From the outset, let me just say that personally, I don’t care — in fact, I think that harmonizing taxes makes a lot of sense from the practical standpoint of efficiency in terms of revenue collection and remittance — but a lot of people are quite exercised about the issue. This latest effort spearheaded by Wilhelmus Nicholaas Theodore Marie “Bill” Vander Zalm contends that the proposed HST violates Sections 91 and 92 of the British North American Act of 1867.
Evidently, it’s sort of a “states-rights” argument (to put the dispute into a context that may be more familiar to our American friends) insofar as the BNA Act directed that the right to tax income (i.e., a “direct tax”) was delegated to the provinces; and it was clearly indicated that any monies so raised must be raised provincially, and used for provincial purposes. Backers of the petition maintain that according to the BNA Act, the federal government was denied the right to levy income tax and are relying on a precedent from the SCOC rendered in 1950 involving the transfer of powers from the provincial to the federal government as it related to application of the Income Tax Act to bolster their argument.
Good luck with that.
I’m not a lawyer and don’t even play one on the Internets, but it seems completely obvious to me that a consumption tax such as the GST/HST is quite a different animal than a “direct” income tax. The SCOC ruling cited by the petitioners does however throw the whole process into some amount of question. In that particular case, reference was made by federal and provincial attorneys general concerning the province of Nova Scotia’s authority to make a certain law which would permit the imposition of an indirect tax if the power to do so were delegated by the federal Parliament to the provincial Legislature. By unanimous decision the court held that the federal Parliament and provincial Legislatures have non-overlapping powers that cannot be delegated from one law-making body to the other.
Should be interesting to see how this plays out. Especially vexing to the Campbell government is the dictate that should the movement to have the HST aborted succeed, any revenues that may have accrued to the government past its planned implementation date would have to be rebated. The mechanism for how that might work however is entirely unclear…