TAXATION OF PETROL

Evening Post, Volume 50, Issue 50, 27 August 1926, Page 7

TAXATION OF PETROL

CONSTITUTIONAL PROBLEM

(From Our Own Correspondent.)

VANCOUVEE, 28th July.

The question of the constitutionality of the petrol tax, which is the basis of the suit instituted by the Commonwealth of Australia against the State of South Australia, lias its parallel here, and the parties have arranged to take the case right to the Privy Council, in order that the judgment of the highest Court in the British Empire may be pronounced.

The appeal of the Attorney-General of tho Province of British Columbia in the fuel oil cases has been dismissed. He claimed payment from the Canadian Pacific Railway and tho Union Steamship Company of British Columbia (no connection with tho New Zealand concorn) of taxes under the Fuel Oil Tax of 1023. The companies, who are large users of oil, demurred from payment, contending that tho Act was ultra vires, as it was a phase of taxation that was exclusively the function of tho Federal Government of Canada, as is the claim of tho Commonwealth in respect of the South Australian petrol tax. The petrol tax of the legislation passed in the British Columbia Legislature is also involved, and both this and the oil tax have been collected for a year. Between them, they yield about a million dollars a year.

Tho Judge dismissed tho appeal of tho Province of British Columbia on two grounds: (1) Ho decided that the first purchaser of the fuel oil was the Union Oil Company of Canada, which bought from the Union Oil Company of California; (2) the tax was direct, and therefore illegal, because it encroached on the field reserved by the British North America Act to the Dominion Parliament. Counsel for tho Dominion contended that tho Provincial Act failed becauso it created an excise duty, which was beyond the powers of a province. Counsel for the province contended that the incidence of the tax enabled payment to be passed on to tho consumer.

It is expected that the Attorney-Gen-eral of the Dominion will intervene, as soon a£ Canada has put her Federal House in order, and state the case for the Privy Council in regard to the rights of the provinces in tho matter of petrol and fuel oil taxation.