620 Connaught Ltd. v. Canada (Attorney General), 2008 SCC 7, [2008] 1 SCR 131

                                                 SUPREME COURT OF CANADA

Between:

620 Connaught Ltd., operating as Downstream Bar, 263053 Alberta Ltd., operating as Miss Italia Ristorante, 313769 Alberta Ltd., operating as Jasper House Bungalows, 659510 Alberta Ltd., operating as Buckles Restaurant and Saloon, Alex Holdings Ltd., operating as Something Else Restaurant, Alpine Grill Ltd., operating as Alpine Grill Restaurant, Athabasca Motor Hotel (1972) Ltd., operating as Athabasca Hotel, Lina and Claudio Holdings Ltd., operating as Beckers Gourmet Restaurant, Cantonese Restaurant Ltd., Earls Restaurant (Jasper) Ltd., Fiddle River Seafood Company Ltd., George Andrew & Sons Ltd., operating as Astoria Hotel Company Limited, Glacier International Ltd., operating as Whistlers Inn, Husereau Restaurant Holdings Inc., operating as Tekarra Restaurant, Jasper Inn Investment Ltd., operating as The Inn Restaurant, Kabos Holding Ltd., operating as Karouzos Steakhouse, Kontos Investments Ltd., operating as Kontos Restaurant, L & W Vlahos Holdings Ltd., operating as L & W Restaurant, La Fiesta Restaurant Ltd., Larry Holdings Ltd., operating as Mount Robson Restaurant, Maligne Tours Ltd., Sawridge Enterprises Inc., operating as Sawridge Inn & Conference Center, T.C Restaurants Ltd., operating as Villa Caruso Steak House & Bar and Tonquin Prime Rib Village Ltd.

Appellants

v.

Attorney General of Canada, Minister of Environment, Superintendent of Jasper National Park and Parks Canada Agency

Respondents

‑ and ‑

Attorney General of Ontario

Intervener

Coram: McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein JJ.

______________________________

620 Connaught Ltd. v. Canada (Attorney General), [2008] 1 S.C.R. 131, 2008 SCC 7

620 Connaught Ltd., operating as Downstream Bar, 263053

Alberta Ltd., operating as Miss Italia Ristorante, 313769

Alberta Ltd., operating as Jasper House Bungalows, 659510

Alberta Ltd., operating as Buckles Restaurant and Saloon, Alex

Holdings Ltd., operating as Something Else Restaurant, Alpine

Grill Ltd., operating as Alpine Grill Restaurant, Athabasca

Motor Hotel (1972) Ltd., operating as Athabasca Hotel, Lina

and Claudio Holdings Ltd., operating as Beckers Gourmet

Restaurant, Cantonese Restaurant Ltd., Earls Restaurant

(Jasper) Ltd., Fiddle River Seafood Company Ltd., George

Andrew & Sons Ltd., operating as Astoria Hotel Company

Limited, Glacier International Ltd., operating as Whistlers

Inn, Husereau Restaurant Holdings Inc., operating as Tekarra

Restaurant, Jasper Inn Investments Ltd., operating as The Inn

Restaurant, Kabos Holding Ltd., operating as Karouzos

Steakhouse, Kontos Investments Ltd., operating as Kontos

Restaurant, L & W Vlahos Holdings Ltd., operating as L & W

Restaurant, La Fiesta Restaurant Ltd., Larry Holdings Ltd.,

operating as Mount Robson Restaurant, Maligne Tours Ltd.,

Sawridge Enterprises Inc., operating as Sawridge Inn &

Conference Center, T.C. Restaurants Ltd., operating as Villa

Caruso Steak House & Bar and Tonquin Prime Rib Village Ltd.                                 Appellants

v.

Attorney General of Canada, Minister of Environment,

Superintendent of Jasper National Park and Parks Canada

Agency                                                                                                                            Respondents

and

Attorney General of Ontario                                                                                            Intervener

Indexed as:  620 Connaught Ltd. v. Canada (Attorney General)

Neutral citation:  2008 SCC 7.

File No.:  31661.

2007:  November 16; 2008:  February 29.

Present:  McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein JJ.

on appeal from the federal court of appeal

Constitutional law — Taxation — Business licence fees — Distinction between a tax and a regulatory charge — Fees for licences required for businesses in national park selling liquor imposed pursuant to regulatory scheme under authority granted by statute to minister — Licensing fee ultra vires minister’s powers if a tax — Whether annual business licence fees a tax or a regulatory charge — Constitution Act, 1867, s. 53  — Canada National Parks Act, S.C. 2000, c. 32, s. 16(1) (n), (r) — Parks Canada Agency Act, S.C. 1998, c. 31, s. 24  — National Parks General Regulations, SOR/78‑213, s. 39  — National Parks of Canada Business Regulations, SOR/98‑455, s. 4.

The appellants own hotels, restaurants and bars serving alcoholic beverages in Jasper National Park and must pay a fee in accordance with the Parks Canada Master List of Fees in order to have a business selling alcohol in the park.  This fee is imposed under the authority granted to the Minister of Canadian Heritage pursuant to s. 24  of the Parks Canada Agency Act .  The Agency’s policy for the year in question was to attribute revenues generated in a park back to that park.  At issue, given that s. 53  of the Constitution Act, 1867  provides that only Parliament may impose a tax, is whether the National Parks Agency under the authority of the Minister imposed a regulatory charge or a tax.  Both the Federal Court and the Federal Court of Appeal found the fee to be a regulatory charge and validly imposed. 

Held:  The appeal should be dismissed. 

The business licence fees paid by the appellants in Jasper National Park are, in pith and substance, regulatory charges and intra vires the Minister’s delegated power.  The business licence fees have several of the attributes of a tax:  they are (1) compulsory and enforced by law, (2) imposed under the authority of Parliament, (3) levied by a public official, the Minister, and (4) intended for a public purpose — the operation of Jasper National Park.  However, they are regulatory charges because they are connected to a regulatory scheme.  [24] [29]

To determine if the governmental levy is connected to a regulatory scheme, the first step is to identify the existence of a relevant regulatory scheme and, if there is such a scheme, the second step is to find a relationship between the charge and the scheme itself.  Here, the regulation of Jasper National Park qualifies as a relevant regulatory scheme:  (1) the Canada National Parks Act  and the Parks Canada Agency Act  together with the accompanying regulations form a complete, complex and detailed code governing how Jasper National Park should operate; (2) the scheme is aimed at affecting individuals’ behaviour; (3) it provides for a proper estimation of the costs of the operation of the park; and (4) the appellants benefit from the regulation in that a well-maintained National Park attracts more visitors and therefore the greater the potential volume of their businesses.  Also, regulations limiting development and thus the number of businesses within the Park allow the appellants to participate in a restricted market in which they are not subject to unlimited competition.  With respect to the second step, the necessary relevant relationship between the fees paid by the persons being regulated and the regulatory scheme exists because the fees are tied to the costs of the regulatory scheme.  While the fee revenue should not exceed the regulatory costs in order to avoid rendering s. 53  of the Constitution Act, 1867  meaningless, the government should  be given some reasonable leeway.  In this case, given the evidence, it can be inferred that the fee revenues generated in Jasper National Park likely did not exceed, and certainly did not significantly exceed, the cost of the regulatory scheme for the Park.  Accordingly, the business licence fees are connected to the regulatory scheme governing the Park. [25-27] [30-34] [37-40] [44-45]

Cases Cited

Applied:  Eurig Estate (Re), [1998] 2 S.C.R. 565; Westbank First Nation v. British Columbia Hydro and Power Authority, [1999] 3 S.C.R. 134; Lawson v. Interior Tree Fruit and Vegetable Committee of Direction, [1931] S.C.R. 357; referred to:  Allard Contractors Ltd. v. Coquitlam (District), [1993] 4 S.C.R. 371; Ontario Home Builders’ Association v. York Region Board of Education, [1996] 2 S.C.R. 929; Ottawa-Carleton (Regional Municipality) By‑law 234‑1992 (Re), [1996] O.M.B.D. No. 553 (QL); Cape Breton Beverages Ltd. v. Nova Scotia (Attorney General) (1997), 144 D.L.R. (4th) 536, aff’d (1997), 151 D.L.R. (4th) 575, leave to appeal refused, [1997] 3 S.C.R. vii.

Statutes and Regulations Cited

Bill of Rights, 1 Will. & Mar. sess. 2, c. 2, art. 4.

Canada National Parks Act, S.C. 2000, c. 32, ss. 4(1) , 16(1) (n), (r), (3) .

Constitution Act, 1867, ss. 53 , 91 (1A), 92(2) , 125 .

National Parks General Regulations, SOR/78‑213, s. 39.

National Parks of Canada Businesses Regulations, SOR/98‑455, s. 4.

Parks Canada Agency Act, S.C. 1998, c. 31, ss. 20(2) (c), 23 , 24 .

Authors Cited

Canada.  House of Commons. Standing Committee on Environment and Sustainable Development.  Evidence, Issue No. 40, 1st sess., 38th Parl., May 19, 2005, p. 7.

Hogg, Peter W.  Constitutional Law of Canada, vol. 1, 5th ed.  Scarborough, Ont. Thomson/Carswell, 2007.

Hogg, Peter W., and Patrick J. Monahan.  Liability of the Crown, 3rd ed.  Scarborough, Ont.:  Carswell, 2000.

APPEAL from a judgment of the Federal Court of Appeal (Linden, Nadon and Evans JJ.A.), [2007] 2 F.C.R. 446, 271 D.L.R. (4th) 678, 352 N.R. 177, [2006] F.C.J. No. 1083 (QL), 2006 CarswellNat 1919, 2006 FCA 252, affirming a decision of Snider J. (2005), 274 F.T.R. 311, [2005] F.C.J. No. 1107 (QL), 2005 CarswellNat 1808, 2005 FC 886.  Appeal dismissed.

Jack N. Agrios, Q.C., and Janice A. Agrios, Q.C., for the appellants.

Kirk N. Lambrecht, Q.C., and Cheryl D. Mitchell, for the respondents.

Janet E. Minor and Michael S. Dunn, for the intervener.

The judgment of the Court was delivered by

Rothstein J. —

I.  Introduction

[1]                              The issue in this appeal is whether the annual business licence fee for the right to sell alcoholic beverages imposed on hotels, restaurants and bars in Jasper National Park is a regulatory charge or a tax.  This business licence fee is imposed under the authority granted to the Minister of Canadian Heritage pursuant to s. 24  of the Parks Canada Agency Act, S.C. 1998, c. 31 , to “fix the fees or the manner of calculating fees in respect of products, rights or privileges provided by the [Parks Canada] Agency”.

[2]                              Pursuant to s. 53  of the Constitution Act, 1867 , only Parliament may impose a tax.  If the business licence fee is, in pith and substance, a tax, it is ultra vires and beyond the jurisdiction of the Minister to impose.  If the fee is, in pith and substance, a regulatory charge, it may validly be imposed under the authority of the Minister pursuant to s. 24  of the Parks Canada Agency Act  (“Parks Agency Act”).

[3]                              Both Snider J. in the Federal Court and Evans J.A. in the Federal Court of Appeal found that the fee was a regulatory charge and therefore was validly imposed: (2005), 274 F.T.R. 311, aff’d [2007] 2 F.C.R. 446.  I am of the same view and would therefore dismiss this appeal.

II.  The Power to Tax

[4]                              Central to our concept of democracy is the principle that the Crown may not levy a tax except with the authority of Parliament or the legislature.  This principle harkens back to the Bill of Rights of 1689, 1 Will. & Mar. sess. 2, c. 2, art. 4, and ensures not only “that the executive branch is subject to the rule of law, but also that the executive branch must call the legislative branch into session to raise taxes (and vote supply)” (P. W. Hogg and P. J. Monahan, Liability of the Crown (3rd ed. 2000), at p. 246).

[5]                              This principle is found in s. 53  of the Constitution Act, 1867 , which mandates that bills imposing any tax shall originate in the House of Commons.  In Eurig Estate (Re), [1998] 2 S.C.R. 565, Major J. explained the rationale underlying s. 53 , at paras. 30-32:

The provision codifies the principle of no taxation without representation, by requiring any bill that imposes a tax to originate with the legislature. My interpretation of s. 53  does not prohibit Parliament or the legislatures from vesting any control over the details and mechanism of taxation in statutory delegates such as the Lieutenant Governor in Council. Rather, it prohibits not only the Senate, but also any other body other than the directly elected legislature, from imposing a tax on its own accord.

In our system of responsible government, the Lieutenant Governor in Council cannot impose a new tax ab initio without the authorization of the legislature. As Audette J. succinctly stated in The King v. National Fish Co., [1931] Ex. C.R. 75, at p. 83, “[t]he Governor in Council has no power, proprio vigore, to impose taxes unless under authority specifically delegated to it by Statute. The power of taxation is exclusively in Parliament.”

The basic purpose of s. 53  is to constitutionalize the principle that taxation powers cannot arise incidentally in delegated legislation. In so doing, it ensures parliamentary control over, and accountability for, taxation. As E. A. Driedger stated in “Money Bills and the Senate” (1968), 3 Ottawa L. Rev. 25, at p. 41:

Through the centuries, the principle was maintained that taxation required representation and consent. The only body in Canada that meets this test is the Commons. The elected representatives of the people sit in the Commons, and not in the Senate, and, consistently with history and tradition, they may well insist that they alone have the right to decide to the last cent what money is to be granted and what taxes are to be imposed.

[6]                              The issue in this case is whether the Minister imposed a tax, which, in accordance with s. 53  of the Constitution Act, 1867 , is beyond his statutory power since only Parliament may levy a tax.

III.  Facts

[7]                              The appellants own all or nearly all of the hotels, restaurants and bars in Jasper National Park serving alcoholic beverages.  In order to operate these establishments, they require a business licence to sell alcohol for which they must pay a fee in accordance with the Parks Canada Master List of Fees.  The 2003/2004 Master List provides that the fees for a business licence for the sale of alcohol are made up of a base fee of $75 plus 3 percent of gross value purchased annually for the sale of spirits and wines, and 2 percent of gross value purchased annually for the sale of beer.

[8]                              The total forecasted cost of operation of Jasper National Park in 2003/2004 was $20.4 million.  The total amount of business licence fees collected for the sale of alcoholic beverages in that period was $87,625.  The Agency’s policy for the 2003/2004 year was to attribute revenues generated in a park back to that park.

IV.  Overview of Statutes and Regulations Governing National Parks

[9]                              The relevant statutory and regulatory provisions are contained in the appendix attached to these reasons.  Parliament has jurisdiction over national parks under s. 91 (1A) of the Constitution Act, 1867 . Two statutes and relevant subordinate regulations govern the management of all national parks in Canada. The Canada National Parks Act, S.C. 2000, c. 32  (“National Parks Act”), vests the Minister with control and management of Canada’s national parks, including Jasper National Park. The second relevant statute is the Parks Agency Act which establishes the Parks Canada Agency as having the responsibility for the administration of the National Parks Act and its regulations.

[10]                          The obligation to obtain a licence to sell alcoholic beverages in national parks and pay the applicable licence fees arises from a combination of the relevant statutes and regulations. Sections 16(1)(n) and 16(1)(r) of the National Parks Act provide that the Governor in Council may make regulations respecting the control of businesses and the determination of fees for the use of park resources.  Section 16(3) of the National Parks Act authorizes the Superintendent of a park to issue licences in relation to any matter that is the subject of regulations. Section 39 of the National Parks General Regulations, SOR/78‑213, prohibits the sale of any intoxicating beverage unless the vendor has obtained a licence under the National Parks of Canada Businesses Regulations, SOR/98-455.  The procedures for obtaining a licence to sell alcohol are set out in s. 4 of the National Parks of Canada Businesses Regulations. The licence application must be accompanied by the applicable fee fixed under s. 24 of the Parks Agency Act. This section states that the Minister may fix fees or the manner of calculating fees regarding products, rights and privileges provided by the Agency.

[11]                          The Agency has the authority to expend the revenues generated from park operations including those listed in s. 20(2)(c) of the Parks Agency Act, i.e. “proceeds from, including fees paid under any Act of Parliament in respect of, the provision by the Agency of a service, of the use of a facility or of a product, right or privilege”. 

V.  Appellants’ Position

[12]                          The appellants’ complaint is with respect to the fees they are required to pay on the purchase of alcohol (3 percent on wine and spirits and 2 percent on beer).  The percentage fee together with the base fee of $75 amounted to $87,625 in 2003/2004. 

[13]                          The appellants say that if, as found by the Federal Court and Federal Court of Appeal, the regulatory scheme relevant to the business licence fees imposed on them was the administration and operation of Jasper National Park, the fees they pay are unconnected to the regulation of their businesses or even businesses generally in Jasper National Park.  As such, they constitute a tax and not a regulatory charge.  Alternatively, the appellants contend that a regulatory scheme must be more precisely defined in order for the amounts collected to be valid regulatory charges, such as the regulation of businesses generally or businesses selling alcoholic beverages in Jasper National Park.  However, if this more precise regulatory scheme is considered, there would be no nexus between the cost of the scheme and the business licence fees collected since the revenues collected would disproportionally exceed the costs of  the regulatory scheme.  In either case, the charge qualifies as a tax which is ultra vires the Minister’s powers.

VI.  Respondent’s Position

[14]                          The government says that the business licence fees paid by the appellants are ancillary or adhesive to the regulatory scheme governing the administration and operation of Jasper National Park.  The fees collected were used to defray the cost of administration and operation of the park.  As such, they qualify as regulatory charges and not as taxes.  The government does not rely on a narrower regulatory scheme regulating only businesses generally or businesses selling alcoholic beverages in the park.

VII.  Selecting the Appropriate Regulatory Scheme

[15]                          The narrow scheme proposed by the appellants focuses exclusively on the regulation of the sale of alcoholic beverages, or alternatively the regulation of businesses, in Jasper National Park.  However, the appellants benefit from such things as heritage presentations, visitors’ services and highway maintenance in the park.  To focus only on the regulation of the sale of alcohol or the regulation of businesses ignores the reality that the appellants’ businesses benefit from their location in and the operation and regulation of the park as a whole.  The National Parks Act, the Parks Agency Act and the regulations together comprise the regulatory scheme governing Jasper National Park.  I conclude that the appropriate regulatory scheme to consider in this case is therefore the regulatory scheme governing the administration and operation of Jasper National Park.

VIII.  Analysis

1.  Analysing Whether a Government Levy is a Tax or a Regulatory Charge

[16]                          The task for the Court is to identify whether the fees paid by the appellants are, in pith and substance, a tax or a regulatory charge.  The pith and substance of a levy is its dominant or most important characteristic.  The dominant or most important characteristics are to be distinguished from its incidental features (P. W. Hogg, Constitutional Law of Canada (5th ed. 2007), vol. 1, at pp. 433-36).    The fees in this case have characteristics of both a tax and regulatory charges.  The Court must ascertain which is dominant and which is incidental.

[17]                          In the context of whether a government levy is a tax or a regulatory charge, it is the primary purpose of the law that is determinative.  Although the law may have incidental effects, its primary purpose will determine whether it is a tax or a regulatory fee.  In Westbank First Nation v. British Columbia Hydro and Power Authority, [1999] 3 S.C.R. 134, Gonthier J. described the pith and substance of a government levy in terms of its primary purpose.  At para. 30, he stated:

In all cases, a court should identify the primary aspect of the impugned levy. . . . Although in today’s regulatory environment, many charges will have elements of taxation and elements of regulation, the central task for the court is to determine whether the levy’s primary purpose is, in pith and substance: (1) to tax, i.e., to raise revenue for general purposes; (2) to finance or constitute a regulatory scheme, i.e., to be a regulatory charge or to be ancillary or adhesive to a regulatory scheme; or (3) to charge for services directly rendered, i.e., to be a user fee. [Emphasis deleted.]

There is no suggestion in this case that the levy is a user fee for the provision of government services or facilities.  The sole question is whether in pith and substance the levy is a tax or a regulatory charge.

[18]                          The issue of whether a levy is a tax or a  regulatory charge has been considered on prior occasions by this Court. The issue was relevant when determining the constitutionality of a provincial levy that had indirect tendencies (Allard Contractors Ltd. v. Coquitlam (District), [1993] 4 S.C.R. 371, and Ontario Home Builders’ Association v. York Region Board of Education, [1996] 2 S.C.R. 929).  If it was a tax, it would be ultra vires the province whose taxing authority under s. 92(2)  of the Constitution Act, 1867  is restricted to direct taxes within the province.  However, if it was a regulatory charge, the province was constitutionality competent to impose such charge.  It was also relevant when deciding if a by-law of an Indian band enacted a system of taxation under the purported authority of the Indian Act , for if it was, it could not be applied to an agent of the provincial Crown by reason of s. 125  of the Constitution Act, 1867  (Westbank ).  However, determining whether a government levy is ultra vires a Minister’s delegated power has not yet been addressed by this Court.

2.  Regulatory Charges Distinguished From User Fees

[19]                          It will be useful to first differentiate a regulatory charge from a user fee.  A user fee, by definition, is a fee charged by the government for the use of government services or facilities.  In the case of user fees, as stated by this Court in Eurig, there must be a clear nexus between the quantum charged and the cost to the government of providing such services or facilities.  The fees charged cannot exceed the cost to the government of providing the services or facilities.  However, “courts will not insist that fees correspond precisely to the cost of the relevant service.  As long as a reasonable connection is shown between the cost of the service provided and the amount charged, that will suffice” (see Eurig, at para. 22).

[20]                          By contrast, regulatory charges are not imposed for the provision of  specific services or facilities.  They are normally imposed in relation to rights or privileges awarded or granted by the government.  The funds collected under the regulatory scheme are used to finance the scheme or to alter individual behaviour.  The fee may be set simply to defray the costs of the regulatory scheme.  Or the fee may be set at a level designed to proscribe, prohibit or lend preference to a behaviour, e.g. “[a] per-tonne charge on landfill waste may be levied to discourage the production of waste [or a] deposit-refund charge on bottles may encourage recycling of glass or plastic bottles” (see Westbank , at para. 29, referring to Ottawa-Carleton (Regional Municipality) By-law 234-1992 (Re), [1996] O.M.B.D. No. 553 (QL), and Cape Breton Beverages Ltd. v. Nova Scotia (Attorney General) (1997), 144 D.L.R. (4th) 536 (N.S.S.C.) (aff’d (1997), 151 D.L.R. (4th) 575 (N.S.C.A.), leave to appeal refused, [1997] 3 S.C.R. vii)).

[21]                          There is no suggestion that the business licence fees in this case are user fees and the government does not take the position that the fees are set at a level so as to proscribe, prohibit or lend preference to certain conduct.  Consequently, the question is whether, in pith and substance, the licence fees constitute a tax or a regulatory charge which is used to defray the costs of a regulatory scheme.

3.  The Characteristics of a Tax

[22]                          In Lawson v. Interior Tree Fruit and Vegetable Committee of Direction, [1931] S.C.R. 357, Duff J. (as he then was) identified the characteristics of a tax (pp. 362-63).  In Eurig, Major J. summarized the Lawson characteristics of a tax at para. 15:

Whether a levy is a tax or a fee was considered in Lawson, supra.  Duff J. for the majority concluded that the levy in question was a tax because it was: (1) enforceable by law; (2) imposed under the authority of the legislature; (3) levied by a public body; and (4) intended for a public purpose.

[23]                          These characteristics will likely apply to most government levies.  The question is whether these are the dominant characteristics of the levy or whether they are only incidental. 

4.  Distinguishing a Regulatory Charge From a Tax

[24]                          The distinction between a tax and a regulatory charge was not the way in which the Court in Lawson dealt with the matter before it.  To address that issue, Gonthier J. in Westbank  added a fifth consideration to those articulated by Duff J. in Lawson: that the government levy would be in pith and substance a tax if it was “unconnected to any form of a regulatory scheme” (para. 43).  This fifth consideration provides that even if the levy has all the other indicia of a tax, it will be a regulatory charge if it is connected to a regulatory scheme.   

[25]                          In Westbank, Gonthier J. established a two-step approach to determine if the governmental levy is connected to a regulatory scheme.  The first step is to identify the existence of a relevant regulatory scheme.  To do so:

[A] court should look for the presence of some or all of the following indicia of a regulatory scheme: (1) a complete, complex and detailed code of regulation; (2) a regulatory purpose which seeks to affect some behaviour; (3) the presence of actual or properly estimated costs of the regulation; (4)  a relationship between the person being regulated and the regulation, where the person being regulated either benefits from, or causes the need for, the regulation. [para. 44]

The first three considerations establish the existence of a regulatory scheme.  The fourth consideration establishes that the regulatory scheme is relevant to the person being regulated.

[26]                          Although this list of factors provides a useful guide, it is not to be treated as if the factors were prescribed by statute.  As stated by Gonthier J., at para. 24:

This is only a list of factors to consider; not all of these factors must be present to find a regulatory scheme.  Nor is this list of factors exhaustive.

Nonetheless, there must be criteria establishing a regulatory scheme and its relevance to the person being regulated.

[27]                          Provided that a relevant regulatory scheme is found to exist, the second step is to find a relationship between the charge and the scheme itself.

This [relationship] will exist when the revenues are tied to the costs of the regulatory scheme, or where the charges themselves have a regulatory purpose, such as the regulation of certain behaviour.

(Westbank , at para. 44)

[28]                          In summary, if there is a regulatory scheme and it is found to be relevant to the person being regulated under step one, and there is a relationship between the levy and the scheme itself under step two, the pith and substance of the levy will be a regulatory charge and not a tax.  In other words, the dominant features of the levy will be its regulatory characteristics.  Therefore, the questions to ask are: (1) Have the appellants demonstrated that the levy has the attributes of a tax? and (2) Has the government demonstrated that the levy is connected to a regulatory scheme?  To answer the first question, one must look to the indicia established in Lawson.  To answer the second question, one must proceed with the two-step analysis in Westbank .

(a)  Do the Business Licence Fees Have the Attributes of a Tax?

[29]                          Certainly the business licence fees have the attributes of a tax.  They are compulsory and enforced by law, imposed under the authority of Parliament, levied by the Minister, a public official, and intended for a public purpose — the operation of Jasper National Park.  However, it is still necessary to determine whether there is a relevant regulatory scheme and whether the fees are connected to that regulatory scheme, in which case the appellants’ licence fees will be considered regulatory charges and not taxes.

(b)  Are the Business Licence Fees Connected to a Regulatory Scheme?

Step 1:  The Criteria for Identifying the Existence of a Relevant Regulatory Scheme: Is the Regulatory Scheme Governing the Administration and Operation of Jasper National Park Relevant to the Appellants?

[30]                          The first Westbank  criterion is the presence of a “complete, complex and detailed code of regulation”.  Jasper National Park exists and operates under an overarching statutory scheme which includes the National Parks Act and the Parks Agency Act, together with the regulations.  Some of these regulations apply only to specific parks; there are even regulations applying specifically to the town of Jasper.  However, the majority of the regulations relate to the management of all national parks.  These regulations range from wildlife management to traffic provisions.  Read in conjunction with the two Acts, these regulations establish how services, rights and privileges are obtained, what is prohibited within the parks and to whom authority is delegated. Together, these statutes and the regulations form a complete and detailed scheme of how Jasper National Park should operate.  Therefore, the first of the regulatory scheme criteria is satisfied.

[31]                          The second criterion is whether the operation of Jasper National Park is a regulatory scheme which is aimed at affecting individuals’ behaviour. The purpose of national parks is set out in s. 4(1) of the National Parks Act:

The national parks of Canada are hereby dedicated to the people of Canada for their benefit, education and enjoyment, subject to this Act and the regulations, and the parks shall be maintained and made use of so as to leave them unimpaired for the enjoyment of future generations.

The operation of Jasper National Park must be in accordance with this principle.  The object of operating the park for the benefit, education and enjoyment of the people of Canada is intended to encourage the use of the park by Canadians, while preserving the integrity of the park for the future.  Regulation of the behaviour of current visitors to and businesses in the park so that they do not use the park in a manner which would impair enjoyment of the park by present and future generations helps to achieve these goals.  The second criterion is satisfied.

[32]                          The third criterion for identifying a regulatory scheme is the presence of a proper estimation of the costs; in this case the cost of the operation of Jasper National Park. This criterion is satisfied.  Snider J. found that the forecast of expenditures for the park in 2003/2004 was estimated to be $20.4 million.

[33]                          The evidence demonstrates that the regulation of Jasper National Park meets the first three criteria in Westbank  and is therefore a regulatory scheme for purposes of the analysis.

[34]                          The fourth criterion is the existence of a relationship between the regulation and the person being regulated, where the person being regulated either causes the need for the regulation or benefits from it. In Allard, this Court recognized that companies that removed gravel benefited from the roads that were funded from the fees collected for the removal of gravel.  In Ontario Home Builders’, the majority found that the benefit conferred on construction contractors was the creation of residential developments with adequate amenities. The same approach is applicable here. The appellants benefit from the existence of a well-maintained national park. The appellants’ revenues are linked to the number of visitors coming each year to Jasper National Park.  The more the park attracts visitors, the greater the potential volume of the appellants’ business. Also, regulations limiting development and thus the number of businesses within the park allow the appellants to participate in a restricted market in which they are not subject to unlimited competition.  These factors demonstrate that the appellants benefit from the regulation of Jasper National Park.

[35]                          However, where a regulatory scheme is very broad, the scheme may not be sufficiently related to the persons being regulated either because the regulation does not benefit those persons, or because those persons do not cause the need for the regulation, except in a very indirect manner.  In such a case, the fees may be found to be a tax.  Evans J.A. recognized the need for a sufficient relationship in his reasons, at paras. 44-45:

The fees in the present case were not attributed to the operations of the Department of Canadian Heritage at large nor even, more specifically, to the administration of the entire system of national parks.  The licence fees paid by the appellants were attributed to the operating budget of the very park, Jasper, in which the appellants conducted their businesses.  Any aspect of the operation of Jasper National Park which makes it more attractive to visitors, including on-site heritage presentations, visitor services and through highways, increases the appellants’ potential customer base.

In contrast, the appellants obtain only a very indirect benefit  at best from the operation of other national parks and from the central administration of the responsible Department and the Parks Canada Agency.  In my opinion, the analogies relied on by the appellants would be more persuasive if the Crown were arguing that the relevant regulatory scheme was the operation and administration of the national parks system as a whole.

[36]                          The safeguard against an insufficient relationship can be found in this Westbank  criterion: “[The] relationship between the person being regulated and the regulation, where the person being regulated either benefits from, or causes the need for, the regulation.”  Here, there is a close relationship between the appellants’ businesses and the regulation of Jasper National Park.

[37]                          Since all four of the Westbank  criteria are met, the regulation of Jasper National Park qualifies as a relevant regulatory scheme.

Step 2: The Relationship Between the Business Licence Fees and the Regulation of Jasper National Park

[38]                          In order for a regulatory charge intended to defray the costs of a regulatory scheme to be “connected”, the fee revenue must be tied to the costs of the regulatory scheme.  The trial judge, at para. 16, found that “[i]n general, the imposition of fees is designed to offset the costs of operating and administering each of Canada’s national parks”, and the policy of the government in 2003/2004 was to attribute revenue generated in a park back to that park (Affidavit of Doug Tapley, Manager of Business Innovations for the Parks Canada Agency, October 25, 2004, at para. 11, Appellants’ Record, at p. 82).

[39]                          Section 23 of the Parks Agency Act specifies that the Minister cannot set a user fee for services or facilities that is higher than the cost to the government of providing them. On the other hand, s. 24 of the Act pertaining to regulatory fees for rights or privileges granted by the government does not contain such a limit.  Nonetheless, where fees generated under a regulatory scheme are to be used to defray the costs of the scheme, as in this case, the fee revenue generated cannot exceed the costs of the scheme.  In referring to a comprehensive and integrated regulatory scheme in Ontario Home Builders’, Iacobucci J. states, at para. 85:

The carefully designed mechanics of the scheme ensure that the power of indirect taxation will not extend beyond the regulatory costs; this is crucial in order to avoid rendering s. 92(2)  of the Constitution Act, 1867  meaningless.

In this case, it is equally necessary that the fee revenue not exceed the regulatory costs in order to avoid rendering s. 53  of the Constitution Act, 1867  meaningless.

[40]                          However, as stated in Allard, at pp. 411-12, the government needs to be given some reasonable leeway with respect to the limit on fee revenue generation.  While a significant or systematic surplus above the cost of the regulatory scheme would be inconsistent with a regulatory charge and would be a strong indication that the levy was in pith and substance a tax, a small or sporadic surplus would not, as long as there was a reasonable attempt to match the revenues from the fees with the cost associated with the regulatory scheme.

[41]                          The total amount collected in licence fees from businesses selling alcohol in Jasper National Park in 2003/2004 was $87,625. It represents less than 0.5 percent  of the total forecasted expenditures of Jasper National Park in 2003/2004 which amounted to $20.4 million.  Obviously, the fees paid by the appellants did not exceed the costs of regulating Jasper National Park.

[42]                          However, it is not sufficient that fees collected under one regulation that is part of an overall regulatory scheme constitute only a small fraction of the costs of the overall regulatory scheme.  An “apples to apples” comparison requires that all fees collected in respect of the operation of Jasper National Park by the Agency must be taken into account to ensure that the total of such fee revenues did not exceed the cost of the operation of the park.  However, there is no specific evidence of the total amount of such fees collected in Jasper National Park in 2003/2004.

[43]                          In the corporate plan of the Parks Canada Agency for 2004/2005 to 2008/2009, fee revenue from all of Canada’s national parks in 2003/2004 amounted to approximately $78 million against costs of $519 million or approximately 15 percent of the costs (Respondent’s Record, at pp. 63-66).  Although fee revenue as a percentage of cost is very low overall, considering the revenue/cost relationship for all of Canada’s parks is a tenuous basis for inferring the revenue/cost relationship in one particular park.  However, Mr. Alan Latourelle, Chief Executive Officer of the Parks Canada Agency, speaking to a Parliamentary Committee in 2005, testified that “[Parks Canada] generate[s] about $43 million in our [M]ountain [P]arks, and our actual expenditures — total, including capital — are about $60 million” (House of Commons, Standing Committee on Environment and Sustainable Development, Evidence, 1st sess., 38th Parl., May 19, 2005, at p. 7).  Although not clearly stipulated in the minutes of the Committee, from the context of the discussion and the date of his appearance, it appears Mr. Latourelle was referring to the revenues and expenditures for 2003/2004.

[44]                          As stated in Allard, at pp. 411-12, the government must be given some leeway, as long as there is a reasonable attempt to match the revenues from the fees with the cost of the regulatory scheme.  In the Mountain Parks, there was a $17 million shortfall between the fees collected and the total expenditures in 2003/2004.  Although the total fee revenue for Jasper National Park is not in evidence, I am prepared to infer from the information in the material before the Court relating to the Mountain Parks that the fee revenues from Jasper National Park likely did not exceed, and certainly did not significantly exceed, the cost of the regulatory scheme for the park.  Accordingly, the business licence fees are connected to the regulatory scheme governing the park.

[45]                          Just as there had to be a relevant relationship between the regulatory scheme and the person being regulated under the first step of the Westbank  approach, there must also be a relevant relationship at the second step, that is, between the fees paid by the persons being regulated and the regulatory scheme caused by those persons or from which those persons receive a benefit.  The conditions were met in this case.  However, I would note that if the fee revenues generated in Jasper National Park are not expended entirely within, or for the benefit of that park, the fees may well be “unconnected” and not in pith and substance a regulatory charge, but rather, a tax.

[46]                          Raising revenues is one of the most powerful tools of government.  It involves the taking of property by the government.  That is why taxes may be levied only by elected legislators in Parliament or the legislature of a province under the Constitution Act, 1867 .  Where the connection between the use of the revenues generated from a government levy and the persons being regulated is doubtful, the courts will scrutinize the facts to ensure that the Constitution is not circumvented by executive or bureaucratic edict.

[47]                          In summary, the evidence discloses that the regulatory scheme governing the administration and operation of Jasper National Park is relevant to the appellants’ businesses and that there is a relationship between the business licence fees paid by the appellants and that regulatory scheme.  In the result, the pith and substance or dominant purpose of the business licence fees is as regulatory charges.

5.  Regulatory Charges to Proscribe, Prohibit or Lend Preference to Certain Conduct

[48]                          Whether the costs of the regulatory scheme are a limit on the fee revenue generated, where the purpose of the regulatory charge is to proscribe, prohibit or lend preference to certain conduct, is not an issue before the Court in this case, and it is not necessary to answer that question here.

6.  Proprietary Charges

[49]                          The intervener, the Attorney General of Ontario, says that a proprietary charge should be kept distinct from a regulatory charge or a tax.  It was submitted that the Province of Ontario relies heavily on proprietary charges as a source of income and that certain fees on businesses in provincial parks are structured as proprietary charges.  I agree that proprietary charges for goods and services supplied in a commercial context are distinct from either regulatory charges or taxes and may be determined by market forces.  As explained by Professor Hogg in Constitutional Law of Canada, at pp. 870-71:

. . . [proprietary] charges are those levied by a province in the exercise of proprietary rights over its public property.  Thus, a province may levy charges in the form of licence fees, rents or royalties as the price for the private exploitation of provincially‑owned natural resources; and a province may charge for the sale of books, liquor, electricity, rail travel or other goods or services which it supplies in a commercial way.

There is some question as to whether a licence fee for the right to occupy land inside the park for premises in which to sell alcohol can be characterized as a proprietary charge.  However, the government has not sought to justify the business licence fees in this case as  proprietary charges.  Whether they could be is better left to be decided at a time when it is properly raised and argued by the parties.

IX.  Conclusion

[50]                          In pith and substance, the business licence fees paid by the appellants in Jasper National Park in 2003/2004 are regulatory charges and therefore are intra vires the delegated power of the Minister of Canadian Heritage.  The appeal should be dismissed with costs.

APPENDIX

Constitution Act, 1867 

53.  Bills for appropriating any Part of the Public Revenue, or for imposing any Tax or Impost, shall originate in the House of Commons.

91.  It shall be lawful for the Queen, by and with the Advice and Consent of the Senate and House of Commons, to make Laws for the Peace, Order, and good Government of Canada, in relation to all Matters not coming within the Classes of Subjects by this Act assigned exclusively to the Legislatures of the Provinces; and for greater Certainty, but not so as to restrict the Generality of the foregoing Terms of this Section, it is hereby declared that (notwithstanding anything in this Act) the exclusive Legislative Authority of the Parliament of Canada extends to all Matters coming within the Classes of Subjects next herein-after enumerated; that is to say, —

. . .

1A.  The Public Debt and Property.

92.  In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next herein-after enumerated; that is to say, —

. . .

2. Direct Taxation within the Province in order to the raising of a Revenue for Provincial Purposes.

Canada National Parks Act, S.C. 2000, c. 32 

4. (1) The national parks of Canada are hereby dedicated to the people of Canada for their benefit, education and enjoyment, subject to this Act and the regulations, and the parks shall be maintained and made use of so as to leave them unimpaired for the enjoyment of future generations.

16. (1) The Governor in Council may make regulations respecting

. . .

(n) the control of businesses, trades, occupations, amusements, sports and other activities or undertakings, including activities related to commercial ski facilities referred to in section 36, and the places where such activities and undertakings may be carried on;

. . .

(r) the determination of fees, rates, rents and other charges for the use of park resources and facilities, the provision of works and services referred to in paragraph (i) and improvements referred to in paragraph (j), and the issuance and amendment of permits, licences and other authorizing instruments pursuant to subsection (3);

. . .

(3) Regulations made under this section may authorize the superintendent of a park, in the circumstances and subject to the limits that may be specified in the regulations,

(a) to vary any requirement of the regulations for purposes of public safety or the conservation of natural resources in the park;

(b) to issue, amend, suspend and revoke permits, licences and other authorizations in relation to any matter that is the subject of regulations and to set their terms and conditions; and

(c) to order the taking of any action to counter any threat to public health or to remedy the consequences of any breach of the regulations in the park.

Parks Canada Agency Act, S.C. 1998, c. 31 

20. . . .

(2) Notwithstanding subsection 29.1(1) of the Financial Administration Act, the Agency may, for the purposes referred to in subsection 19(1), spend amounts equal to revenues resulting from the conduct of its operations in that or subsequent fiscal years, including

. . .

(c) proceeds from, including fees paid under any Act of Parliament in respect of, the provision by the Agency of a service, of the use of a facility or of a product, right or privilege;

23. (1) The Minister may, subject to any regulations that the Treasury Board may make for the purposes of this section, fix the fees or the manner of calculating the fees to be paid for a service or the use of a facility provided by the Agency.

(2) Fees for a service or the use of a facility that are fixed under subsection (1) may not exceed the cost to Her Majesty in right of Canada of providing the service or the use of the facility.

24. The Minister may, subject to any regulations that the Treasury Board may make for the purposes of this section, fix the fees or the manner of calculating fees in respect of products, rights or privileges provided by the Agency.

National Parks of Canada Businesses Regulations, SOR/98‑455

3. No person shall carry on, in a park, any business unless that person is the holder of a licence or an employee of a holder of a licence.

4. . . .

(2) An application must be accompanied by the applicable fee fixed under section 24  of the Parks Canada Agency Act .

National Parks General Regulations, SOR/78‑213

39. No person shall sell any intoxicating beverage in a Park unless he has obtained a licence for such a sale under the National Parks Businesses Regulations and the sale

(a) is in accordance with the laws of the province in which the Park is situated; and

(b) has been approved by the director‑general.

Appeal dismissed with costs.

Solicitor for the appellants:  Jack N. Agrios, Edmonton.

Solicitor for the respondents:  Attorney General of Canada, Edmonton.

Solicitor for the intervener:  Attorney General of Ontario, Toronto.