Tax Lock Is Unconstitutional, Pointless, and Dangerous
On Friday, the Prime Minister promised if elected he would enact legislation that would create a “tax lock,” preventing future governments from raising taxes,
This new legislation will protect our fragile economy and guarantee reduced taxes and stable incomes for our families.
His party has already promised not to raise taxes, while the other parties have promised they will. This measure goes further, because it would seek to bind the hands of successive governments, without the necessary constitutional amendments.
Former Parliamentary law clerk, Rob Walsh, indicated the proposed legislation would likely be unconstitutional for this reason. The division of powers under s. 91 of The Constitution Act clearly states that one of the powers of Parliament includes,
3. The raising of Money by any Mode or System of Taxation.
[emphasis added]
In contrast, the taxation powers of the provinces under s. 92 are limited to “raising of a Revenue for Provincial Purposes.”
Any statute limiting this federal power without a constitutional amendment would likely have no force and effect.
Glen McGregor of the Ottawa Citizen said,
Some have speculated that a future government could enact new legislation to repeal a “tax lock” bill but in Walsh’s view, that wouldn’t be required.
Even if the Conservatives managed to get the proposal into law, it would carry no consequence for breaking it, much like the Conservative government’s fixed election date law, which Harper broke by going to the polls early, in 2008, by retroactively claiming the law wasn’t meant to apply to minority governments.
Rather, the proposal allows the Tories to highlight opposition positions on taxation — specifically, the Liberals plan to raise taxes on upper-income earners and the NDP’s promise to increase the corporate tax rate.
The Prime Minister likely adopted the idea from similar initiatives in the U.K. Lynton Crosby, a consultant hired by the Prime Minister earlier this month, assisted governments in both the U.K. and Australia through successful elections.
The difference is that in the U.K., where devolution is steadily occurring, the division of taxation powers is quite different constitutionally, and in Wales, still subject to a referendum. The constitutional basis for taxation in Australia, under ss. 51(ii), 53, 55, and 90, and 96 of their constitution act. The 2009 case of Pape v Commissioner of Taxation by High Court of Australia noted significant limits on this taxation power.
Similar limits are observed in Canada, but the ability of the federal government to fund areas outside of its constitutional jurisdiction is just as crucial, especially in light of evolving realities of societal needs. The federal government presented a paper in 1969, Federal-Provincial Grants and the Spending Power of Parliament, to the Federal-Provincial First Ministers’ Conference to address the evolving nature of the spending power. In this paper, Pierre Elliott Trudeau stated,
Ordinarily, one thinks of the “spending power” of governments simply in terms of the spending they do on particular programmes, under the authority of legislation passed by their legislative bodies. Constitutionally, however, the term “spending power” has come to have a specialized meaning in Canada: it means the power of Parliament to make payments to people or institutions or governments for purposes on which it [Parliament] does not necessarily have the power to legislate.
The first and foremost of these programs today is our health system, which is largely funded by the Canada Health Transfer administered under the Canada Health Act. The current government has implemented reductions in the annual increases to the provinces over time, leaving a “fiscal gap” imposed on the provinces.
Health services are the single largest social transfer from the federal government to the provinces. The Prime Minister’s promise then to prevent future tax raises should not only be seen as pointless and unconstitutional, but a direct threat to our health itself.
There’s no need for any sort of sophisticated argument regarding taxation powers in the Constitution Act 1867. Ordinary legislation does not and cannot bind future parliaments. If Harper passed a “tax lock,” then the next parliament introduced a ‘tax hike,’ the ‘tax hike law’ would prevail over the ‘tax lock.’
I fear Mr. Harper is not considering the law at all in proposing this law
It sounds rather like
– something to add noise to the debate, and
– protect him from criticism for not having kept feeding sufficient money into infrastructure in the days after the “great recession” to avoid having the current double-dip recession…
I doubt that such a law would be unconstitutional – though of course that would depend on exactly what it said – but it would certainly be ineffective to bind future Parliaments.
Mr Harper probably got the idea, like so very much of what he has done over the past 9 years, from the Harris government in Ontario. See the Taxpayer Protection Act, 1999.
I agree that it would be entirely symbolic – and not of something worthwhile, either. Governments need to be able to pay for what they do, and what they do is often necessary or popular, or even both.
John, the 1999 provincial legislation is very interesting indeed. Thanks for pointing that out. There’s some interesting commentary on how that statute has affected successive governments, even where they do not agree with its contents.
Yes, the legislation is symbolic, and no doubt Mr. Harper is well aware of it. I am assuming the objective is to ensure that any future government planning on raising taxes will face increased scrutiny. Given that we have a political culture in which “reductions in the annual draconian cuts, I think that such an approach has its merits.
Oops, typo: meant to write “Given that we have a political culture in which “reductions in the annual increases” to the provinces”, i.e. a decrease in the rate of increase, are seen a draconian cuts”
There’s at least one case saying this type of legislation is unenforceable and to some extent unconstitutional:
http://www.canlii.org/en/mb/mbqb/doc/2014/2014mbqb155/2014mbqb155.html