacitum, there can be no such implied power involved in this item 14, as is insisted upon; moreover, if the contention were sound, then upon the same principle they could equally pass an Act imposing a special tax of an indirect character for the payment of provincial officers under a power implied under item 4 of this 92nd section, and another Act imposing another special tax, also of an indirect character, to defray the expense attending the establishment, maintenance, and management of public and reformatory prisons, under the powers conferred by item 6, and another to defray the expense attending the establishment, maintenance, and management of hospitals, asylums, etc., under the powers conferred by item 7; .. and so the effect would be that this implied power of raising revenue by indirect taxation, which, it is contended, the legislatures have, being exercised, as it might be if they have the power, to raise sufficient revenue to defray all the expenses of the government and legislatures in respect of all the several matters under their control and jurisdiction, it would be quite unnecessary for them to exercise the power conferred by item 2, raising by direct taxation the revenue for provincial purposes, or to draw upon the revenue created by the subsidy paid by the Dominion, or by sale of the public property, or other income arising therefrom, or from the assets assigned to each province. Such a contention appears to me to involve so palpable a reductio ad absurdum, as to carry with it its own refutation; and indeed the judgment of the Privy Council in Attorney-General (Quebec) v. The Queen Insurance Company, in effect, decides that the provincial legislatures cannot, by any Act of theirs, authorize the raising a revenue by any mode of taxation other than direct."

That the Privy Council did not consider the question determined by any previous decision of their own is apparent from the language of the judgment of that tribunal when the case came before them. The question is touched upon in other Canadian authorities-for example, in Regina v. Taylor (w), where Mr. Justice Wilson-afterwards Chief Justice Sir Adam Wilson-says:

(w) 36 U. C. Q. B. 183, at p. 201.