Macdonald, C.J.B.C.:—This is an appeal raising a question involving the jurisdiction of the Dominion Parliament and that of the local Legislature. We have been informed by counsel that the Minister of Justice was notified of this appeal and replied that he did not wish to be heard at this stage. A large number of authorities were cited on both sides a few only of which I shall refer to.
The facts are shortly these. Crude oil is permitted by the Dominion Government to be imported into this Province free of customs duty and to be refined here—one product of which is known as fuel-oil, on which the Dominion has imposed no duties of excise. The Province has passed an Act (Fuel-oil Tax Act, 1930 (B.C.), c. 71) imposing a tax on the ultimate consumer of fuel oil and it justifies that tax by submitting that it does not invade the jurisdiction of Dominion Parliament; that it is not an excise tax and that it does not interfere with trade and commerce but that it deals with property and civil rights—a question assigned to the Province by the B.N.A. Act and is direct taxation. It was contended by counsel for the Attorney-General that excise duties have never been imposed except upon the manufacturer or producer of the article; that it has never been imposed upon the consumer and that the tax imposed by the Province is therefore not an excise tax but one imposed upon property which is found within the Province—and therefore direct taxation. Counsel have very ably presented their arguments pro and con.
The history of excise legislation has been traced from the time of Charles II down to the present time and the several cases referred to have been shown to relate to duties of excise on the consumer as well as upon the producer. I think, on the whole case before us, the tax is a duty of excise and is not within the competence of the Province. Apart from that, I think, it also offends against the powers of the Dominion with regard to the regulation of trade and commerce. The Dominion Parliament allows crude oil in free and permits the refiner to sell his fuel-oil free of excise duty. This is done, I take it, to regulate trade and commerce of the country and a tax imposed by the Province is one which shackles it. In view of my opinion that the tax is an excise tax it is hardly necessary to consider whether it is affected by the practice in the past of recognizing the personal property tax as a direct tax and whether competent of the Provincial Legislature. The question of whether the personal property tax was intra vires or ultra vires has never been brought before the Courts and that tax is therefore a very frail foundation upon which to found an argument but in addition to that the Privy Council has referred to the distinction between them.
It was suggested that the case of Halifax v. Fairbanks [1927] 4 D.L.R. 945, is inconsistent with the decision of the same Court in Bank of Toronto v. Lambe (1887) 12 App. Cas. 575, and in the case of A.-G. B.C. v. C.P.R. [1927] 4 D.L.R. 113. I do not, however, read the Halifax case in that way. It seems to me that what the Privy Council meant was that in a case of this kind it is helpful to consider the state of the law at the time of Confederation, but has not intended to exclude the application of Lambe’s case. This, however, is a matter which the Judicial Committee will doubtless decide for itself should this case reach that tribunal. The appeal, I think, must be dismissed.
Martin, J.A.:—In this appeal, wherein some difficult questions in the very debatable land of provincial powers of taxation are raised, the solution of which, we were informed by counsel, is of an urgent nature in connection with the public revenue, I do not think it is necessary or desirable to say more than to adopt the following language of Romer, L.J., in the very recent taxation case of Hennell v. Inland Revenue Corners (1933) 102 L.J.K.B. 69, wherein he said at p. 73:—
"‘During the argument of this case I have felt, and I still feel, considerable doubt, but upon the whole I have come to the conclusion that this appeal should be dismissed.’’
That language embodies my view of the like disposition of this case.
MCPHILLIPs, J.A. (dissenting) :—The constitutionality of the following statute law of the Legislature of British Columbia is called in question in this appeal—being secs. 2, 5(1) and 6, the Act being the Fuel-oil Tax Act. In the Supreme Court of British Columbia by a judgment of the Chief Justice of that Court (Morrison, C.J., ante, p. 194) the legislation was held to be ultra vires of the constitutional powers conferred upon the Parliament of the Province under the B.N.A. Act, 1867. The argument addressed to this Court centered around the principal section of the Act, viz., sec. 2, which reads as follows :—
"‘2. For the raising of a revenue for Provincial purposes every person who consumes any fuel-oil in the Province shall pay to the Minister of Finance a tax in respect of that fuel-oil at the rate of one-half cent a gallon.’’
The learned Chief Justice of the Court below concluded his reasons for holding as he did in the following words (p. 691) :—
"‘In short the Act strikes at the use, enjoyment or consumption of this commodity, the levying of imposition upon which is the very essence of an excise tax.
" " For these reasons in my opinion the Province is under a constiutional disability to impose it. The action is dismissed with costs.”
It may be stated at the outset that the power to pass an Excise Act by the Parliament of Canada is not one of the exclusive legislative powers conferred by the B.N.A. Act but of course see. 91(3) is very broad in its terms (‘‘ (3) The raising of Money by any Mode or System of Taxation.”) whilst the Legislature of the Province is in more restricted lines, namely, sec. 92(2) :—
"92. In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next hereinafter enumerated, that is to say . . .
"‘2. Direct Taxation within the Province in order to the raising of a Revenue for Provincial Purposes.’’
Then it must always be borne in mind that as regards the powers of the Parliament of Canada—that the concluding paragraph of sec. 91 reads as follows :—
‘*And any Matter coming within any of the Classes of Subjects enumerated in this Section (92) shall not be deemed to come within the Class of Matters of a local or private Nature comprised in the Enumeration of the Classes of Subjects by this Act (B.N.A. Act) assigned exclusively to the Legislatures of the Provinces.”
Further under sec. 92 there is specifically enacted by subsec. (16) "‘Generally all Matters of a merely local or private Nature.” Then there is sec. 92(13) "Property and Civil Rights in the Province. ‘ ‘
The conception of the framers of the Act was not to give the Parliament of Canada such a controlling power as would paralyze the Legislatures of the Provinces—that is that the Legislatures of the Provinces would be within the Provinces supreme in respect of ‘‘ Matters of a local or private Nature. ‘ ‘ Therefore the question of "local or private Nature’’ becomes a most important enquiry when considering the impugned legislation and so far held to be ultra vires. The fuel-oil of course is property, personal property, and it cannot, with great respect to all contrary opinion, be looked upon as being in any other category. The property is locally held and within the purview of the Act here being considered is personally consumed and the tax is imposed (sec. 2) upon "‘every person who consumes any fuel-oil in the Province.”
It is not capable of being said that property within the Province is not taxable—in fact that was not contended for at this Bar but that it was an invasion of the exclusive domain of the Parliament of Canada—in the following respects—(1) an indirect tax (2) an excise tax (3) affects trade and commerce. However, in the main the attack on the legislation revolved around the submission that it was legislation in the way of an Excise Act. Approaching the matter at that point of view I fail to see that there is any authority of any authoritative nature which would preclude the Legislature of a Province of Canada imposing taxation which could be termed an Excise Act which of course I do not view it to be. In England of course the Parliament is supreme and we cannot expect to get any authority in the English Courts that will be of aid or assistance in the matter as in England there can never be what we have here—conflict between the powers of the Dominion and the Provinces as to the respective powers of the Dominion Parliament and the Parliaments of the Provinces.
Turning to Wharton’s Law Lexicon, 13th ed., 1925, we have this stated :—
"‘Excise [fr. acciis, Dut.; excisum, Lat.], the name given to the duties or taxes laid on certain articles produced and consumed at home, amongst which spirits have always been the most important; but, exclusive of these, the duties on the licenses of auctioneers, brewers, etc., etc., and on the licenses to keep dogs, kill game, etc., etc., are included in the excise duties.”
Now what is the position of matters in the Province of British Columbia today? It is a very large producer of coal and coal is taxed—a large producer of lumber and lumber is taxed— then let us come precisely to fuel-oil—this is produced in Canada, it is true not in as great volume as in the United States of America, but Canada admits of the entry of crude oil into Canada without duty from which fuel-oil is produced. In Ontario there are oil wells in operation for nearly a century and still operating and there are large oil wells in the Province of Alberta—the Turner Valley—and fuel oil is produced from these wells and there are many other oil fields in various portions of the Dominion of Canada that will in the early future be in operation. Is it to be said that this property when in the Province and consumed in the Province shall be free from taxation in the Province? I cannot follow the reasoning advanced in the matter. It would seem to be the negation of all powers or authority in the Province to tax any personal property.
We are of course familiar with all the cases that have gone to the Privy Council and the Supreme Court of Canada upon the question of whether the tax is a direct or indirect tax. Here fuel oil is no different in my view for taxation purposes than-any other personal property of any person resident in the Province such as furniture, motor cars etc., all of which property is capable of being sold—for instance the stock-in-trade of the merchant actually being sold yet all this property, in truth all personal property, is subject to taxation and has been the subject of taxation by the Provinces. It is true no matter what may be one’s individual opinion the Court must bow to the decision of the ultimate Court of Appeal and loyally obey it. In A.-G. B.C. v. C.P.R. [1927] 4 D.L.R. 113, 96 L.J.P.C. 149, their Lordships of the Privy Council decided, as set forth in the L.J.P.C. headnote, that :—
“The British Columbia Fuel Oil Tax Act, 1923, is ultra vires the Legislature of the Province, inasmuch as it does not impose direct taxation within the meaning of sec. 92, subsec. 2 of the British North America Act, 1867.
‘‘The Act of 1923 provided that every person who should purchase within the Province fuel-oil, sold for the first time after its manufacture in or importation into the Province, should pay a tax thereon, and the vendor was to collect the tax and pay it over to the Government :—Held, that the tax so provided for was not a direct tax and was invalid, applying the test laid down as to what was a direct and what an indirect tax in Att.-Gen, for Manitoba v. Att.-Gen. for Canada . . .. [1925] 2 D.L.R. 691.
"‘Decision of the Supreme Court of Canada . . . . [1927] 2 D.L.R. 257 affirmed.
4 " Cases referred to:
Att.-Gen. for Manitoba v. Att.-Gen. for Canada . . . . [supra I
«Att.-Gen. for Quebec v. Reed (1884) 54 L.J.P.C. 12; 10 App. Cas. 141.
<( Bank of Toronto v. Lambe, (1887) 56 L.J.P.C. 87; 12 App. Cas. 575.
i( Brewers and Malsters Association of Ontario v. Att.-Gen. for Ontario [1897] A.C. 231.”
It might be said though that the present case has entirely different features. The taxation imposed here is not such as it was there—as against " 1 every person who should purchase within the Province fuel-oil, sold for the first time after its manufacture in or importation into the Province, should pay a tax thereon, and the vendor was to collect the tax and pay it over to the Government. ‘ ‘
Here the tax is only imposed upon the taxpayer ‘ ‘ who consumes any fuel-oil in the Province.” No question of indirect taxation it would seem to me is open. The only persons who are capable of being taxed are the consumers. They are persons certain—the actual consumers—and what they have consumed is personal property which in its genus can be nothing other than personal property. The present case is not one, I submit, which can be definitely stated to be controlled by the decision last referred to. It was laid down by the Board in A.-G. Man. v. A.-G. Can. [1925] 2 D.L.R. 691, at p. 694, "‘that a direct tax is one that is demanded from the very person who it is intended or desired should pay it. An indirect tax is that which is demanded from one person in the expectation and with the intention that he shall indemnify himself at the expense of another. Of such taxes excise and customs are given as examples.’’
In À. G. Man. v. Manitoba Licence ders’ Ass 9 n [1902] A. C. 73, we have the headnote reading : e—
" " The Manitoba Liquor Act of 1900 for. the suppression of the liquor traffic in that province is within the powers of the provincial legislature, its subject being and having been dealt with as a matter of a merely local nature in the province within the meaning of British North America Act, 1867, sec. 92, subsec. 16, notwithstanding that in its practical working it must interfere with Dominion revenue, and indirectly at least with business operations outside the province. Attorney-General for Ontario v. Attorney-General for the Dominion [1896] A.C. 348, followed.’’
Where the tax is fixed upon the actual consumer of the fuel-oil —and that is the only person capable of being taxed—I fail to see how it is possible of being said that the tax is capable of being passed on. The taxation can only be imposed when the fuel-oil has been consumed and whoever consumes it is the only person who can be taxed. I can readily understand why possibly the Legislature in its wisdom did not think it fair or just to impose this taxation on this species of property save only after consumption. This will be borne into one’s mind the more clearly when large consumers of fuel-oil have to keep very heavy stocks of fuel-oil on hand—such as railway companies, steamship companies, large industrial concerns, etc., and money would only come in consequent on consumption in their business operations. Therefore the law-making authority has said by legislation, «You will only be taxed as you consume the fuel-oil." This is a most considerate action upon the part of the Legislature.
I would again refer to the question so strongly urged at this Bar and which was the burden of the argument—that the Act here to be dealt with was an Excise Act—and that, as such, was ultra vires of the provincial Legislature. I do not agree that if it could be called an Excise Act that perforce then it was beyond the scope of provincial legislation. In Bank of Toronto v. Lambe, 12 App. Cas., at pp. 581-3, Lord Hobhouse who delivered the judgment of their Lordships of the Privy Council considered the governing principle as to what may be said to be a direct tax and I think it well to quote what Lord Hobhouse said :—
"First, is the tax a direct tax? For the argument of this question the opinions of a great many writers on political economy have been cited, and it is quite proper, or rather neces- sary, to have careful regard to such opinions, as has been said in previous cases before this Board. But it must not be forgotten that the question is a legal one, viz., what the words mean, as used in this statute ; whereas the economists are always seeking to trace the effect of taxation throughout the community, and are apt to use the words ‘direct,’ and ‘indirect,’ according as they find that the burden of a tax abides more or less with the person who first pays it. This distinction is illustrated very clearly by the quotations from a very able and clear thinker, the late Mr. Fawcett, who, after giving his tests of direct and indirect taxation, makes remarks to the ffect that a tax may be direct or indirect by the position of the taxpayers or by private bargains about its payment. Doubtless, such remarks have their value in an economical discussion. Probably it is true of every indirect tax that some persons are both the first and the final payers of it; and of every direct tax that it affects persons other than the first payers; and the excellence of an economists definition will be measured by the accuracy with which it contemplates and embraces every incident of the thing defined. But that very excellence impairs its value for the purposes of the lawyer. The legislature cannot possibly have meant to give a power of taxation valid or invalid according to its actual results in particular cases. It must have contemplated some tangible dividing line referable to and ascertainable by the general tendencies of the tax and the common understanding of men as to those tendencies.
‘ After some consideration Mr. Kerr chose the definition of John Stuart Mill as the one he would prefer to abide by. That definition is as follows:—
‘{ ‘Taxes are direct or indirect. A direct tax is one which is demanded from the very persons who it is intended or desired should pay it. Indirect taxes are those which are demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another; such are the excise or customs.
“ The producer or importer of a commodity is called upon to pay a tax on it, not with the intention to levy a peculiar contribution upon him, but to tax through him the consumers of the commodity, from whom it is supposed that he will recover the amount by means of an advance in price.’ [2 Mill on Political Economy, Book v, c. 3, p. 367.]
“It is said that Mill adds a term—that to be strictly direct a tax must be general; and this condition was much pressed at the bar. Their Lordships have not thought it necessary to examine Mill’s works for the purpose of ascertaining precisely what he does say on this point; nor would they presume to say whether for economical purposes such a condition is sound or unsound; but they have no hesitation in rejecting it for legal purposes. It would deny the character of a direct tax to the income tax of this country, which is always spoken of as such, and is generally looked upon as a direct tax of the most obvious kind ; and it would run counter to the common understanding of men on this subject, which is one main clue to the meaning of the legislature.
‘“Their Lordships then take Mill ‘s definition above quoted as a fair basis for testing the character of the tax in question, not only because it is chosen by the Appellant’s counsel, nor only because it is that of an eminent writer, nor with the intention that it should be considered a binding legal definition, but because it seems to them to embody with sufficient accuracy for this purpose an understanding of the most obvious indicia of direct and indirect taxation, which is a common understanding, and is likely to have been present to the minds of those who passed the Federation Act.”
It will be observed that the contention made that the submission, p. 082, "‘that to be strictly direct a tax must be general”? was rejected and further on, at p. 582, Lord Hobhouse said:—
° It would deny the character of a direct tax to the income tax . . . generally looked upon as a direct tax of the most obvious kind.”
In the result in the Lambe case taxes imposed by the Quebee Legislature on certain commercial corporations carrying on business in the Province was held to be legislation intra vires of the provincial Legislature—being direct taxation. What is the position of matters here? The consumer is the one directly taxed. There is no difficulty in determining who the consumer is and once consumed the article or commodity of course is gone and the consumer is the very person who it is intended or desired should pay it and once consumed there can be no trafficking with the article or commodity. Therefore it is utterly impossible in the construction of the Act before us to bring the language into play defining indirect taxes at p. 582:—
"‘Indirect taxes are those which are demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another; such are the excise or customs. ’
Here we have the consumers of the commodity taxed and not until the commodity is consumed does the tax take effect, 1.e., thé incidence occurs, the tak attaches upon the person consuming and falls upon no other, no opportunity or possibility for any recoupment by the consumer "fat the expense of another.’’
I »pIu, passing. it might be said that the income tax, which 18 admitted legal taxation on the. part of the provincial Legislatures, is: in. principle the same as the present tax under consideration— the itaxpayer pays on income which in effect he has consumed ; he, has. destroyed his personal proprietorship of the money; he received the money and paid it away in the expense of living for himself and family. Here we have the fuel oil and its consumption. Once consumed nothing remains. There can be no possible indemnification. I would refer to what Lord Moulton said in Cotton v. The King (1913) 15 D.L.R. 283, at pp. 289-90:—
"The language of this provision of the British North America Act, 1867, marks an important stage in the history Of the fiscal legislation of the British Empire. Until that date the division of taxation into direct and indirect belonged solely ‘to the province of political economy, so far as the taxation in Great Britain or Ireland or in any of our Colonies is concerned; and, although all the authors of standard treatises on the subject recognized the existence of the t wo types of taxation, there cannot be said to have existed any recognized definition of either class which was universally accepted. Each individual writer gave his own description of the characteristics of the two classes, and any difference in the descriptions so given by different writers would necessarily lead to differences in the delimitation of the two classes, so that one authority might hold a tax to be direct which another would class as indirect. But, so long as the terms were used only in connection with the theoretical treatment of the subject, this ‘state of things gave rise to no serious inconvenience. The British North America Act changed this entirely. ‘Direct ! taxation ‘ is employed in that statute as defining the sphere of
provincial legislation, and it became from that moment essen- » dial that the Courts should, for the purpose of that statute,
.- ascertain and define the meaning of the phrase as used in such legislation. ‘ ‘
No indefiniteness here exists as to who is to pay—always the consumer. There can be no passing on of a tax upon property which has been consumed. Looked at in its reality no tax is imposed on fuel-oil existent—the tax is upon fuel-oil non-existent consumed by the taxpayer. Once the fuel-oil is within the Province it cannot be said that any magic attaches to it or that it is immune from provincial taxation, being property it must be sub- ject to the incidence of taxation and the taxation here imposed, under the Act being considered, is direct taxation being property consumed. The Legislature so enacts and in Bank of Toronto v. Lambe 12 App. Cas., at p. 585, Lord Hobhouse said:—
4 Their Lordships . . . hold . . . as regards direct taxation within the province to raise revenue for provincial purposes, that subject falls wholly within the jurisdiction cf the provincial legislatures.’’ The imposition in my opinion is in its nature a direct tax upon property and being that how ean it be said to trench upon "‘the regulation of trade and commerce ?‘‘
In Citizens Ins. Co. v. Parsons (1881) 7 App. Cas. 96, it is shown that there may be cases where the statute law relates to property and civil rights and it cannot be held to be an attempt on the part of the Legislature of the Province to affect trade and commerce and I would refer to a decision of this Court of Little v. A.-G. B.C. (1922) 65 D.L.R. 297, at pp. 298, 800-1, 31 B.C.R. 84, at pp. 86, 97-8.
I would refer to what Lord Atkinson said in delivering the judgment of their Lordships of the Privy Council in Montreal v. Montreal Street R. Co. (1912) 1. D.L.R. 681, at pp. 686-7 :—
"‘It has, no doubt, been decided many times by this board that the two sees. 91 and 92 are not mutually exclusive, that their provisions may overlap, and that where the legislation of the Dominion Parliament comes into conflict with that of a provincial Legislature over a field of jurisdiction common to both the former must prevail; but on the other hand, it was laid down in Attorney-General of Ontario v. Attorney-General of the Dominion. . . . [1896] A.C. 348:
"‘(1) That the exception contained in sec. 91, near its end, was not meant to derogate from the legislative authority given to provincial Legislatures by the 16th subsec. of sec. 92, save to the extent of enabling the Parliament of Canada to deal with matters, local or private, in those cases where such legislation is necessarily incidental to the exercise of the power conferred upon that Parliament under the heads enumerated in see. 91;
"" (2) That to those matters which are not specified amongst the enumerated subjects of legislation in see. 91 the exception at its end has no application, and that in legislating with respect to matters not so enumerated the Dominion Parliament has no authority to encroach upon any class of subjects which is exclusively assigned to the provincial Legislature by see. 92;
1 " (3) That these enactments, secs. 91 and 92, indicate that the exercise of legislative power by the Parliament of Canada in regard to all matters not enumerated in sec. 91 ought to be strictly confined to such matters as are unquestionably of Canadian interest and importance, and ought not to trench upon provincial legislation with respect to any classes of subjects enumerated in sec. 92 ;
"(4) That to attach any other construction to the general powers which, in supplement of its enumerated powers, are conferred upon the Parliament of Canada by sec. 91 would not onlly be contrary to the intendment of the Act, but would practically destroy the autonomy of the provinces;
"‘And lastly, that if the Parliament of Canada had authority to make laws applicable to the whole Dominion in relation to matters which in each province are substantially of local or private interest, upon the assumption that these matters also concern the peace, order, and good government of the Dominion, there is hardly a subject upon which it might not legislate to the exclusion of provincial legislation. The same considerations appear to their Lordships to apply to two of the matters enumerated in sec. 91—namely, the regulation of trade and commerce.’’
We have Lord Haldane in delivering the judgment of their Lordships of the Privy Council in Workmen’s Compensation Bd. v. C.P.R. (1919) 48 D.L.R. 218, at p. 221:—
"‘It is not in dispute that the persons employed by the respondent company with reference to whose dependents the present question is raised, come within the conditions under which the enactment purported to be applicable to them. Nor can it be successful contended that the Province had not a general power to impose direct taxation in this form on the respondents if for provincial purposes. In Bank of Toronto v. Lambe (1887) 12 App. Cas. 575, it was decided by the Judicial Committee that a Province could impose direct taxes in aid of its general revenue on a number of banks and insurance companies carrying on business within the Province, and none the less that some of them were, like the respondents, incorporated by Dominion Statute. The tax in that case was not a general one, and it was imposed, not on profits nor on particular transactions but on paid-up capital and places of business. The tax was held to be valid, notwithstanding that the burden might fall in part on persons or property outside the province.”
In A.-G. B.C. v. Macdonald Murphy Lbr. Co. [1930] 2 D.L.R. 721 at p. 725, Lord Macmillan, in delivering the judgment of their Lordships, said :—
" " While it is no doubt true that a tax levied on personal property, no less than a tax levied on real property, may be a direct tax where the taxpayer’s personal property is selected as the criterion of his ability to pay, a tax which, like the tax here in question, is levied on a commercial commodity on the occasion of its exportation in pursuance of trading transactions, cannot be described as a tax whose incidence is, by its nature, such that normally it is finally borne by the first payer, and is not susceptible of being passed on. On the contrary, the existence of an export tax is invariably an element in the fixing of prices, and the question whether it is to be borne by seller or purchaser in whole or in part is determined by the bargain made. The present tax thus exhibits the leading characteristic of an indirect tax as defined by authoritative decisions. ‘ ‘
There, as stated, it was held to be an indirect tax” but in the present case in accordance with the language of Lord Macmillan I think it is well indicated it is a direct tax—note— 4 While it is no doubt true that a tax levied on personal property, no less than a tax levied on real property, may be a direct tax. . . .”
Here in effect it is a tax on personal property but it is levied only upon that property consumed, 2.e., fuel-oil, and being consumed in the language of Lord Macmillan ‘‘is not susceptible of being passed on’’. In my opinion the Act to be considered here is plainly a tax upon personal property and is a direct tax. The manner and form of the imposition of the tax matters not if it be clear, as I think it is upon the frame of the statute— the imposition of a tax upon personal property of the tax payer —property which he has consumed—the intention of the Legislature is plain that it is a direct tax upon the person having and consuming fuel-oil, the consumption having taken place. All these questions of nicety, as to whether it is direct or indirect taxation, are at an end as in the language of Lord Macmillan, already quoted, the fuel-oil so taxed and consumed ‘‘is not susceptible of being passed on’’. I am of the opinion that the Act is intra vires legislation of the Legislature of the Province of British Columbia and being of that opinion I would allow the appeal.
Macdonald, J.A.:—I have given full consideration to the arguments submitted (and the cases and statutes cited) and have reached a firm conclusion that this is an excise tax. An appeal is about to be taken to the Judicial Committee for the final determination of the questions involved and because of the limited time at my disposal, and to avoid delay, I will briefly outline my views. The submission is that the Fuel-oil Tax Act, 1930 (B.C.), c. 71, is ultra vires of the provincial Legislature. Sec. 2 reads as follows :—
‘ ‘For the raising of a revenue for Provincial purposes every person who consumes any fuel-oil in the Province shall pay to the Minister of Finance a tax in respect of that fuel-oil at the rate of one-half cent a gallon/‘
One must scrutinize the whole Act to determine its true character. Sec. 5 prevents any one from keeping fuel-oil for sale without a licence (subject to cancellation for infraction of the Act) for each place of business where so kept. Powers of inspection and interrogation are given by sec. 6(1) and by sec. 6(2) failure to produce for inspection, or to permit inspection, of books and records or of receptacles or tanks containing fuel-oil, exposes the offender to a penalty. By sec. 7(1) all who consume fuel-oil, sell it, or keep it for sale must keep books and records and make such returns as may be prescribed by regulations.
By subsec. (2), making false or deceptive entries is an offence. These sections indicate that while sec. 2 imposes the tax on the “person who consumes’’ the dealer and distributor are brought within the purview of the Act. It would be illegal to tax the dealer; he could pass it on to the purchaser. He is however affected by the legislation.
An attempt to tax fuel-oil by former legislation (1923 (B.C.), c. 71) was unsuccessful. It is now hoped that pitfalls then encountered may be avoided. The Act is so framed that the wholesaler, retailer or distributor, as the commodity passes on the way to the consumer, pay no tax. When sold by the retailer to the householder or consumer, the submission is, it still remains untaxed, but when burnt the person using it for heating purposes must pay a tax on every gallon consumed. It is suggested therefore that as the impost cannot be passed on it is a direct tax.
This tax, it is urged, is not imposed on a commercial commodity, but as in the case of income tax, is levied on the person and his ability to pay is measured by the amount he consumes, as income tax is measured by the amount one earns. We must however "‘ascertain the real nature of the tax’’ (A.-G. B.C. v. Macdonald Murphy Lbr. Co. [1930] 2 D.L.R. at p. 723) and base conclusions, not on form but on substance.
Fuel-oil is a product of crude oil, the latter not produced in commercial quantities in this Province. It is imported from foreign countries (some produced in Alberta and Ontario) free of duty, distilled here in refineries, other more valuable products (including gasoline) extracted leaving fuel-oil as a residue arising in the process of manufacturing. It is therefore a product refined in the Province although at times limited amounts may be imported. Coal, a competitive product, is extensively produced in British Columbia and the free use of oil as a fuel limits the production and use of coal. It was submitted by respondent that the primary purpose of the Act is to protect the coal industry. I would suggest that is an important secondary consideration, the primary purpose being to obtain much-needed revenue.
The Act is defended under sec. 92(2) of the B.N.A. Act (direct taxation) subsec. (13) (property and civil rights) and subsec.
(16) (as a matter of a merely local or private nature in the Province) and attacked on the ground that it is an excise tax embodied in a statute framed purposely with a facade to conceal its real character. In A.-G. B.C. v. C.P.R. [1927] 2 D.L.R. 257, at p. 258, the late Chief Justice of Canada, referring to sec. 6 of the former Fuel-oil Act, 1923 (B.C.), c. 71, already referred to, said :—
"‘Had sec. 6 been the only provisions imposing the tax it would probably be difficult for the respondent to maintain its inapplicability to the fuel-oil in its possession from time to time, or successfully to challange its validity.’’
This is not a final opinion, nor was it necessary for the decision of the case. It is only dealt with in the judgment of Viscount Haldane in delivering the judgment of the Judicial Committee on appeal ([1927] 4 D.L.R. 113, at p. 116) by saying that sec. 6 “has to be read with reference to sec. 3’’. No opinion therefore was expressed on the effect of sec. 6 standing alone.
The authority to impose an excise tax is found in sees. 122 and 91(3) of the B.N.A. Act—“The raising of Money by any Mode or System of Taxation.’’ Customs duties may be levied with the dual purpose of regulating trade and commerce, by protecting native industries and of raising revenue by indirect taxation, while an excise tax, although affecting trade, is imposed primarily for revenue. purposes. It is under the control of the Inland Revenue Department of the Government. There is therefore a distinction between an excise tax and a customs duty. They have this feature in common that both are restrictive of trade but not equally in manner or degree.
It is said that an excise tax is ‘‘A duty charged on home goods (as distinguished from customs duties on imported or exported goods) either in the process of their manufacture or before their sale to the home consumers:’’ Oxford Dictionary, vol. 3, p. 3/9. This definition is not sufficiently comprehensive for the lawyer. It is a tax on a commodity paid by the consumer and its essential character is not changed by delay in collecting it or by any conditions relating to time or manner of payment. It was submitted that an ‘‘excise tax” as used in 1867, did not include a tax on the consumer and that a search of English statutes from 1660 to 1867 suports this view. True it was usually a tax on goods but paid by the consumer or the purchaser of the commodity.
By sec. 19BB(3) of the Special War Revenue Act, 1915 (Can.), ¢. 8, as enacted by 1920 (Can.), ce. 71, sec. 2(1), it is provided that, “The excise taxes imposed by the preceding subsections shall be paid by the purchaser to the vendor at the time of sale and delivery for consumption or use . . . .” It would make no difference if, as a matter of policy, it was made payable after consumption.
The Dominion Parliament could place an excise tax on this fuel-oil. It chose to exempt from taxation "‘oil for illuminating or heating purposes’’ in the Special War Revenue Act of 1915 as amended in 1920, thus asserting the right to tax. If the present Act is intra vires, as contended, a levy may be made by the Provinces on sugar, boots, beer and countless commodities manufactured in the Province payable after consumption or use and the only difference between this and Dominion excise imposts on the same commodities would be in the method of collection. While usually the result of a judicial decision should not be considered as decisive yet in determining division of authority under the B.N.A. Act this consideration should at least be kept in mind to avoid confusion.
Further, the Provinces in levying taxes on commodities subject to similar imposts (or customs duties) by the Dominion Parliament might seriously interfere, as submitted, with the commercial policy of the Federal Parliament in domestic and foreign affairs (e.g., in framing treaties). It is a principle that when a right in conferred it involves all necessary protection in the exercise of that right. True the same submission might be made in respect to a personal property tax (usually regarded as within local authorit ) where the taxpayer’s personal property is subject to a tax using it as a criterion of his ability to pay but not in the same way or to the same degree. If, however, it is intra vires of the provincial Legislature by an Act to gauge the ability of a consumer to pay a tax by the amount of fueloil he consumes and to apply this method of taxation to all commodities manufactured in the Province where the raw material is imported from abroad it would impair the free exercise of the right of the Dominion Parliament to regulate trade and commerce and to pursue consistent commercial policies.
Our judgment however may rest on the view that this is an "‘excise tax’’ none the less so because of the wording of sec. 2. It is a tax on the person in respect to a commodity as all taxes are. Properties do not pay taxes of any kind; individuals pay the levy. It is an over-refinement therefore to say that where a tax is imposed on the consumer, rather than on the thing consumed, different results: follow. When a duty is imposed on goods it means, if fully expressed, that a duty is levied on the person in respect to the importation of goods ‘just as a property tax is usually, though not necessarily, a tax on persons in respect of their property :’’ A.-G. N.S.W. v. Collector of Customs (1908) 5 Com. L.R. 818 at p. 854, referred to in A.-G. B.C. v. A.-G. Can. [1923] 4 D.L.R. 669 at p. 671. Indeed it is not at, all clear that by sec. 2 the tax may not be directly imposed on the commodity before consumption having regard to a free translation of the words "‘who consumes’’. It was found necessary by subsecs. 3, 6 and 7 to place restrictions on those who sell or keep fuel-oil for sale to the extent that a licence must be obtained and records kept showing the difficulty, in fact the impossibility, of keeping in separate compartments, so to speak, the person and the commodity. These provisions are characteristic of all Excise Acts.
The case of Halifax v. Fairbanks [1927] 4 D.L.R. 945 is con- elusive. There a business tax payable by every person occupying real property, although the taxpayer might seek to pass it on to others, was held to be a direct tax because before Confederation certain taxes were then universally recognized as falling within one or the other category. A tax on commodities produced and consumed in the country were known as excise taxes long before Confederation and must be assigned to federal jurisdiction without regard to any theory as to the ultimate incidence of the tax. This is, of course, a tax on a commodity produced and consumed in this country. In 1 Stephen’s Commentaries on the Laws of England, 17th ed., the author, at p. 272, says:—
" Excise Duties, which are also controlled by the Commissioners of Customs and Excise, are those duties which are imposed by Parliament upon commodities produced and consumed in this country. They are directly opposite in their nature to the customs duties; for they are an inland imposition, paid sometimes on the consumption of the commodity, frequently upon the retail sale. Inasmuch as this duty is peculiarly liable to evasion, the officers of the revenue have a power to enter and search the places of business of such as deal in exisable commodities, at any hour of the day, and, in the presence of a constable, of the night also.’’
As stated, they are paid ‘‘sometimes on the consumption of the commodity’’. One may trace legislation since the reign of Charles II to the present day and find that excise duties were imposed on consumable commodities. As we approach the Confederation period we find an Act of the year 1867 (1867* (Imp.), ec. 5) amending a similar Act of an earlier date imposing a Duty of Excise on Dogs. A licence had to be obtained and an annual duty of five shillings was payable by the owner. Sec. 4 provides that :—
"‘The said Duties and Licences shall be Excise Duties . . . .’’ This tax is not imposed on dealers but on the owners. I refer also to 1869 (Imp.), c. 14, subsees. 16 to 18 under Part V under the heading ‘‘ As to Assessed Taxes and Excise Licenses’’. Duties, through licences, were imposed on male servants, carriages, horses, mules, armorial bearings, etc., to be paid by the owner, proprietor or employer. Licences had to be procured and by sec. 18, ‘‘Such duties and licences shall be excise duties and licences, and shall be under the management of the Commissioners of Inland Revenue . . . .”
Regardless of the history or setting of the particular statutes referred to we have before Confederation a long series of Acts showing that a definite meaning was assigned to the word “excise” and ‘‘fuel-oil’’ if then used could readily be added to the list. Turning to Dominion Statutes we find (1867 (Can.), c. 8) an Inland Revenue Act. Certain individuals were prevented from carrying on any business subject to excise without a licence. An exception was made by sec. 3(3) and (4) in respect to utensils used for brewing beer for family use; also as to growers of tobacco on the owner’s land and the manufacture of it for private use and not for sale, indicating a liability to such a tax if not exempted. An excise tax, therefore, could be imposed on these utensils and appliances in the hands of the user or consumer. In fact the Dominion Inland Revenue Act of 1868 (Can.), ce. 50, an excise tax, similar in nature to the tax under review, was imposed on refined petroleum (sec. 7. It follows that on the principle enunciated in Halifax v. Fairbanks, supra, this Act is ultra vires and the appeal should be dismissed.
Appeal dismissed.