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Provincial

power over local or private

matters

generally.

Prop. 66 of the provinces before Confederation were to be utterly wiped away by the British North America Act." But Mr. Bethune, who was of counsel, replied that as he understood them the decisions of the Privy Council seemed to point to that; and in the notes to Proposition 26 the Privy Council decisions on the matter have been referred to. But it must not be forgotten that, as there pointed out,1 among the powers expressly given to the provinces is what may be termed a minor residuary gift of power to make laws in relation to 'generally all matters of a merely local or private nature in the province'; and there would seem to be no doubt that in respect to any subject matter of legislation not within the enumerated classes of section 91, a provincial legislature can make laws in relation to it of a local or private nature in the province; while if it is also not within any of the specified subjects in section 92, the Dominion parliament can legislate upon it for the peace, order, and good government of Canada generally. 2

3

The general subject of provincial powers of taxa tion, hitherto undealt with in detail in this work, may be appropriately discussed in connection with this Proposition. In this case, as generally, any powers they have must be looked for in section 92 of the British North America Act. It is true that in Bank of Toronto v. Lambe, Baby, J., claims for the provincial legislature, as "one of its inherent

4

See supra p. 343. And cf. per Ramsay, J., in Bank of Toronto v. Lanibe, M.L. R. 1 Q.B. at p. 183, 4 Cart. at p. 75, (1885).

See supra pp. 360, n. 1; 399-401; 437-8; 655 et seq.

3 As to provincial taxation generally in relation to Dominion powers and objects, see supra pp. 671-80.

4M. L. R. 1 Q.B. at p. 197, 4 Cart. at p. 88, (1885). Cf. per Mathieu, J., in Export Lumber Co. v. Lambe, 13 R.L. at p. 117, (1885).

powers," the right to levy money by any mode or Prop. 66 system of taxation within the province and for provincial ends, saying:-" A people can undoubtedly tax itself through its legislators in parliament assembled. . The general powers of taxation cannot be impliedly taken away from them. It requires an express and clear enactment of the law to deprive them of what is a primary right. There is nothing of the kind, however, in the (British North America) Act." But we have already seen how the Privy Council treated this claim of inherent powers, and that it is opposed to the authorities.1

powers of

Now as Gwynne, J., says in Reed v. Mousseau, Provincial the only subsections of section 92, which expressly taxation. authorise the raising by Act of the provincial legislatures of any revenue whatever, by any system of taxation, are Nos. 2, 9, and 15. The last, dealing with the imposition of punishment by fine, penalty, or imprisonment, we need not concern ourselves with here. No. 2, however, empowers the legislatures exclusively to make laws in relation to direct taxation within the province in order to the raising of a revenue for provincial purposes;' and in connection with this several questions arise, and first as to what is direct taxation,' within the meaning of this clause.

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This question has been brought before the Privy Council in four cases. The first was AttorneyGeneral for Quebec v. The Queen Insurance Co.,3 where however the Board did not find it necessary to

1 Supra pp. 2-3, 710. See, also, per Strong, J., in Reed v. Mousseau, 8 S. C. R. at pp. 418-9, 3 Cart. at p. 199, (1883).

28 S.C. R. at p. 431, 3 Cart. at p. 208. Cf. per Dorion, C.J., S.C. 3 Cart. at p. 213. The public property and assets transferred to

each province constitute an additional source of revenue.

3

3 App. Cas. 1090, I Cart. 117, (1878). Supra p. 373.

Prop. 66 consider the scientific definition of direct or indirect taxation, because they found that whether as used by political economists, or in jurisprudence in the Courts of law, or in the popular use, the term 'direct taxation' was held not to apply to the tax they had to deal with, namely, a stamp imposed by statute on policies, renewals, and receipts, with provisions for avoiding the policy, renewal, or receipt, in a Court of law, if the stamp was not affixed.1

Direct taxation.

Taxation by law stamps.

Stamp Acts.

The next case in which the matter came before the Board, is Attorney-General of Quebec v. Reed,2 where the tax in question was a stamp duty of ten cents imposed by a Quebec Act on every exhibit produced in Court in any action depending therein. Their lordships say that the view more favourable to the tax being a direct tax was that of Mill and those who agree with him, namely, that a direct tax is "one which is demanded from the very persons

1 In Attorney-General of Quebec v. Reed, 3 Cart. at pp. 220-1, Ramsay, J., comments on the Privy Council judgment in this case, and denies that it "implies that a duty being subject to collection by means of a stamp, makes it necessarily indirect taxation." He says: "No one can seriously contend as an abstract question, I should think, that the form of collection, the evidence of payment, can determine as to the nature of the impost. If there was a poll-tax on each elector and the law said that each elector should take a receipt therefor on paper, bearing a penny stamp, it would hardly be said that the penny stamp was a different kind of taxation from the poll-tax." What he says the Privy Council decided was "only that the duty sought to be collected in that case, by a so called license, was in reality an ordinary Stamp Act, and indirect taxation." And in Choquette v. Lavergne, R.J.Q. 5 S.C. at pp. 122-3, (1893), Pelletier, J., speaks to the same effect and gives illustrations of his meaning

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Que la taxe s'appelle timbre ou autrement, peu importe, car pour la qualifier, il faut examiner son incidence." So, also, per Lacoste, C.J., S.C. in App. R.J.Q. 3 Q. B. at pp. 308-9. See further as to this case, infra p. 716. n. 1. See, too, Todd's Parl. Gov. in Brit. Col., 2nd ed. at p. 549.

2 10 App. Cas. 141, 3 Cart. 190, (1883), followed Plummer Wagon Co. v. Wilson, 3 M. R. 68; and see some remarks by "R" in 8 L. N. 58. The 9th Resolution at the Inter-provincial Conference at Quebec in 1887, protested against the result of this decision, and declared in favour of the amendment of the British North America Act so as to expressly give the provinces the right to legislate as to fees payable in legal proceedings in the provincial Courts, and apply the revenue thence derived to provincial purposes. See supra p. 196, n. 2.

direct taxa

who it is intended or desired should pay it," while Prop. 66 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;" but that even on this view of the matter the Definition of tax was not direct, for from the very nature of legal tion. proceedings, "until they terminate, as a rule and speaking generally, the ultimate incidence of such a payment cannot be ascertained. . . 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. . . . In truth that is a matter of absolute indifference to the intention of the legislature. On the other hand, so far as relates to the know- Taxation by ledge 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 enacts 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 presumed incidence may be altered.1 An importer may be himself a consumer. Where a stamp duty upon transactions of purchase and sale is payable, there may be special arrangements

1Cf. The Brewers and Maltsters Association of Ontario v. The Attorney-General for Ontario, [1897] A. C. at p. 237, where the Privy Council say: "If the legislature were under the guise of direct taxation, to seek to impose indirect taxation, nothing that their lordships have decided or said in the present case would fetter any tribunal that might have to deal with such a case if it should ever arise." See, also, Proposition 32 and the notes thereto, supra p.p 373-81.

law stamps.

Prop. 66 between the parties determining who shall bear it.1 The question whether it is a direct or an 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 92nd clause of the Act in question."

Bank of
Toronto v
Lambe.

on sale

The third case in which this matter came before the Board was Bank of Toronto v. Lambe,2 and their lordships' judgment therein can be best referred to in their own words in the subsequent case of The Brewers and Maltsters Association of Ontario v. The Attorney-General for Ontario, which is the last of the four cases alluded to. They there say: "The question what is direct taxation' within the meaning of sub-section 2 does not come now before this Board for consideration for the first time. In the case of the Bank of Toronto v.

1It might seem from the context, that the Privy Council here intimate the view that a stamp duty upon transactions of purchase and sale would be an indirect tax, by reason of the uncertainty of the ultimate incidence of it. But in Choquette v. Lavergne, R.J.Q. 5 S.C. 108, in App. sub nom. Lamonde v. Lavergne, R.J.Q. 3 Q.B. Stamp duty 303, (1893-4), a Quebec Act imposing a tax for provincial purposes on sales of immoveable property of 12 cents on the dollar upon the transactions. value, which tax was to be paid in stamps before the registration of the transfer in addition to payment either in money or stamps of the registrar's charges for recording the deed, was held a direct tax and intra vires. The judgment of the Privy Council in Attorney-General of Quebec v. Reed was referred to. Lacoste, C.J., says: "Dans l'èspece, le droit de mutation est imposé sur l'acheteur. C'est lui seul que le législateur a en vue, c'est le plus intéressé et bien souvent le seul intéressé, comme dans le cas où le vendeur recoit son prix au comptant. Lorsqu'il paie, il n'a pas l'espoir de se récupérer. Un immeuble n'est pas, de sa nature, un objet de commerce, que l'on achète pour revendre et l'acheteur ne peut en général compter sur une revente pour se refaire : " R.J.Q. 3 Q.B. at p. 308. Cf. per Pelletier, J., S.C., R.J.Q. 5 S. C. at pp. 121-3.

212 App. Cas. 575, 4 Cart. 7, (1887).

[1897] A. C. 231.

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