Recurrent LVC "Fee"

Should pilots petition the Minister of Transport to have these fees returned?  

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  1. 1. Should pilots petition the Minister of Transport to have these fees returned?

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Pay back illegal taxes, top court rules

Governments told to reimburse citizens charged user fees

Published: Friday, January 12, 2007

Governments that charge illegal taxes are required to pay back the money, the Supreme Court of Canada ruled yesterday in a decision that could put governments on the hook for hundreds of millions of dollars.

The court unanimously concluded that governments are not immune to repaying citizens who have been illegally tapped to pad government coffers by being charged user fees that are effectively another tax.

By law, taxes can only be imposed by Parliament and legislatures. Taxes disguised as user fees violate the sacred constitutional principle of no taxation without representation, said the ruling.

"Restitution is warranted to guarantee respect for constitutional principles, in particular, in this case, the principle that the Crown may not levy a tax except with the authority of the Parliament or the legislature," wrote Justice Michel Bastarache in the 9-0 decision.

"This principle of 'no taxation without representation' is central to our conception of democracy and the rule of law."

The ruling is a victory for Kingstreet Investments, which owns three New Brunswick bars -- two in Fredericton and one in Moncton. The company said it paid more than $1 million in illegal taxes to the provincial government from the mid-1980s until 2001, in the form of a "user charge" on liquor sales, on top of regular liquor taxes.

The company will recoup $750,000 to $900,000 as a result of the ruling, said Eugene Mockler, Kingstreet's lawyer.

The stakes are much higher for Canada's private broadcasters, which hope to recover more than $790 million from the federal government for charging a licence fee that a Federal Court judge recently concluded is really an illegal tax.

Upon hearing of the Supreme Court decision, the Canadian Association of Broadcasters announced it has asked the Federal Court of Appeal to order the federal government to repay the money, which it has collected since 1998, over and above the licence fees broadcasters pay to cover the cost of regulation and supervision.

The president of the Consumers Association of Canada said it hopes the decision will rein in the government practice of charging illegal user fees, which are then not used to cover a service but become part of government revenue.

"It looks like the Supreme Court has put a cork in this bottle," said Bruce Cran, who suspects the practice is widespread.

"Governments can't just go around collecting illegal taxes and when they do, they will be held accountable."

The decision should be an incentive for citizens to challenge illegal taxes, said John Carpay, executive director of the Canadian Constitution Foundation, which intervened in the case.

"This is a victory for taxpayers because it basically says that governments are not above the law," said Mr. Carpay.

The Supreme Court rejected the New Brunswick government's argument that Kingstreet is double dipping because it already passed on the extra charge to its customers, saying the prime issue is that the government must pay for its actions.

The provinces of British Columbia, Alberta, and Manitoba all intervened in the appeal to side with the New Brunswick government.

As a result of the statute of limitations, the bars can recover the tax only for six of the years that it paid into New Brunswick's coffers.

© The Ottawa Citizen 2007

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