Mr. Speaker, the Bloc Quebecois' amendment reads as follows:
That Bill C-28 be amended by deleting Clause 64.
The amendment that I am moving in the House would delete this clause from Bill C-28, the Budget Implementation Act. More specifically, what we would like to remove is the element of retroactivity.
In his budget, the Minister of Finance announced his intention to retroactively amend provisions of the Excise Tax Act related to school buses. By doing so, the minister could establish a new rate for all school boards, despite judgments rendered by the courts since December 21, 2001.
The government is simply planning to override judgments that recognized that school boards were right on the issue of the refunding the GST paid for school transportation. This retroactive measure is a very serious departure from the rule of law and from the authority of a final judgment. This could be precedent setting in Canadian parliamentary practice.
In order to give members some context on this and to help them understand the scope of this situation, allow me to sketch a brief history of this issue and the actions the Liberal federal government has taken against the school boards.
From 1996 to 2001, Quebec and Ontario school boards submitted GST claims for the transportation of students. On November 17, 2001, the federal appeal court brought down a unanimous decision in favour of the first 29 Quebec school boards. I have the judgment relating to a board in my riding, Commission scolaire des Chênes.
Normally, school boards with cases pending at the time of the judgment ought to have been paid.
On December 21, 2001, the Minister of Finance announced his intention of making a retroactive amendment to the Excise Tax Act, which included pending cases. This measure is legal, but unfair. The school boards, and their federations, opposed it.
More than a year later, the school boards of Quebec and Ontario have obtained favourable final judgments that represent eight and ten million dollars respectively.
On February 18, 2003, when the Minister of Finance brought down his budget, he proposed a retroactive amendment that would go still further than the proposal of December 21, 2001, since it goes against the judgment obtained by the school boards of Quebec and Ontario.
School boards want the rights they had before December 21, 2001, which they protected by filing theirs claims with the Tax Court of Canada before that date and for which they received a successful final decision before the February 2003 budget, to be restored and respected.
What is it important to remember? Through clause 64 of Bill C-28, the federal government is preparing to disregard a court decision. Informed of this plan, the Barreau du Québec and the Canadian Bar Association responded quickly, describing the finance minister's plan as a dangerous approach that could undermine the public's confidence in the courts. It would seem that both associations wrote the Minister of Finance and the Minister of Justice, saying that they opposed the legislative change proposed in the last budget.
Here is what President of the Bar in Quebec, Claude G. Leduc, had to say about the federal government's approach:
It does not respect any of these decisions or commitments, which, in our view, seriously erodes the principle of the authority of a final judgment and is contrary to the sound management of justice. Such a legislative approach discredits the judicial process and is likely to undermine taxpayers' confidence in the courts.
Along the same line, Simon Potter, of the Canadian Bar Association, stated, and I quote:
—we are persuaded that the policy behind any such retroactivity is deeply flawed and dangerous.
In October 2001, 29 school boards in Quebec, including the Commission scolaire Des Chênes, in my riding, won their case before the Federal Court, the court recognizing that school bus services were indeed a commercial activity within the meaning of the act, which entitled them to recover all the GST paid. The federal government must therefore refund the overpayment on the GST. We are talking about approximately $18 million.
The case was next heard by the Tax Court of Canada last January. The case appeared to be over because the federal government agreed in a settlement to abide by the judgment of the lower court, on condition that the school boards withdraw their demand for an appeal before the Federal Court of Appeal.
To the astonishment of the school boards, the federal government did an about-face, pointedly ignored its obligations and, in the recent budget, introduced a clause that would completely change all its promises. At the Standing Committee on Finance, the present secretary of state did his utmost to try to remind us of what the federal government had published in a press release on this subject, but was unable to adequately defend the government in view of the letters from representatives of the bar.
The government's decision may not be unconstitutional, but the government should realize how dangerous such actions are to parliamentary democracy and the judicial system. The Minister of Finance should recognize that he made a mistake and give his support to our amendment which states:
That Bill C-28 be amended by deleting clause 64.
If the government takes a hard line, it will have to live with the consequences. This clause will do nothing less than weaken one of the pillars of democracy, which is the authority of a final judgment.
It has always been the case that school boards pay the GST. The government should rebate the tax because it is part of the commercial purpose of school transportation. But in this case, without warning the school boards, they withheld the GST and said, “The rules of the game have changed. And in addition, we are going to hold on to the four or five months you have already paid in advance”. That is what is known as retroactivity.
The school boards went before the courts and won their case because they are entitled to GST rebates. But in this case, the government, in addition to no longer providing rebates, is making this a retroactive measure.
There have been two decisions by the Court of Appeal, and the government is creating a precedent. This has never before been seen in the history of Canada. That is why we ask that clause 64 be deleted.