November 11, 1998
Mr. Paul McKeever
Barrister & Solicitor
108 [Sic.] Stevenson Road South
Oshawa, Ontario L1J 5M1
Dear Mr. McKeever
Re: Overlap of Taxing Powers
Thank you for your letter of October 28 and the accompanying article, which I have read with interest.
The question whether the two taxation powers overlap must turn on whether the federal Parliament can impose a "direct" tax "for provincial purposes". If it can, then the two powers overlap.
The federal Parliament, which can levy "any mode or system of taxation", can certainly impose a "direct" tax. Whether it can impose a direct tax "for provincial purposes" turns on the meaning of the phrase "for provincial purposes". If it essentially means nothing, as I suspect is the case, then the two powers overlap.
I'm not sure whether any practical consequences flow from this question. We know that both levels of government can impose income taxes (for example) and can use the proceeds for any purpose they choose. Both levels of government can and do finance provincial health care plans, for example.
With best wishes,
Yours sincerely,
Dean
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