No Part II taxes without a Ways and Means resolution, justice rules

On December 14, Federal Court of Canada Justice William Shore ruled against the federal government in favour of the Canadian Association of Broadcasters and 17 broadcasting licensees on the legality of Part II broadcasting licence fees. Justice Shore found that since the fees aren’t necessary to regulate the broadcast industry, they are a tax. The following comments are taken from the introduction to the decision – the full document is available at http://cas-ncr-nter03.cas-satj.gc.ca/fct-cf/docs/2006FC1482.pdf One of the most fundamental principles of Canadian law is that taxes must be levied only with the authority of Parliament. This principle was first enunciated in the Bill of Rights 1688 and is now enshrined in s. 53 of the Constitution Act, 1867. The imposition of taxes must be by a Ways and Means resolution. Fees on the other hand can be treated differently. Levies upon an industry for purposes beneficial to that industry are regarded as not covered by the rules of financial procedure and so do not require authorization by Ways and Means resolution. The same applies to fees reasonably charged for the provision of services….Modern legislation, however, frequently makes provision for the imposition of other types of fees or payment which, although not taxes in a strict sense, have enough of the characteristics of taxation to require to be treated as ‘charges upon the people’ and therefore to be authorized by a Ways and Means resolution moved by a Minister….The following are examples of the circumstances in which a Ways and Means resolution will normally be required: (1) Where the primary, or a significant, purpose of imposing the payment is to raise revenue, over and above the cost of any service to which the payment is related, and in particular where no defined limit is set to the payment: for example, provision requiring the holders of broadcasting licences to make payments (of unspecified amounts) in respect of those licences (Erskine May’s Treatise on The Law, Privileges, Proceedings and Usage of Parliament, 23rd ed. By William McKay, ed. London: LexisNexis UK, 2004, at pp. 897 & 899)... If the Crown claims that a levy is a fee, and not a tax, it is incumbent on the Crown to lead some evidence in support of its position. All of the evidence before this Court supports the conclusion that Part II Fees are a tax. None of the evidence supports the conclusion that they are properly a fee. These levies are not connected to activities related to the Canadian broadcasting system, but are in fact a "leakage" out of the regulatory scheme into government coffers for general public purposes. If Part II Licence Fees were not collected, would the Canadian broadcasting regulatory scheme even be affected? No.If the obligation to pay Part II Licence Fees was eliminated, all of the elements of public policy and the regulatory scheme would still be left in place – Part I Licence Fees, Canadian content requirements, contributions to Canadian Television Fund, independent funds and FACTOR, mandatory expenditures on Canadian programming and community programming, simultaneous substitution, transfer of ownership or control benefits payments, etc…. If the Part II Licence Fees obligation were removed, the migration of over $100 million year out of the broadcasting system and into general government revenues would end. There is no reasonable nexus between the charges and the regulatory scheme. Part II Licence Fees are not a "regulatory charge." They are a tax.

No Part II taxes without a Ways and Means resolution, justice rules

Broadcast | December 20, 2006

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