... Or in this case, the New Brunswick legislature.
Buckle up, this may take a minute to get through, but it's an important principle.The backstory:
Since 1988, licensed premises in New Brunswick purchase their alcohol from the provincial liquor corporation’s retail stores and, in addition to the retail price, paid a so-called “user charge”, as prescribed by regulation. Finally, Kingstreet Investments, which operated a bunch of nightclubs in the province, challenged the constitutional validity of this “user charge”. Kingstreet was looking for reimbursement and interest of the amounts paid.
The trial court ruled that the user charge was an “unconstitutional indirect tax”, but that court refused to order the government to repay the money collected, as it applied the “passing-on” defence (which means, in somewhat clear English, that the bars were passing on the higher price to their customers, and therefore suffered no loss). The lower court also applied what it called a general rule against recovery of unconstitutional taxes.
(It's important to note that neither this Court, nor the two higher Courts that weighed in on this case ever said that the tax was constitutionally valid. Keep that in mind as we go on.)
Kingstreet took their case to the N.B. Court of Appeal, the highest Court in the province, which “allowed” Kingstreet’s appeal, and told the province to pay up, but not from the beginning of when the money was improperly collected, but only from from the time Kingstreet started its lawsuit against the province. The “user fees” paid before then were, according to the Court of Appeal, subject to that “passing‑on” defence I mentioned earlier.
So off both sides go to the Supreme Court of Canada, and last month, in a judgment you can read here
if you’re interested, the S.C.C., in a unanimous decision, told the province, "no dice": all
of the improperly-collected money had to go back to Kingstreet.
To quote from the S.C.C.’s “headnote” (a summary of its decision that appears at the beginning of the decision):This case should be decided on the basis of constitutional principles rather than unjust enrichment as an unjust enrichment analysis is ill‑suited to deal with the issues raised by ultra vires taxes
[that is, taxes that are beyond the scope of the government in question to impose – JH.]. The taxpayers in this case have recourse to a remedy as a matter of constitutional right. This remedy is the only appropriate one because it raises important constitutional principles which would be ignored by treating the claim under another category of restitution.
Restitution is generally available for the recovery of monies collected under legislation that is subsequently declared to be ultra vires. Such restitution is warranted to guarantee respect for constitutional principles, in particular, in this case, the principle that the Crown may not levy a tax except with authority of the Parliament or the Legislature. This principle of “no taxation without representation” is central to our conception of democracy and the rule of law. When the government collects and retains taxes pursuant to ultra vires legislation, it undermines the rule of law. To permit the Crown to retain an ultra vires tax would thus condone a breach of this most fundamental constitutional principle. As a result, a taxpayer who has made a payment pursuant to ultra vires legislation has a right to restitution.
Now, that’s what you could call a thumbnail sketch of the Court’s decision, but you get the idea: to allow “the Crown” (i.e., the N.B. government) to retain its ill-gotten money undermines the rule of law
So what’s the newly-elected (despite losing the popular vote, but that’s another story) government in N.B. going to do?
If you said “Pay back whatever unconstitutional taxes they collected over the years, and offer an apology”, then I’m sorry to say that you have to sit in the corner with the dunce hat on, becase that aint how governments tend to behave.
Nope, as this
story (from the increasingly-indispensable Macleans.ca
website) shows, the ward-heelers in New Brunswick plan on simply changing the law – retroactively
. They’re going to be real sports about it and pay Kingstreet its money back, presumably for showing the gumption to take the government all the way to the S.C.C., and no doubt incurring hefty lawyers’ bills along the way.
But everyone else who was hosed by a “user fee” which was actually an unconstitutional tax, and who paid money that the Court said had to be returned at the risk of undermining the rule of law, can just go pound sand. The government is now calling this underhanded, unconstitutional user fee a “retroactive tax”, which is about a good example of doublespeak as I’ve heard all day.
N.B.’s Public Safety Minister – now there’s an ironic title for the job, under the circumstances – John Foran said they were just thinking of the children, for God’s sake – er, I mean, protecting the taxpayers’ interests and keeping roads and schools from imminent collapse, and of course, he dragged the rest of the N.B. populace into the act:[Foran] says New Brunswickers would sooner see money spent on things like education and health care.
I don’t know if New Brunswickers will see it that way or not. But here’s the thing, and it’s a shame Foran doesn’t get this: the “rule of law” is not something that just ebbs and flows with public opinion. Quite the opposite: it’s one of those things that make civilized places, well, civilized because it ensures that nobody – from the Crown to a tavern-owner to the guy who buys a beer or three at said tavern – can escape the laws that are supposed to apply to us all.
If I take the government to Court, and win, then others who suffered exactly the same wrong should get exactly the same remedy. And just like any other loser in any other Court case, the government shouldn't get to play fast & loose with that principle just because the result may not be popular.
Now, what the N.B. government is going to do here may well pass constitutional muster – I’m a lawyer but I don’t practice in that area, so really, your guess is as good as mine. It may very well be that the taxpayers who ponied up for this bloody “user fee” for years may be out of luck, so that (presumably) another group of taxpayers can benefit.
But keep in mind what the S.C.C. said (at para. 14 of the decision I linked to above):The Court’s central concern must be to guarantee respect for constitutional principles.
Ask yourself if what the N.B. government is doing lives up to that "central concern" or not. You can’t tell me that this doesn’t give a political, if not legal, thumb to the eye to the values that the Supreme Court of Canada went on about in its decision.