|
The Sales Tax on Legal Fees |
|
|
|
The British Columbia Government charges 7% sales tax on legal services. I don't know anyone who thinks this is a good or fair tax. The Province doesn't charge sales taxes on other professional services.
Mr. Dugalt Christie didn't think it was a fair tax. He was a lawyer who fought for the rights of disadvantaged people. He challenged this tax. I will quote the Supreme Court of Canada:
This case is the latest in a series of challenges to the tax and its predecessor, the Social Service Tax Amendment Act, 1992, S.B.C. 1992, c. 22. It was brought by Mr. Dugald Christie, a litigation lawyer who worked with poor and low income people in Vancouver. Mr. Christie was consumed by a passion to provide legal services to those at the margins of society. It was a passion that ultimately took
his life; last year, on a cross-Canada bicycle trip to raise funds for the cause, he was struck and killed on a stretch of highway near Sault Ste. Marie, Ontario.
Mr. Christie's action to have the legal services tax declared unconstitutional was rooted in his experience of the effects of the tax on his practice. Mr. Christie charged low fees. His net income in the years 1991 to 1999 did not exceed $30,000 per year. Often his clients were not able to pay the bills he rendered for legal services, either on time or at all. Yet the Act required him to submit the tax
to government even though the fees on which it had been levied had not been paid. Mr. Christie's small income made this difficult. On March 10, 1997, the government sent Mr. Christie a demand notice. A few days later, without ascertaining the reason for non-payment or attempting to work out a payment schedule, the province seized $972.11 from Mr. Christie's bank account. It seized a further $5,349.64 in December 1997. Mr. Christie stopped practising law and did not resume the practice until July 2000.
Mr. Christie was initially successful--at least in part. Madam Justice Koenigsberg of the Supreme Court of British Columbia found that the tax on legal fees was unconstitutional when applied to low income earners.
A majority of a five judge panel of the British Columbia Court of Appeal went further. The Court of Appeal ruled that "to the to the extent that the [Social Service Tax] Act purports to tax legal services related to the determination of rights and obligations by courts of law or independent administrative tribunals, it is unconstitutional as offending the principle of access to justice, one of the elements of the rule of law."
The Supreme Court of Canada, in British Columbia (Attorney General) v. Christie, 2007 SCC 21, disagreed. In reasons for judgment released on May 25, 2007, The Supreme Court of Canada unanimously ruled that the tax on legal services is constitutional.
The Supreme Court of Canada's decision does not necessarily mean that the judges of Canada's highest court consider the tax to be a good tax. It only means that the government has the constitutional right to impose it.
If British Columbia voters don't like it, they can still demand change from their elected representatives.
I know I don't like it. |
