CLARKE,
J.A.:—This
is
a
reference
to
the
Appellate
Division
of
this
Court
for
hearing
and
determination
pursuant
to
s:
2
of
the
Constitutional
Questions
Act,
R.S.A.
1922,
c.
89,
of
the
question
of
the
constitutional
validity
of
the
said
Act,
or
of
any
of
the
provisions
thereof.
By
an
order
made
on
May
11,
1938,
Mr.
J.
EK.
Brownlee,
K.C.,
was
appointed
to
represent
the
class
of
agricultural
producers
interested
in
opposing
the
constitutional
validity
of
the
Act.
Upon
the
hearing
Mr.
W.
S.
Gray,
K.C.,
and
Mr.
H.
J.
Wilson,
K.C.,
represented
the
Attorney-General
of
Alberta,
and
they
were
opposed
by
Mr.
Brownlee,
K.C.,
with
Mr.
C.
W.
Clement.
The
Attorney-General
of
Canada
having
been
notified
stated
that
he
did
not
desire
to
be
heard.
Section
2
provides
that
in
the
Act,
unless
the
context
otherwise
requires,—
‘‘(a)
‘Agricultural
produce’
means
wheat,
oats,
rye,
barley,
flax,
peas,
beans,
hay,
alfalfa,
sugar
beets,
potatoes,
grass
seed,
clover
seed,
alfalfa
seed,
eggs,
honey,
horses,
cattle,
sheep,
swine,
poultry,
geese,
dairy
produce
and
wool;
“(b)
‘Minister’
means
the
Minister
of
Municipal
Affairs
;
“(c)
‘Municipality’
means
every
municipal
district,
improvement
district
and
every
school
district
which
collects
its
own
taxes
other
than
a
village
school
district
;
“(d)
‘Primary
dealer’
means
any
person
who
in
the
course
of
and
as
a
part
of
his
business
purchases
agricultural
produce
from
the
producer
thereof
or
deals
in
or
handles
or
processes
any
agricultural
produce
for
the
producer
thereof;
“(e)
‘Producer’
means
every
person
who,
being
the
registered
owner
or
the
purchaser
under
an
agreement
of
sale
or
the
lessee
of
any
land
in
a
municipality,
occupies
and
uses
such
land
for
the
purpose
of
the
production
of
any
agricultural
produce.
‘*3.
On,
from
and
after
the
first
day
of
the
month
next
following
the
month
in
which
this
Act
is
proclaimed
to
be
in
force,
seven
undivided
one-hundredth
parts
of
all
agricultural
produce
shall,
as
and
from
the
moment
upon
which
the
same
comes
into
being,
be
vested
in
His
Majesty,
in
the
right
of
the
Province,
to
be
used
in
such
manner
and
for
such
purposes
as
are
herein-
after
provided,
and
shall
remain
so
vested
until
such
produce
is
sold
by
the
producer
thereof.’’
"‘4.
Whenever
any
such
agricultural
produce
is
sold
by
or
on
behalf
of
the
producer
thereof,
so
much
of
such
produce
as
is
by
this
Act
vested
in
His
Majesty
shall
be
delivered
to
the
Minister
on
behalf
of
His
Majesty.
‘
’
"5.
Every
primary
dealer
in
the
Province
is
hereby
authorized
and
empowered
as
the
agent
for
His
Majesty,
to
receive
out
of
all
agricultural
produce
which
is
delivered
to
him
upon
the
purchase
thereof
or
which
is
delivered
to
him
for
the
purpose
of
being
dealt
in,
handled
or
processed,
the
portion
thereof
which
is
vested
in
His
Majesty,
and
upon
the
delivery
of
any
such
produce
to
a
primary
dealer
such
dealer
shall
as
such
agent
as
aforesaid,—
.
.
.
"(c)
retain
on
behalf
of
his
Majesty
the
portion
thereof
by
this
Act
vested
in
His
Majesty,
namely,
seven
undivided
onehundredth
parts
thereof,
and
dispose
of
the
portion
so
retained
in
such
manner
as
he
may
be
directed
by
the
Minister.
.
.
.
"‘6(1)
In
case
any
producer
of
agricultural
produce
desires
to
ship
such
produce
to
any
point
outside
the
Province,
he
shall
first.
give
notice
in
writing
to
the
Minister
setting
out
the
kind
and
amount
of
the
produce
which
he
proposes
to
ship,
the
company
or
person
by
whom
the
proposed
shipment
is
to
be
made,
the
date
upon
which
it
is
proposed
to
make
the
shipment,
and
the
legal
description
of
the
land
occupied
by
the
producer.
(2)
Such
notice
shall
be
delivered
to
the
Minister
not
later
than
the
tenth
day
before
the
date
of
the
proposed
shipment;..
.
.
(3)
The
Minister
shall
then
proceed
to
give
such
directions
as
he
may
deem
proper
as
to
the
delivery
to
the
Minister
of
the
part
thereof
belonging
to
the
Crown
in
the
right
of
the
Province,
and
to
issue
a
permit
for
the
shipment,
subject
to
the
compliance
by
the
producer
with
such
directions
which
shall
be
set
out
therein.
"‘(4)
No
producer
shall
ship,
move
or
send
or
cause
to
be
shipped,
moved
or
sent
out
of
the
Province
any
agricultural
produce
unless
he
has
a
permit
under
this
section
authorizing
the
shipment
and
has
complied
with
all
the
directions
set
out
therein.
(5)
No
person
whatsoever
shall
ship
or
transport
or
accept
any
agricultural
produce
from
a
producer
for
shipment
or
transportation
out
of
the
Province
unless
he
receives
at
the
time
of
the
receipt
of
the
produce
for
shipment
the
permit
of
the
Minister
for
such
shipment
and
satisfies
himself
that
the
directions
set
out
therein
have
been
complied
with.”
Section
10
authorizes
the
Minister
to
store
so
much
of
the
agricultural
produce
received
by
him
pursuant
to
the
Act
as
he
deems
necessary
for
furnishing
any
relief
in
kind,
the
furnishing
whereof
is
authorized
by
any
Act
of
the
Legislature
of
the
Province,
and
to
sell
any
of
such
produce
and
to
place
the
proceeds
of
sale
in
a
special
trust
account;
and
s.
11
provides
that
the
money
for
the
time
being
to
the
credit
of
the
special
trust
account
shall
be
available:—
Firstly,
for
the
payment
to
municipal
districts
and
improvement
districts
of
the
amounts
payable
to
them
pursuant
to
s.
12;
Secondly,
to
provide
for
crop
loss
insurance
in
the
nature
of
grants
of
seed
to
farmers
who
have
lost
grain
crops
through
drought,
hail,
frost,
cutworms
or
grasshoppers,
in
such
manner,
subject
to
such
conditions
and
to
such
extent
as
may
be
from
time
to
time
prescribed
by
the
Lieutenant-Governor
in
Council.
Section
12
provides
for
payment
out
of
the
special
trust
fund
of
the
amount
of
the
difference
between
the
estimated
expenditures
and
the
estimated
receipts
of
the
municipal
districts
and
improvement
districts.
The
Act
was
not
to
come
into
force
until
a
day
fixed
for
that
purpose
by
Proclamation
of
the
Lieutenant-Governor
in
Council,
but
no
such
proclamation
to
be
made
until
after
the
question
of
the
validity
of
the
Act
has
been
referred
to
the
Supreme
Court
of
Alberta,
and
that
upon
such
reference
or
upon
appeal
thereof,
it
is
certified
that
the
Act
is
valid.
Owing
to
the
unusual
character
of
the
Act,
I
have
quoted
from
its
provisions
at
considerable
length
in
the
hope
of
setting
forth
all
that
appears
to
be
material
for
consideration
upon
the
reference.
Amongst
other
objections
raised
to
the
validity
of
the
Act
in
question
is
a
very
important
one,
viz.:—That
the
Act
exceeds
the
authority
to
make
laws
in
relation
to
"‘Direct
Taxation
within
the
Province
in
order
to
the
raising
of
a
Revenue
for
Provincial
Purposes’’—given
to
the
Legislature
of
the
Province
exclusively
as
provided
by
s.
92(2)
of
the
B.N.A.
Act,
1867.
It
will
be
useful
at
the
outset
to
have
a
clear
understanding
of
what
constitutes
taxation
within
the
meaning
of
s.
92(2)
referred
to.
In
the
case
of
Lawson
v.
Interior
Tree
Fruit
&
Vegetable
Committee,
[1931]
2
D.L.R.
193,
which
arose
under
a
Produce
Marketing
Act,
of
British
Columbia,
it
appeared
that
the
control
of
the
marketing
of
the
products
dealt
with
by
the
Act
was
given
to
a
Committee
which
was
given
the
power
"‘for
the
pur-
pose
of
defraying
the
expenses
of
operation
to
impose
levies
on
any
product
marketed.’’
Mr.
Justice
Duff,
delivering
the
judgment
of
a
majority
of
the
Court
at
pp.
197-8
said
that
he
had
no
doubt
that
such
levies
are
taxes,
for
the
following
reasons
given
by
him,
viz.
:—
(a)
They
are
enforceable
by
law.
(b)
They
are
imposed
under
the
authority
of
the
Legislature,
and
(c)
The
levy
is
made
for
a
public
purpose.
Applying
this
test
to
the
share
of
the
produce
vested
in
His
Majesty,
in
the
right
of
the
Province,
by
s.
3
of
the
Act
here
in
question,
all
the
conditions
exist
which
constitute
the
exaction
of
such
share
from
the
producer
to
be
taxation.
Then
as
to
such
taxation
being
direct
or
indirect
Mr.
Justice
Duff,
at
p.
197
said:—"I
think
.
.
.
that
such
levies
so
imposed,
have
a
tendency
to
enter
into
and
to
affect
the
price
of
the
product.
I
think,
moreover,
that
levies
of
that
character,
assuming
for
the
moment
they
come
under
the
head
of
taxation,
are
of
the
nature
of
those
taxes
on
commodities,
on
trade
in
commodities,
which
have
always
been
regarded
as
indirect
taxes.
If
they
are
taxes,
they
cannot
be
justified
as
direct
taxation
within
the
Province.”
This
question
of
direct
or
indirect
taxation
will
be
further
considered
when
referring
to
other
cases
on
the
subject.
An
effort
was
made
on
the
argument
to
distinguish
the
taxation
here
in
question
from
that
found
to
be
indirect
in
numerous
cases
cited,
on
the
ground
that
the
share
of
the
Crown
becomes
vested
from
the
moment
upon
which
the
agricultural
produce
dealt
with
by
the
Act
comes
into
being,
so
that
thereafter
the
seven
undivided
one-hundredth
parts
thereof
becomes
the
absolute
property
of
the
Crown
from
the
beginning
of
its
existence
and
so
remains
until
it
becomes
separated
and
set
apart
at
the
time
of
its
marketing.
In
the
absence
of
authority
to
the
contrary,
I
am
unable
to
find
such
distinction
either
in
the
fact
that
the
share
of
the
Crown
is
deliverable
in
kind
or
in
the
fact
of
the
vesting
of
such
share
in
its
embryonic
state
as
the
Act
provides.
It
must
be
agreed
that
the
undivided
share
is
taken
from
the
producer
willy-nilly;
it
does
not
come
down
as
manna,
it
was
neither
created
nor
contributed
to
by
the
Crown
nor
by
any
person
other
than
the
producer;
and
then
after
the
producer
is
required
by
law
to
part
with
an
undivided
share
he
is
required
to
care
for
it
at
his
expense
until
it
is
ready
for
market,
and
then
after
being
separated
from
the
producer’s
own
share,
it
is
delivered
to
the
Crown,
all
as
required
by
law.
It
is
difficult
to
imagine
a
more
effectual
form
of
taxation,
and
as
to
its
classification
as
direct
or
indirect,
I
cannot,
I
think,
do
better
than
to
cite
some
of
the
leading
cases
where
the
Courts
have
dealt
with
such
a
question.
Bank
of
Toronto
v.
Lambe
(1887),
12
App.
Cas.
575
(head-
note)
:—
‘‘Held,
that
Quebec
Act
45
Vict.
c.
22,
which
imposes
certain
direct
taxes
on
certain
commercial
corporations
carrying
on
business
in
the
province,
is
intra
vires
of
the
provincial
legislature.
"‘A
tax
imposed
upon
banks
which
carry
on
business
within
the
province,
varying
in
amount
with
the
paid-up
capital
and
with
the
number
of
its
offices,
whether
or
not
their
principal
place
of
business
is
within
the
province,
is
direct
taxation
within
clause
2
of
sect.
92
of
the
British
North
America
Act,
1867,
the
meaning
of
which
is
not
restricted
in
this
respect
by
either
clause
2,
3,
or
15,
of
sect.
91.”
Lord
Hobhouse
delivered
the
judgment
of
their
Lordships
and
says
at
p.
581:—First,
is
the
tax
a
direct
tax?
For
the
argument
of
this
question
the
opinions
of
a
great
many
writers
on
political
economy
have
been
cited,
and
it
is
quite
proper,
or
rather
necessary,
to
have
careful
regard
to
such
opinions,
as
has
been
said
in
previous
cases
before
this
Board.
But
it
must
not
be
forgotten
that
the
question
is
a
legal
one,
viz.,
what
the
words
mean,
as
used
in
this
statute;
whereas
the
economists
are
always
seeking
to
trace
the
effect
of
taxation
throughout
the
community,
and
are
apt
to
use
the
words
"
direct,
‘
‘
and
"
indirect,
‘
‘
according
as
they
find
that
the
burden
of
a
tax
abides
more
or
less
with
the
person
who
first
pays
it,’’
and
at
p.
582:—
4
"The
legislature
cannot
possibly
have
meant
to
give
a
power
of
taxation
valid
or
invalid
according
to
its
actual
results
in
particular
cases.
It
must
have
contemplated
some
tangible
dividing
line
referable
to
and
ascertainable
by
the
general
tendencies
of
the
tax
and
the
common
understanding
of
men
as
to
those
tendencies.’’
He
then
quotes
the
definition
of
John
Stuart
Mill
which
is
as
follows
:—
Taxes
are
either
direct
or
indirect.
A
direct
tax
is
one
which
is
demanded
from
the
very
persons
who
it
is
intended
or
desired
should
pay
it.
Indirect
taxes
are
those
which
are
de-
manded
from
one
person
in
the
expectation
and
intention
that
he
shall
indemnify
himself
at
the
expense
of
another;
such
are
the
excise
or
customs.
‘‘
‘The
producer
or
importer
of
a
commodity
is
called
upon
to
pay
a
tax
on
it,
not
with
the
intention
to
levy
a
peculiar
contribution
upon
him,
but
to
tax
through
him
the
consumers
of
the
commodity,
from
whom
it
is
supposed
that
he
will
recover
the
amount
by
means
of
an
advance
in
price.’
”
Their
Lordships
then
take
Mill’s
definition
as
a
fair
basis
for
testing
the
character
of
the
tax
in
question,
because
it
seems
to
them
to
embody
with
sufficient
accuracy
for
this
purpose
an
understanding
of
the
most
obvious
indicia
of
direct
and
indirect
taxation,
which
is
a
common
understanding,
and
is
likely
to
have
been
present
to
the
minds
of
those
who
passed
the
Federation
Act,
and
Lord
Hobhouse
continues
at
p.
583
:—
“But
the
tax
now
in
question
is
demanded
directly
of
the
bank
apparently
for
the
reasonable
purpose
of
getting
contributions
for
provincial
purposes
from
those
who
are
making
profits
by
provincial
business.
It
is
not
a
tax
on
any
commodity
which
the
bank
deals
in
and
ean
sell
at
an
enhanced
price
to
its
customers.
It
is
not
a
tax
on
its
profits,
nor
on
its
several
transactions.
It
is
a
direct
lump
sum,
to
be
assessed
by
simple
reference
to
its
paid-up
capital
and
its
places
of
business.
It
may
possibly
happen
that
in
the
intricacies
of
mercantile
dealings
the
bank
may
find
a
way
to
recoup
itself
out
of
the
pockets
of
its
Quebec
customers.
But
the
way
must
be
an
obscure
and
circuitous
one,
the
amount
of
recoupment
cannot
bear
any
direct
relation
to
the
amount
of
tax
paid,
and
if
the
bank
does
manage
it,
the
result
will
not
improbably
disappoint
the
intention
and
desire
of
the
Quebec
Government.”
Brewers
and
Maltsters’
Ass’n
of
Ontario
v.
A.-G.
Ont.,
[1897]
A.C.
231
(headnote)
:—
^Held,
that
the
Liquor
Licence
Act
(Revised
Statutes
of
Ontario,
ce.
194),
s.
51
sub-s.
2,
which
requires
every
brewer
and
distiller
to
obtain
a
licence
thereunder
to
sell
wholesale
within
the
province,
is
intra
vires
of
the
provincial
legislature—
"(a)
as
being
direct
taxation
within
sub-s.
2,
s.
92,
of
the
British
North
America
Act,
1867.
.
.
.
(b)
as
comprised
within
the
term
‘other
licences’
in
sub-s.
9
of
the
same
section.’’
It
was
considered
that
on
the
question
of
‘‘direct
taxation”
there
was
no
substantial
difference
between
the
case
of
Bank
of
Toronto
v.
Lambe
(supra)
and
the
present
ease.
Lord
Herschell,
who
delivered
the
judgment
of
their
Lordships
said
at
pp.
236-7.—‘‘In
the
present
case,
as
in
Lambed
Case,
their
Lordships
think
the
tax
is
demanded
from
the
very
person
whom
the
Legislature
intended
or
desired
should
pay
it.
They
do
not
think
there
was
either
an
expectation
or
intention
that
he
should
indemnify
himself
at
the
expense
of
some
other
person.
No
such
transfer
of
the
burden
would
in
ordinary
course
take
place
or
can
have
been
contemplated
as
the
natural
result
of
the
legislation
in
the
case
of
a
tax
like
the
present
one,
a
uniform
fee
trifling
in
amount
imposed
alike
upon
all
brewers
and
distillers
without
any
relation
to
the
quantity
of
goods
which
they
sell.
It
cannot
have
been
intended
by
the
imposition
of
such
a
burden
to
tax
the
customer
or
consumer.
It
is
of
course
possible
that
in
individual
instances
the
person
on
whom
the
tax
is
imposed
may
be
able
to
shift
the
burden
to
some
other
shoulders.
But
this
may
happen
in
the
case
of
every
direct
tax.
"‘It
was
argued
that
the
provincial
legislature
might,
if
the
judgment
of
the
Court
below
were
upheld,
impose
a
tax
of
such
an
amount
and
so
graduated
that
it
must
necessarily
fall
back
upon
the
consumer
or
customer,
and
that
they
might
thus
seek
to
raise
a
revenue
by
indirect
taxation
in
spite
of
the
restriction
of
their
powers
to
the
imposition
of
direct
taxation.
Such
a
ease
is
conceivable.
But
if
the
Legislature
were
thus,
under
the
guise
of
direct
taxation,
to
seek
to
impose
indirect
taxation,
nothing
that
their
Lordships
have
decided
or
said
in
the
present
ease
would
fetter
any
tribunal
which
might
have
to
deal
with
such
a
case
if
it
should
ever
arise/
‘
On
the
question
of
licences
under
s-s.
(9)
of
s.
92,
their
Lordships
were
not
satisfied
that
the
licence
rendered
necessary
by
Liquor
Licence
Act
in
question
was
not
one
within
the
meaning
of
said
s-s.
(9)
of
s.
92.
A.-G.
Man.
v.
A.G.
Can.,
[1925]
2
D.L.R.
691.
This
relates
to
ce.
17
of
the
Statutes
of
Manitoba
for
1923
entitled
"An
Act
to
provide
for
the
collection
of
a
Tax
from
persons
selling
grain
for
Future
Delivery.’’
It
appeared
that
the
ultimate
market-price
for
grain
in
Canada
and
Western
America,
the
producing
countries,
is
determined
in
the
great
importing
markets
in
Great
Britain
and
Europe.
This
is
a
‘‘world-price’’
which
is
but
little
controlled
by
the
producers,
and
which
has
to
be
looked
to
to
cover
all
the
items
in
cost
of
production
and
of
transportation.
Viscount
Haldane
delivered
the
judgment
of
their
Lordships
and
said
at
p.
696:—"It
is
impossible
to
doubt
that
the
tax
was
imposed
in
a
form
which
contemplated
that
someone
else
than
the
person
on
whom
it
was
imposed
should
pay
it.
The
amount
will,
in
the
end,
become
a
charge
against
the
amount
of
the
price
which
is
to
come
to
the
seller
in
the
world
market,
and
be
paid
by
someone
else
than
the
persons
primarily
taxed.
The
class
of
those
taxed
obviously
includes
an
indefinite
number
who
would
naturally
indemnify
themselves
out
of
the
property
of
the
owners
for
whom
they
were
acting.’’
A.-G.
B.C.
v.
C.P.R.,
[1927]
4
D.L.R.
113.
This
case
is
concerned
with
the
validity
of
the
British
Columbia
Fuel-oil
Tax
Act,
1923,
which
enacted
that
every
person
who
purchases
within
the
Province
fuel-oil
sold
for
the
first
time
after
its
manufacture
or
importation
into
the
Province,
should
pay
for
provincial
purposes
a
tax
equal
to
one-half
cent
per
gallon
of
the
oil
so
purchased.
It
was
decided
that
the
tax
was
indirect.
Viscount
Haldane,
who
delivered
the
judgment,
said
that
while
a
direct
tax
is
one
that
is
demanded
from
the
very
person
who
it
is
intended
or
desired
should
pay
it,
an
indirect
tax
is
that
which
is
demanded
from
one
person
in
the
expectation
and
with
the
intention
that
he
should
indemnify
himself
at
the
expense
of
another,
as
may
be
the
case
with
excise
and
customs.
The
question
of
validity
could
not
be
made
to
impose
on
the
Courts
the
duty
of
separating
out
individual
instances
in
which
the
tax
might
operate
directly
from
those
to
which
the
general
purview
of
the
taxation
applies.
It
may
be
true
having
regard
to
the
practice
of
the
respondents,
the
oil
they
purchase
is
used
by
themselves
alone,
and
is
not
at
present
resold.
But
the
respondents
might
develop
their
business
so
as
to
include
resale
of
the
oil
they
have
bought.
The
principle
of
construction
as
established
is
satisfied
if
this
is
practicable,
and
does
not
for
its
application
depend
on
the
special
circumstances
of
individual
eases.
Fuel-oil
is
a
marketable
commodity,
and
those
who
purchase
it,
even
for
their
own
use,
acquire
the
right
to
take
it
into
the
market.
It,
therefore,
comes
within
the
general
principle
which
determines
that
the
tax
is
an
indirect
one.
City
of
Halifax
v.
Fairbanks,
[1927]
4
D.L.R.
945:
s.
394
of
the
Charter
of
the
City
of
Halifax
provided
that
any
property
let
to
the
Crown
was
to
be
deemed
for
business
purposes
to
be
in
the
occupation
of
the
owner,
and
was
to
be
assessed
for
business
tax
according
to
the
purposes
for
which
it
was
occupied.
The
respondent
estate
owned
premises
which
it
let
to
the
Crown,
represented
by
the
Minister
of
Railways,
for
use
as
a
ticket
office
of
the
Canadian
Northern
Railway,
the
lessee
agreeing
to
pay
the
business
tax.
The
City
assessed
the
respondent
estate
to
the
business
tax
under
s.
394
of
the
Charter
:—
Held,
that
the
tax
imposed
by
s.
394,
being
a
tax
upon
property
was
‘‘direct
taxation”
even
though
the
owner
probably
would
seek
to
pass
it
on
to
the
tenant.
Viscount
Cave,
who
delivered
the
judgment
said
at
pp.
948-9,
“that
their
Lordships
have
primarily
to
consider,
not
whether
in
the
view
of
an
economist
the
business
tax
imposed
on
an
owner
under
s.
394
of
the
Halifax
City
Charter
would
ultimately
be
borne
by
the
owner
or
by
someone
else,
but
whether
it
is
in
its
nature
a
direct
tax
within
the
meaning
of
s.
92(2)
of
the
Act
of
Union.
The
framers
of
that
Act
evidently
regarded
taxes
as
divisible
into
two
separate
and
distinct
categories,
namely,
those
that
are
direct
and
those
which
cannot
be
so
described,
and
it
is
to
taxation
of
the
former
character
only
that
the
powers
of
a
provincial
government
are
made
to
extend.
From
this
it
is
to
be
inferred
that
the
distinction
between
direct
and
indirect
taxes
was
well
known
before
the
passing
of
the
Act;
and
it
is
undoubtedly
the
fact
that
before
that
date
the
classification
was
familiar
to
statesmen
as
well
as
to
economists,
and
that
certain
taxes
were
then
universally
recognized
as
falling
within
one
or
the
other
category.
Thus,
taxes
on
property
or
income
were
everywhere
treated
as
direct
taxes.
.
.
.
On
the
other
hand,
duties
of
customs
and
excise
were
regarded
by
everyone
as
typical
instances
of
indirect
taxation.
When
therefore
the
Act
of
Union
allocated
the
power
of
direct
taxation
to
the
Province,
it
must
surely
have
intended
that
the
taxation
of
property
and
income
should
belong
exclusively
to
the
provincial
legislatures,
and
that
without
regard
to
any
theory
as
to
the
ultimate
incidence
of
such
taxation.’’
And
further
at
pp.
949-50
he
said,
referring
to
Mill’s
formula,
previously
referred
to
“it
cannot
have
the
effect
of
disturbing
the
established
classification
of
the
old
and
well
known
species
of
taxation,
and
making
it
necessary
to
apply
a
new
test
to
every
particular
member
of
those
species.
The
imposition
of
taxes
on
property
and
income,
of
death
duties
and
of
municipal
and
local
rates
is,
according
to
the
common
understanding
of
the
term,
direct
taxation,
just
as
the
exaction
of
a
customs
or
excise
duty
on
commodities
or
of
a
percentage
duty
on
services
would
ordinarily
be
regarded
as
indirect
taxation;
and
although
new
forms
of
taxation
may
from
time
to
time
be
added
to
one
category
or
the
other
in
accordance
with
Mill
‘s
formula,
it
would
be
wrong
to
use
that
formula
as
a
ground
for
transferring
a
tax
universally
recognized
as
belonging
to
one
class
to
a
different
class
of
taxation.’’
The
King
v.
Caledonian
Collieries
Ltd.,
[1928]
A.C.
358
(headnote)
:—
"The
Mine
Owners
Tax
Act,
1923,
of
Alberta,
purported
to
impose
upon
every
mine
owner,
as
therein
defined,
a
percentage
tax
upon
the
gross
revenue
of
his
mine
during
each
preceding
month
:—
''Held,
that
the
tax
was
not
direct
taxation
within
the
meaning
of
s.
92,
head
2,
of
the
British
North
America
Act,
1867,
and
that
the
Act
was
therefore
ultra
vires.
The
tax
in
its
real
nature
was
a
tax
upon
sales,
and
the
general
tendency
would
be
to
pass
it
on
to
the
purchaser;
it
was
not
material
that
in
particular
circumstances
it
might
be
economically
undesirable
or
practically
impossible
so
to
do,
nor
that
the
tax
became
payable
before
the
sales
took
place.’’
Charlottetown
v.
Foundation
Maritime
Ltd.,
[1932]
S.C.R.
589
(headnote)
:—
"The
appellant
City
was
by
Statute
empowered
‘to
pass
bylaws
imposing
a
tax
on
contractors
resident
outside
this
province
doing
business
within’
the
City.
It
passed
a
by-law
enacting
that
all
contractors
non-residents
of
the
provinces
who
should
engage
in
the
business
of
a
contractor
for
the
performance
of
any
work
within
the
City,
under
a
contract
or
agreement,
should
pay
to
the
City
‘on
every
such
contract
or
agreement
a
direct
tax,
‘
the
tax
to
be
a
percentage
of
the
contract
price,
graduated
on
a
sliding
scale
according
to
the
amount
of
the
contract.
The
City
claimed
from
respondent
payment
of
a
tax,
in
accordance
with
the
by-law,
of
a
percentage
on
the
amount
of
respondent’s
contract
for
the
building
of
an
hotel.
Held,
The
tax
was
'indirect
taxation.’
Mr.
Justice
Rinfret,
who
delivered
the
judgment
of
the
Court
said
at
p.
359
:—'
Such
a
tax
would
invariably
be
an
element
in
the
fixing
of
the
price
of
the
contract
and,
in
its
normal
and
general
tendency,
must
be
reasonably
assumed
to
pass
to
the
owner,
in
the
ordinary
course
of
the
transaction,
as
enhancement
of
the
cost.
That
would
seem
to
be,
in
the
end,
the
natural
consequence—in
fact,
the
inevitable
result—of
the
taxation
now
in
question.
Lower
Mainland
Dairy
Products
Sales
Adjustment
Committee
v.
Crystal
Dairy
Ltd.
[1933]
A.C.
168
(headnote)
:—
''Because
it
was
more
profitable
to
dairy
farmers
in
British
Columbia
to
sell
their
milk
in
a
fluid
form
than
to
sell
products
manufactured
from
it,
the
market
for
fluid
milk
became
glutted.
As
a
remedy
the
Provincial
legislature
passed
the
Dairy
Products
Sales
Adjustment
Act,
1929
.
.
.
authorizing
the
appointment
of
a
Adjustment
Committee
in
any
district
in
which
the
dairy
farmers
petitioned
for
one.
Where
a
Committee
was
appointed
the
farmers
had
to
make
returns
to
it,
and
a
farmer
selling
fluid
milk
had
to
pay
to
the
Committee
a
levy
assessed
according
to
the
quantity
he
had
sold;
the
total
of
these
levies,
which
together
made
up
the
difference
in
value
of
the
milk
disposed
of
in
the
two
forms,
was
to
be
apportioned
by
the
Committee
among
the
farmers
who
had
sold
milk
products.
The
expenses
of
the
Committee
were
to
be
met
by
a
further
levy
on
the
farmers.
.
.
.
Held,
that
both
levies
were
taxes,
and,
as
they
would
tend
to
affect
the
price
of
commodities,
they
were
indirect
taxes,
and
the
Act
was
therefore
ultra
vires
the
Province
having
regard
to
s.
91,
head
3,
and
s.
92,
head
2,
of
the
British
North
America
Act,
1867.’’
Lord
Thankerton
who
delivered
the
judgment
of
their
Lordships
said
at
p.
85:—"In
the
first
place,
the
contention
of
the
appellants
that
the
Act
of
1929
is
a
law
relating
to
agriculture
under
s.
95
of
the
Act
of
1867
may
be
disposed
of
as
untenable,
for
the
Act
of
1929
does
not
appear
in
any
way
to
interfere
with
the
agricultural
operations
of
the
farmers,
and
s.
21
of
the
Act
expressly
prohibits
the
committee
from
fixing
prices
‘at
which
milk
or
manufactured
products
may
be
sold,’
and
from
directing
‘in
what
quantity,
to
whom,
or
when
milk
or
manufactured
products
may
be
sold
or
disposed
of
by
a
dairy
farmer.’
”
A
similar
objection
was
taken
on
behalf
of
the
Attorney-
General
in
the
present
case
based
upon
s.
95
of
the
B.N.A.
Act,
1867,
which
is
met
by
the
opinion
just
quoted.
Lord
Thankerton
proceeds
at
p.
86
as
follows:—‘‘The
principles
on
which
taxes
are
to
be
classified
as
direct
or
indirect
are
now
well
established
by
decisions
of
this
Board,
which
it
is
quite
unnecessary
to
recapitulate.
They
are
summarized
in
A.-G.
B.C.
v.
C.P.R.,
[1927]
4
D.L.R.
113,
at
pp.
114-5.
The
adjustment
levies
are
imposed
on
traders
in
the
fluid
milk
market
in
proportion
to
the
weight
sold
or
disposed
of
by
each
of
them
calculated
at
the
standard
price;
the
expenses
levied
are
imposed
‘on
milk
and
(or)
manufactured
products
sold
or
disposed
of.’
In
effect,
both
levies
are
imposed
on
the
sale
of
commodities
by
the
persons
taxed,
and,
in
their
Lordships’
opinion,
there
can
be
little
doubt
that
such
taxes
have
a
tendency
to
enter
into
and
affect
the
price
which
the
taxpayer
will
seek
to
obtain
for
his
commodities,
as
is
the
case
with
excise
and
customs.
‘
‘
A.-G.
B.C.
v.
Kingcome
Navigation
Co.,
[1934]
1
D.L.R.
31:—
The
Fuel-oil
Tax
Act,
1930,
of
British
Columbia
which
imposes
a
tax
upon
every
consumer
of
fuel-oil
according
to
the
quantity
which
he
has
consumed,
was
held
to
be
valid
under
s.
92(2)
of
the
B.N.A.
Act.
The
tax
was
held
to
be
direct
taxation
because
it
was
demanded
from
the
very
persons
who
it
was
intended
or
desired
should
pay
it.
Lord
Thankerton
in
delivering
the
judgment
of
the
Judicial
Committee
of
the
Privy
Council
says
at
p.
42:—‘‘The
Act
does
not
relate
to
any
commercial
transaction
in
the
commodity
between
the
taxpayer
and
someone
else.
Their
Lordships
are
unable
to
find,
on
examination
of
the
Act,
any
justification
for
the
suggestion
that
the
tax
is
truly
imposed
in
respect
of
the
transaction
by
which
the
taxpayer
acquires
the
property
in
the
fuel-oil
nor
in
respect
of
any
contract
or
arrangement
under
which
the
oil
is
consumed,
though
it
is
of
course,
possible
that
individual
taxpayers
may
recoup
themselves
by
such
a
contract
or
arrangement;
but
this
cannot
affect
the
nature
of
the
tax.’’
Reference
may
also
be
had
to
a
decision
of
this
Court
in
Spooner
Oils
Ltd.
v.
Turner
Valley
Gas
Conservation
Bd.,
[1932]
4
D.L.R.
750,
at
p.
764;
reversed
[1933]
4
D.L.R.
545.
From
a
consideration
of
the
foregoing
cases,
the
following
deductions
seem
to
follow
:—
(a)
The
forms
of
taxation
commonly
understood
at
the
time
of
the
passing
of
the
B.N.A.
Act
have
been
classified
as
a
direct
tax
which
is
one
which
is
demanded
from
the
very
persons
who
it
is
intended
or
desired
should
pay
it
such
as
taxes
on
property
or
income,
in
respect
of
which
the
ultimate
incidence
of
the
tax
is
immaterial,
and
indirect
taxes
which
are
demanded
from
one
person
in
the
expectation
and
intention
that
he
shall
indemnify
himself
at
the
expense
of
another,
such
as
the
excise
and
customs.
(b)
Taxes
levied
on
marketed
products
have
a
tendency
to
enter
into
and
to
affect
the
price
of
the
product,
and
levies
of
that
character
are
of
the
nature
of
those
taxes
on
commodities
or
trade
in
commodities
which
have
always
been
regarded
as
indirect
taxes.
The
case
of
A.-G.
B.C.
v.
C.P.R.,
and
of
The
King
v.
Caledonian
Collieries
Ltd.,
and
the
Lawson
case
(supra)
appear
to
me
according
to
their
facts
to
be
strongly
in
support
of
the
conclusion
that
the
tax
in
question
herein
is
indirect
and
I
would
so
decide,
the
result
being
that
the
Act
in
question
is
ultra
vires
the
Legislature
of
the
Province.
In
view
of
this
holding
nothing
would
be
gained
by
dealing
with
the
other
questions
raised.
It
is
the
view
of
the
Court
that
all
the
questions
have
been
argued
very
fully,
and
very
ably
at
the
bar.
In
compliance
with
the
Constitutional
Questions
Act,
the
Court
certifies
to
the
Lieutenant-Governor
in
Council
its
opinion
that
for
the
reasons
stated
the
Agricultural
Land
Relief
Act,
1938
(Alta.),
c.
6,
is
constitutionally
invalid.
Decree
ultra
vires.
Email this Content