Business Groups Seek Certainty on Validity of HST Extinguishment Act

News Releases

Vancouver, June 29, 2010 ‐ In a June 4, 2010 article in the Vancouver Sun, former BC Attorney General Geoff Plant questions the constitutional validity of the draft bill at the heart of the anti‐HST initiative – the so‐called “HST Extinguishment Act.”

Mr. Plant’s argument is rooted neither in the politics nor in the substantive merits of the HST itself. Rather, he focuses on whether or not the draft bill at the core of the anti‐HST initiative can, constitutionally speaking, become law in British Columbia. If the draft legislation is unconstitutional, the B.C. legislature will be legally unable to enact the bill as drafted by its proponents, regardless of how many signatures the petition receives.

The vast majority of B.C. business organizations support the HST as an integral component of the province’s longterm economic prosperity. The tax will make B.C. businesses more competitive in Canada and around the world, and will encourage investment and job creation in the province. However, concerns about the constitutionality of the draft HST Extinguishment Act – such as those raised by Mr. Plant – give rise to uncertainty about the future of the province’s tax policy. This uncertainty has the potential to harm B.C. businesses and the economy at large.

Concerned about this uncertainty, a number of business associations have today filed for Judicial Review of the decision to approve the initiative petition and its draft bill in the first place. This process will enable a judge to make a simple determination as to whether the draft bill is constitutionally valid and therefore suitable for introduction to the Legislature. The petitioners are the Council of Forest Industries, the Mining Association of British Columbia, the Independent Contractors and Businesses Association, the Western Convenience Stores Association, the Coast Forest Products Association, and the BC Chamber of Commerce.

We are hopeful that the Judicial Review we have requested can be completed expeditiously, providing British Columbians with certainty and confidence that considerable time and money will not be expended on a draft bill that is constitutionally unsound and therefore incapable of becoming law. The Judicial Review will provide clarity as to whether or not the petition can legally move forward.
Seeking judicial review at this juncture will avoid the considerable legal confusion that would result if the initiative process were to proceed unchecked on its current course. There should be no hesitation whatsoever in taking the necessary steps to ensure that British Columbians are presented with all the pertinent facts as they consider government policies that will profoundly impact the province’s future.

Background

The anti-HST initiative is doomed. Here's why

The Vancouver Sun
By Geoff Plant - Special to the Sun - June 4, 2010

If media statements are to be believed, the organizers of the anti-HST initiative petition are on the verge of success. But their initiative petition is fundamentally flawed and cannot possibly achieve the purpose that they intend.

To understand why, it is necessary to say something about the process under the Recall and Initiative Act, and to examine the actual petition.

An initiative petition is not just a political campaign, it is a legal process.

At the heart of every initiative petition is a draft statute. The purpose of an initiative campaign is not simply to complain about government policy -- there are lots of other ways to do that. The purpose of an initiative campaign is to require the legislature to pass a statute. The proposed statute is part of the petition itself.

The Recall and Initiative Act states clearly that an initiative may be undertaken in respect only of an issue that is within the jurisdiction of the province. In addition, the act also states that the draft bill must be clear and unambiguous. The initiative petition fails on both these grounds.

The draft bill prepared by the anti-HST campaign is called the HST Extinguishment Act. Its central provision states very simply "[T]he HST is hereby extinguished in British Columbia."

As everyone knows or should know, the HST is not provincial legislation. It's part of a federal statute, which can be amended or "extinguished" only by the federal Parliament. The legislature of British Columbia has no ability to extinguish federal legislation.

The draft bill is therefore a constitutional impossibility. It cannot be passed by the provincial legislature.

It's important to realize that the question is not whether the anti-HST campaigners could have drafted a valid bill, but whether they did. No lawyer ever succeeded in court by asking a judge to ignore the words of a statute and decide the case on the basis of what the legislature should have said.

The proposed initiative bill is flawed on other grounds. Its preamble states that the HST "contravenes" the provisions of our constitution under which the provinces have the power to impose direct taxation.

Unfortunately for the anti-HST campaigners, this is simply not the law. If they had asked, any constitutional law student could have explained that the federal government has the power to raise money by any mode or system of taxation. Therefore, the federal government has all the constitutional authority it needs to enact the HST, which is just the GST by another name. Similarly, while the provincial government clearly has authority to enact the PST, it is equally capable of deciding not to, and that is what it did when it repealed the PST.

It is hardly satisfactory to have the statute books of British Columbia filled with preambles that are constitutional nonsense.

Other provisions of the proposed bill fail to satisfy the requirement that it be "clear and unambiguous." For example, the section of the bill that tries to provide for some kind of refund to British Columbians is particularly problematic. How will eligibility for this refund be determined? By whom? Where will the money come from to pay for it? None of this is answered in the bill.

In addition, the bill would reinstate the PST as the "only" sales tax in British Columbia. It is completely silent on what therefore would happen to, for example, the Hotel Room Tax, and the Motor Fuel Tax -- are they to be repealed or reinstated? If so, on what basis?

The fact is that this proposed initiative bill should never have been accepted by Elections B.C. It does not meet the statutory requirements. But somehow it was accepted, and thousands of British Columbians have been induced to sign it in the belief that it will cause the repeal of the HST, when it can do no such thing.

And what next? There is no procedure in the Recall and Initiative Act for correcting the flaws in an initiative bill, once it has been accepted by the chief electoral officer. If the necessary signatures are obtained, the bill goes to a committee of the legislature. The committee either recommends that the bill be introduced in the legislature, or refers it back to Elections B.C. for a provincewide vote.

To undertake a provincewide vote in the face of the constitutional issues I have described would be a mistake.

There is another option. Under a statute called the Constitutional Question Act, the provincial cabinet has the power to refer any matter to the Supreme Court or Court of Appeal of B.C. for hearing and consideration. (This is the procedure that the government is using to test the constitutionality of the Criminal Code provisions outlawing polygamy.)

My suggestion is this: If the signature drive succeeds, the committee should be convened and recommend that the draft bill be tabled in the house, and immediately thereafter the bill should be referred to the courts for an opinion on its constitutional validity.

Nothing will be lost by such a procedure and much will be gained. If the bill is found to be valid, it can be debated and voted on in the house. If not, the petitioners will be free to try again, but this time the campaign will be conducted against the backdrop of a much clearer understanding of how our Constitution works.

Some may say it would be a shame if it turns out that so much energy has been invested by so many people in a failed undertaking. But that is what the rule of law is all about -- making sure that we conduct our politics according to law.

This petition fails that test. If it is fatally flawed, as I believe, its proponents alone are to blame.

Geoff Plant is a partner at Heenan Blaikie LLP and a former Liberal attorney-general of British Columbia.

 

For further information, contact:

John Winter
President & CEO
BC Chamber of Commerce
C 604.376.3577
jwinter@bcchamber.org