Mr. Speaker, I would like to come back to the amendment of clause 64 of Bill C-28. When the budget was brought down on February 18, the Minister of Finance proposed a retroactive amendment that goes farther than the December 21, 2001, proposal, in that it circumvents the judgments obtained in their favour by school boards in Quebec and Ontario.
In order to start at the beginning of this, I have a letter from Stikeman Elliott dated January 15, 2002, addressed to the hon. member for LaSalle—Émard, former minister of finance, which reads as follows:
Proposed amendment to the GST/HST affecting school boards.
Mr. Minister:
This letter is in reference to the news release issued by your department on the evening of December 21, 2002, regarding the aforementioned subject.
We represent Consultaxe Planification (1996) Ltée, a firm of tax consultants from Montreal, and through them, 111 of the 415 school boards in the provinces of Quebec, Ontario, British Columbia, Alberta, Saskatchewan, Manitoba and Nova Scotia.
We have been instructed to inform you and your colleagues that our clients are completely opposed to the proposal contained in your release. Furthermore, they intend to rigorously defend their interests and their rights on this matter, as they feel they have suffered a serious injustice.
On October 17, the Federal Court of Appeal ruled unanimously in favour of the appellant school boards, the Commission scolaire des Chênes being the test case. The court ruled that studenttransportation is a commercial activity that is eligible for 100% input tax credits, under provisions of the Excise Tax Act (GST/HST) affecting school boards and their provision of student transportationservices.
The appellants were 29 Quebec school boards, whose cases were the first to be appealed.
The first cases started being heard in 1996 and over the years, these same school boards or the corporate entities that have replaced them as a result of the numerous mergers that occurred in 1998, submitted new claims. Also party to these claims were many school boards in Ontario, Manitoba, Saskatchewan, Alberta, British Columbia and Nova Scotia. Most of these claims, at the time of the ruling, were pending before the courts while awaiting the judgment in the test case mentioned above.
At the time of the judgment, the amount of GST in question represented approximately $70,500,000.
On December 21, 2001, the Department of Finance proposed amending the act so that school boards could only claim a partial GST/HST rebate. This amendment,if adopted as proposed, will be made retroactive to January 1, 1991, the date the GST was introduced. The proposal mentions that “the proposed amendment will not affect any case that has already been decided by the Federal Court”.
This means that the initial claims of the 29 school boards in Quebec will be reimbursed because they were the first case to be heard by the Federal Court, but their subsequent claims, as well as those of other school boards whose appeal cases were before the Tax Court of Canada pending the aforementioned ruling, will not be reimbursed.
Amending the Excise Tax Act is one thing. However, our clients feel that amending it retroactively to eleven years prior to the date of the ruling, and affecting cases that are pending before the courts is an abuse of the law and power and constitutes flagrant discrimination against the school boards that have cases pending.
Given your considerable political experience, you can easily imagine the reactions from school boards that have been treated this way. These institutions with cases under appeal feel that they have been prejudiced and deprived of a fundamental right, that of having the government respect a ruling by a federal high court of justice. Your department will no doubt respond by saying that it is respecting the judgment because it did not set aside the ruling involving 29 Quebec school boards, insofar as concerns their initial claims. However, this disregards all of the other cases under appeal, which are based on the same fundamental point of law. In order to avoid incurring needless costs for all of the parties involved, including the federal government obviously, it was decided to suspend proceedings for these cases and proceed first with only the 29 school boards mentioned above. Once a final ruling was handed down by the courts, all of the other cases could have been resolved accordingly. However, the legislative amendment proposed by your department would have the effect of retroactively reversing this arrangement. Needless to say our clients feel that the Department of Finance is playing the role of the better who says: “Heads, I win; tails, you lose”.
Therefore, we urge you, Mr. Minister, to reconsider this proposed amendment in order to make it fair for all school boards in Canada who were involved in these claims. This amendment could be made retroactive only to the date of the judgment for all school boards in Canada with cases pending before the courts at that time.
Respectfully,
The Honourable Marc Lalonde
c.c.: Members of the federal cabinet
I do not know if all of the government members received a copy of this letter, but I am prepared to give them one.