Tax bills and the ways and means process.

AuthorLukyniuk, Michael
PositionEssay

The consideration by Parliament of the Crown's requests for taxation is one of the cornerstones of our system of government. Although the rules of procedure are fairly straightforward for the introduction of a tax bill, there are many parliamentary issues which are brought into play and merit reflection. Among them are the amount of consideration and resources required for increasingly large and complex Budget Implementation Bills; the repetition found in some debates; the inclusion of non-budgetary matters in the Budget Implementation Bill; the implementation of tax initiatives before legislation is enacted; the effect of tax alleviations proposed by private Members on the government's management of the fiscal plan; and the preclusion of any debate on private Members' bills which propose tax increases. These and other issues related to ways and means are examined in the following article.

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One of Parliament's fundamental roles is to give consideration to the Crown's requests for spending and taxation. The procedures in the House of Commons relating to spending protect the financial initiative of the Crown by requiring that a royal recommendation--solely obtained by a Minister--be attached to any item proposing an appropriation. The procedures relating to taxation are slightly different. Unless a change to a tax law is contemplated, tax provisions continue from year to year. Whenever the Crown wishes to propose a new tax, to continue an expiring tax, to increase an existing tax, or to extend a tax to a new class of taxpayers, it is accomplished through what is known as the "ways and means" process--a procedural term referring to the manner that revenues are raised to meet government expenditures. The rules of the House stipulate that the adoption of a ways and means motion (outlining any increase in the incidence of taxation) must precede first reading of a tax bill. As only a Minister may give notice of a ways and means motion, the financial initiative of the Crown is thus protected for tax purposes. (1)

The Basic Form of the Ways and Means Motion

There are basically two types of ways and means motions: one is for the presentation of a Budget, and the other is to bring in a tax bill (or bills). When the Minister of Finance wishes to present a Budget, notice is given to the House of Commons of a generally worded motion (i.e., 'That this House approve in general the budgetary policy of the government'). At a designated time, the Minister proposes the proforma motion and presents the Budget which is debated for four days. At the same time, the Minister will also table notices of ways and means motions which provide details of tax initiatives contained in the Budget. The tabling provides provisional authority to impose taxes effective immediately. (For further details on this aspect, see section below, The Provisional Implementation of Taxation.) The Budget motion is open to amendment by the Opposition and provisions are also provided in the rules for votes on the amendments and the main motion at specific times. (2) The defeat of a Budget motion is considered as a want-of-confidence in the government by the House.

When a Minister wishes to bring in a tax bill, a notice of a ways and means motion must first be given to the House. In most cases, the notice of motion is essentially a draft version of the tax bill. The next day, or at some future date, the ways and means motion is proposed and voted on; it is not subject to debate or amendment since the purpose is simply to bring forward the legislative initiative. The role of the House is to consider this "legislative" ways and means motion and to take a decision. If the ways and means motion is adopted, a bill (or bills) based on its provisions may be brought forward by the Government. The rejection of any ways and means motion is interpreted by parliamentary convention as a loss of confidence in the Government by the House.

The Relationship Between the Ways and Means Motion and the Tax Bill

Speakers of the House of Commons have been called upon to clarify the relationship between the ways and means motion and the subsequent tax bill. The rules of the House of Commons state that a tax bill must be based on a ways and means motion. (3) In rulings, Speakers have explained that the bill does not have to be identical to the motion but significant departures from the intent of the motion are not permitted.

In 1974, a ways and means motion provided for the taxation of boats other than "naval vessels" whereas the bill provided exemptions for "boats purchased or imported ... for use exclusively by the Government of Canada"--a somewhat wider definition. The Speaker felt that the bill was sufficiently based on the motion reasoning that "The change relates to one of degree of exclusion, but remains within the general description of Government purchases." However, the Speaker went on to caution the government that the terms of the ways and means motion are a carefully prepared expression of the financial initiative of the Crown and frequent departures from them can only invite deterioration of that most important power. (4)

In 1975, a ways and means motion provided for an exempt class of persons to be made by regulation whereas the bill established it from a definition in another statute. The Speaker ruled that two different approaches were being proposed and that the Minister should prepare amendments to either the bill or the motion to bring them in closer conformity with one another. (5)

In 1978, a ways and means motion dealt with the 1978 taxation year for residents of prescribed provinces whereas the bill dealt with the 1977 taxation year for residents of other provinces. Despite the fact that these discrepancies were about the reduction of taxation, the Speaker ruled that since the motion was the basis for a tax bill, a new motion would have to be adopted to make the bill conform. (6)

The Speaker has also ruled that a tax bill is based solely on the specific wording of the ways and means motion; secondary matters are not taken into account. In 1990, a ways and means motion contained a reference to a technical paper which had not been tabled in the House. This technical paper outlined a plan for a 9% tax whereas the ways and means motion provided for a 7% tax. The Speaker explained that the technical paper was "peripheral to the expression of the financial initiative of the government". The motion for a 7% tax stood on its own and didn't derive any authority from documents previously issued. (7)

Tax Bills

Procedurally-speaking, there are two kinds of tax bills: those stemming from a Budget, and those brought in of their own accord.

Tax bills stemming from a Budget may only be given first reading after a four-day debate on the Budget is concluded and all the votes have been taken. On the day the Budget is presented, the Minister of Finance tables notices of ways and means motions regarding the tax initiatives (i.e., amendments to the Income Tax Act, the Excise Tax Act, etc.). The main purpose is to provide detailed information on the tax initiatives and to immediately implement these tax changes on a provisional basis (see section below, The Provisional Implementation of Taxation). Although these ways and means motions could be used...

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