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of banks.

Lambe, it was necessary to put a construction on Prop. 66 those words. The legislature of Quebec had imposed a tax on every bank carrying on business Taxation within the province. This tax was a sum varying with the paid-up capital, with an additional sum for each office or place of business. The question at once arose, was this 'direct taxation'? . . . The legislation impeached was held valid on the ground that the tax imposed was direct taxation in the province within the meaning of sub-section 2. Their lordships pointed out that the question was not what was direct or indirect taxation according Direct to the classification of political economists1 but in No. 2 of what sense the words were employed by the legis- B.N.A. lature in the British North America Act. At the same time they took the definition of John Stuart Mill as seeming to them to embody with sufficient. accuracy the common understanding of the most obvious indicia of direct and indirect taxation, which were likely to have been present to the minds of those who passed the Federation Act."

2

1In the judgments in the Courts below in this case the views of economists are much considered and discussed. The judgments of Mathieu, and Rainville, J.J., not printed in Mr. Cartwright's collection, will be found in 13 R. L. 68, 125.

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taxation' in

sect. 92,

Act.

taxation.

*For Mill's definition referred to, see supra pp. 714-5. A writer in 22 L.J. Eng. at p. 398, (quoted 10 L.N. 257), seems somewhat hypercritical in his remarks on this use of Mill's definition by the Privy Council. He says: "The citation of J. S. Mill for a definition of indirect taxation in an Act of parliament was not happy. For purposes of legislation and political economy Mill's distinction that indirect taxes are demanded from one person in the expectation and in- Mill's tention that he shall indemnify himself at the expense of another was definition sufficient. His point of view was that of the statesman; but when of direct the powers of a legislature are concerned, it is necessary to look not at the intention of the legislature, but at the effect of the Act." In the first place, as shown in the text, the Board do not quote Mill's words as a binding legal definition; and, in the second place, the words of Lacoste, J., in Lamonde v. Lavergne, R.J.Q. 3 Q.B. at p. 307, in reference to this use of Mill's definition, seem to afford a sufficient answer: "Ce désir, cette intention, cette expectative se présument et s'infèrent non pas tant des termes du statut que de ce qui arrive dans le cours ordinaire et natural des choses. C'est à dire que le taxe est 'direct' ou indirect' suivant que celui qui la paie d'après le cours ordinaire des choses, se récupère où ne se récupère pas."

Prop. 66

economists.

In the course of their judgment they point out that though it is quite proper, or rather, necessary, to have careful regard to the opinions of writers on political economy on the subject of what is 'direct' The political and what is 'indirect' taxation, yet "it must not be forgotten that the question is a legal one, namely, what the words mean as used in this statute, while the economists are always seeking to trace the effect of taxation throughout the community, and are apt to use the word 'direct' and 'indirect' according as they find that the burden of a tax abides more or less with the person who first pays it," whereas, "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. They reject as certainly incorrect "for legal purposes," the view attributed to Mill, that "to be strictly direct, a tax must be general," but they take his definition " as a fair basis for testing the character of the tax in question"; not, however, "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."

The statutory meaning of ' direct taxation.'

The last of the four cases in which the meaning of direct taxation' in No. 2 of section 92 of the British North America Act has come before the

112 App. Cas. at pp. 581-2, 4 Cart. at p. 15.
212 App. Cas. at pp. 582-3, 4 Cart. at pp. 16-7.

and Malt

sters case.

Privy Council is that of The Brewers and Maltsters Prop. 66 Association of Ontario v. The Attorney-General for Ontario,1, where they hold that the provincial legislature has power, in order to raise a revenue for provincial purposes, to impose a license fee on brewers, distillers, and other persons, though duly The Brewers licensed by the government of Canada, for the manufacture and sale of fermented, spirituous, or other liquors, for licenses to sell within the province the liquors manufactured by them, as had been done by R.S.O. c. 194, s. 51, which imposed a license fee of $100 upon every such brewer and distiller for license to sell wholesale within the province, and that this was direct taxation, within No. 2 of section 92.2 After referring, as has been seen, to their prior decision of Bank of Toronto v. Lambe, and Mill's definition, their lordships say:-" In the License present case, as in Lambe's case, their lordships wholesale think the tax is demanded from the very person whom the legislature intended or desired should pay it. They do not think there was either an expectation or intention that he should indemnify himself at the expense of some other person. No such transfer of the burden would in ordinary course take place, or can have been contemplated as the natural result of the legislation in the case of a tax like the present one, a uniform fee, trifling in amount, imposed alike upon all the brewers and distillers without any relation to the quantity of goods which they sell. It cannot have been intended by the imposi

[1897] A. C. 231.

2 For the previous authorities in favour of the view that such taxation on trades and businesses is direct and not indirect taxation, see supra p. 361, n. 2; cf. Bank of Toronto v. Lambe, 13 App. Cas. at at p. 584, 4 Cart. at pp. 18-9, (1897); and Lambe v. Fortier, R.J.Q. 5 S.C. 47, 355, 25 S. C. R. 422, (1894-5).

tax on

dealers.

Prop. 66 tion of such a burden to tax the customer or con

Provincial

taxation

need not be

equal and uniform

sumer. It is, of course, possible that in individual instances the person on whom the tax is imposed may be able to shift the burden to some other shoulders. But this may happen in the case of every direct tax.”1

This case was a reference of certain questions by the Lieutenant-Governor in Council, and one of these questions was, whether, if the imposition of such license fee was intra vires, "must one and the same fee be exacted from all such brewers, distillers, and persons?" The Ontario Court of Appeal, by their judgment of January 14th, 1896, unreported, answered this question in the negative in accordance with the prior case of Fortier v. Lambe, R.J.Q. 5 S.C. 47, 355, 25 S.C.R. 422, (1894-5). Cf., also, Dow v. Black, L. R. 6 P.C. at p. 282, 1 Cart. at p. 107, (1875), where the Privy Council decided that No. 2 of section 92 "must be taken to enable the provincial legislature, wherever it shall see fit, to impose direct taxation for a local purpose upon a particular locality within the province;" and see Proposition 17 and the notes thereto. In The Brewers and Maltsters Association case no appeal was taken to the Privy Council in regard to the answer to the above question. Hence in entire accordance with that omnipotence of Canadian legislatures within their respective spheres, which is one of the points in which, in the words of the preamble of the British North America Act, the Dominion has a constitution similar in principle to that of the United Kingdom,' there is no such necessity for uniformity and equality of taxation with us as exists in the United States, where the constitution provides by Article I, section 3, that 'direct taxes shall be apportioned among the several States. ... according to their respective numbers, which shall be determined by adding to the whole number of free persons, including those bound to service for a term of years, and excluding Indians not taxed, three-fifths of all other persons,' and by Article 1, section 8, that all duties, imports, and excises, shall be uniform throughout the United States'; and that no capitation or other direct tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.' Difference Hence it would seem that no tax can be a direct tax in the sense of the United States constitution, which is not capable of apportionment according to the rules thus laid down; and it has been seriously doubted if, in the sense of that constitution, any taxes are direct constitution. taxes, except those on polls or on lands: Story on the Constituion of the United States, 5th ed., Vol. 1, pp. 703-4. Hence the American decisions as to what are 'direct taxes' within the United States constitution are inapplicable to the constitution of the Dominion. See this point of distinction pointed out and commented on: per Dorion, C.J., in Bank of Toronto v. Lambe, M. L.R. 1 Q.B. at p. 125-6, 4 Cart. at p. 26; per Tessier, J., S.C., M.L.R. 1¡Q. B. at p. 163, 4 Cart. at p. 57; per Jetté, J., S.C., M. L. R. I S.C. at p. 36, 4 Cart. at p. 93; per Pelletier, J., Choquette v. Lavergne, R.J.Q. 5 S C. at p. 115. See, also, supra pp. 254-5. In Fortier v. Lambe, R.J.Q. 5 S.C. 47, however, Tait, J., quotes a very apposite passage from Cooley on Taxation, that: "Taxes are said to be direct, under which designation would be included those which are assessed upon the property, person,

in this

respect from

the United

States

tax on

It remains, before passing on to the next point to Prop. 66 be considered, to notice the recent case of Re Yorkshire Guarantee and Securities Corporation, (Limited), in which the Supreme Court of British Columbia held unanimously that a tax imposed by the provincial Assessment Act, (C.S.B.C. 1888, c. III, s. 3), upon mortgages was a direct tax and intra vires, notwithstanding the evidence showed that the company required their mortgagors to recoup the amount. At p. 274, Drake, J., says :-"The intention of the Provincial legislature is that the owner of the personalty is to mortgages bear the tax; it is imposed on him, and he is the person intended to bear it. It is not imposed on him with a view that someone else (the mortgagor) shall bear it, or that it shall be distributed over a class of persons. The tax is not imposed on the dollars, but on the owners of the dollars. Customs duties are imposed on the goods, not on the owner of the goods. I cannot see how the appellants in this case can escape from the decision of Bank of Toronto v. Lambe. This tax appears to me to fall within the indicia laid down by the Privy Council in that case for discriminating between a direct and indirect tax."

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business, income, etc., of those who are to pay them; and indirect are those which are levied on commodities before they reach the consumer and are paid by those upon whom they ultimately fall, not as taxes, but as part of the market prices of the commodity."

14 B.C. 258, (1895).

See supra pp. 716-8.

of land.

3 In a report as Minister of Justice, of December 24th, 1894, Sir C. Taxes in H. Tupper says: "The question may arise whether taxation which respect renders both the owner, occupier, and tenant of land liable for a tax, the amount of which is arrived at having regard to the extent and value of the land so owned, occupied, or held under lease, is not indirect, and therefore ultra vires of a provincial legislature: Hodgins' Provincial Legislation, 2nd ed., p. 1229. In Le College de Médecins v. Brigham, 16 R.L. 283, (1888), it was held that a provincial Act requiring all members of the College of Physicians and Surgeons of the province to pay two dollars for the use of the College was intra vires.

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