December 11, 1998
Mr. Paul McKeever
Barrister & Solicitor
108 [Sic.] Stevenson Road South
Oshawa, Ontario L1J 5M1
Dear Mr. McKeever
Thank you for your letter of November 20.
I think it is hard to argue that the unqualified phrase in s. 91(3) "any mode or system of taxation" excludes taxation. Despite Tupper's letter, that has not been the general understanding as witness the introduction of a federal income tax in 1917 without any constitutional challenge. That tax has continued in force to the present day.
The tax rental agreements only started in 1939 and they only covered the tax room that had been filled by the provinces. In any case, the rented room was filled by federal legislation since provincial powers cannot be delegated to the federal parliament. In 1962, the tax rental agreements were replaced by the tax collection agreements, with federal and provincial income taxes existing side by side.
Even if Tupper was right about the original understanding (so imperfectly captured by the unqualified language of s. 91(3)), it is now perfectly clear that the federal power extends to direct taxation. Therefore, if the question of overlap is posed as other than an historical question, the answer is: the powers do overlap. Every taxation law now enacted by a province could also be enacted by the federal Parliament.
With best wishes.
Yours Sincerely,
Dean
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