With $115 million at stake, why be honourable?
By STEVE WEATHERBE
September 18, 2006
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Editor: editor@businessexaminer.net

Time was, the provincial Liberals found the very idea of levying the provincial sales on legal services abhorrent.

That time was when they were in opposition. Now firmly ensconced in government, they have apparently forgotten their earlier position; with $115 million a year collected annually from ordinary citizens using lawyers' services, the government of Gordon Campbell is fighting legal tooth and nail a BC Supreme Court ruling exempting much of those services from the PST.

The man behind the case, Dugald Christie, a lawyer who also founded a province-wide service to provide free legal advice, was killed while cycling on July 31st. Christie (see story page 20) saw it as a fundamental issue of the public's and especially the poor's access to justice.

So far the provincial government has defended the tax on the ground that it has the right to levy taxes. Period.

"It's quite outrageous," said Frits Verhoeven, president of the Canadian Bar Association's British Columbia branch. "We are the only profession singled out for the provincial sales tax. And no one has ever come up with a sensible reason."

The PST was first levied on lawyers' fees in 1992 by the New Democratic government of the day, when Glen Clark was finance minister.

"The NDP said it would be used to fund legal aid," Verhoeven said. "But a lot more has been collected than was ever spent on legal aid."

At that time, notes Verhoeven, the Liberals opposed the tax. And for good reason. The late Liberal MLA Fred Gingell, then finance critic, led the charge. "Why are law-abiding citizens in this province who perhaps earn only just enough money-to be above the level to which legal aid is applied being taxed to pay for the cost of the legal defence of people who are involved in our criminal justice system, normally on the wrong side of it. It simply isn't logical."

Verhoeven agrees. "Legal aid should be a burden on all taxpayers, not just those who are already using the legal system but can afford to pay."

An initial judgement partially in Christie's favour ruled that all tax on services related to appearances before courts or administrative tribunals were unconstitutional. Other lawyers' services were still to be taxed. PST revenues from lawyers dropped from $10 million to $2.5 million a month. The province promptly sought a stay on the order as it applied to non-poor clientele, pending the appeal (both Christie and the province appealed) on the grounds it would be exceedingly difficult to collect the money if the province won the appeal.

In March the BC Supreme Court ordered the province's lawyers to collect PST on non-courtroom services from non-poor clients but to hold the proceeds in trust, if they so chose, until the appeal is settled.

The provincial government has provided a sliding scale for qualifying as poor: those do who earn $28,000 or less with a family of four to support; $33,000 or less with a family of five; $35,000 or less with six and $38,000 or less with seven.

The Supreme Court of Canada will hear the case in March, 2007.

A spokesman for the provincial government said there would be no comment while the appeal was pending.

[posted September 25, 2006]