REGULATORY LAW, LICENSING FEES, AND LEGISLATIVE JURISDICTIONS

Reference: "CONSTITUTIONAL LAW OF CANADA" by Peter W. Hogg.

PREFACE

Because this paper is addressed to a variety of readers, it has
to begin with some primary data.  For those experienced in the
basics of Constitutional law as it refers to the powers vested in
the federal Parliament and in the provincial Legislatures to
impose licensing fees and taxes, and the vested jurisdictions to
enact criminal law legislation and regulatory law legislation, I
apologize.

HOGG, 15.9(e): "...the distribution of powers between the
federal Parliament and the provincial Legislatures is exhaustive;
the totality of legislative power is distributed between the
federal Parliament and the provincial Legislatures."

Sections 91 and 92 of the Constitution vest the powers required
by a government to enact regulatory law in two groups, and
allot one group, exclusively, to the federal Parliament and the
other, exclusively, to the provincial Legislatures.

Sections 91 and 92 of the Constitution vest the powers required
by a government to impose taxes and fees in two groups, and
allot one group, exclusively, to the federal Parliament and the
other, exclusively, to the provincial Legislatures.

The power to enact criminal law is vested exclusively in the
federal Parliament.

Where either Parliament or a Legislature wishes to impose fees
or charges, it must be able to point to the justification of
such impositions in the form of powers vested in that Parliament
or Legislature to impose fees or charges under a regulatory law
power vested in it, or the imposition is ultra vires.

Two very similar laws can appear, one as a provincial and the
other as a federal law--an apparent breach of the "exclusive"
jurisdictions established by s. 91 and 92 of the Constitution.  

That is permissible only where the matter has a "double aspect";
i.e., where it can be seen by the provincial Legislature as
handling, say, "property and civil rights in the province" [s.
92(13)] and equally well by the federal Parliament as "criminal
law" [s. 91 (27)].  Where conflict arises between two valid laws,
the federal legislation is usually held to be paramount by the
courts--if it is not found to be ultra vires of Parliament.

Dual legislation is not permissible where the federal
Parliament enacts legislation which, "in pith and substance,"
lies within the provincial Legislature's exclusive jurisdiction,
or vice versa. That is particularly true of revenue-raising laws.

As an example: A Motor Vehicle Act will fall into the provincial
Legislature jurisdiction by virtue of the fact that ground
transportation was available to be regulated in 1867, on the date
of Confederation.  Air transport, because it was not there in
1867, fell into the jurisdiction of the federal Parliament
through a residual powers clause.

Motor vehicles have some aspects which require federal criminal
law to be written about them.  That makes them a "dual aspect"
subject, and they appear in both federal criminal laws and
provincial regulatory laws.

If the federal Parliament suddenly enacted a federal Motor
Vehicles Act, purporting to regulate ground transportation on a
national basis, that would clearly be ultra vires of the federal
Parliament, as an encroachment on provincial legislative powers.

If that federal Motor Vehicles Act provided for licensing fees to
be charged, that would clearly be ultra vires of the federal
Parliament, as an encroachment on provincial tax powers.

HISTORY

When the federal Parliament decided to take control of firearms,
it did so in the only way it could.  Because the power to
regulate firearms with regulatory law clearly fell into the
jurisdiction of the provincial Legislatures, Parliament created a
pseudo-criminal-law regulatory licensing scheme which could
survive judicial scrutiny--within the Criminal Code.

Each of a large number of actions involving firearms was defined
as a "crime"--an action so heinous or so damaging to some
fundamental right that imprisonment was provided as a punishment
for engaging in that prohibited behavior.

As in certain other areas [e.g., the abortion law that was
struck down [in Morgentaler et al. v. the Queen and the
Attorney General of Canada (1988) 1 SCR 30], the firearms control
laws defined a crime, then established "a specifically-tailored
defence to a particular [criminal] charge."  That is, the person
has engaged in the criminalized behavior, but cannot be convicted
because he or she has the "specifically-tailored defence."  

In the case of the firearms laws in Part III of the Criminal
Code, the "defences" provided were described as "permits,"
"authorizations in writing," and "registration certificates."

Apparently in order to maintain the polite fiction that this mass
of regulatory law was in fact proper criminal law, Part III made
repeated use of the wording "in the interests of the safety of
the applicant/holder or any other person."  That language tied
the matter solidly to the issue of safety, and made it law
permissible within the Criminal Code--though just barely.  It was
one small but vital step away from actually licensing someone
(giving him permission) to commit a crime.

Research does not clearly identify any vested power which allows
Parliament to define certain behavior as the commission of a
crime and gives it power to sell licenses to commit that crime.

At the time it was first enacted, the Criminal Code Part III set
of regulatory laws regarding firearm possession and use was not
subject to the strictures of the Canadian Charter of Rights and
Freedoms--it had not yet come into existence.  At that time, the
accepted definition of "crime" was, roughly, "anything that
Parliament puts in the Criminal Code and imposes a penalty for."

Over the years, the licensing documents and regulatory scheme
have drifted away from the original, carefully engineered plan to
create valid criminal law.  Licensing fees of up to several
hundred dollars are currently imposed in order for the applicant
to qualify for a "specifically-tailored defence."

C-68 takes that tendency to drift much further; perhaps too far.

As the Morgentaler decision pointed out, where a "defence"
is offered by the law, it must be available; it cannot be
"illusory or so difficult to obtain as to be practically
illusory"--or the Supreme Court of Canada will strike that law
down, as it did the abortion law.

At what point does a licensing fee cause a "defence" to become
"illusory or so difficult to obtain as to be practically
illusory" for a poor person?  That is a serious question. 

Additionally, many of the licensing documents currently offered
by the existing laws are unobtainable.  The law provides for
their issuance, but the firearms control authorities refuse to
issue them as a matter of policy.  That position is vulnerable.

EFFECTS

As an example of the effect of federal encroachments on
provincial tax powers, recent heavy increases in the firearms
dealer's permit fee have resulted in the elimination of two-
thirds of all British Columbia firearms dealers.  That represents
a severe loss of business tax and licensing fee revenue to both
the provincial and municipal governments.  It also represents
loss of jobs and future employment opportunities, along with the
tax revenues that arise from those losses.

BILL C-68'S "FIREARMS ACT"

In Bill C-68, it seems probable that the federal Parliament's
Justice Minister has made serious blunders.

First, C-68 splits firearms control law into two parts.  The new
Firearms Act is basically regulatory in nature; it seems unlikely
that it could pass the "pith and substance" test.

If the Firearms Act is enacted by using the federal Parliament's
power to enact criminal law, it is criminal law, and an exact
parallel to the Narcotics Act.  Therefore, if it fails the "pith
and substance" test by being unmasked as a licensing scheme,
primarily intended to license, regulate, and control firearms
ownership and usage, it is ultra vires of Parliament.

If the Firearms Act is enacted by using Parliament's power to
enact regulatory law, it is apparently ultra vires of Parliament
because Parliament has no more power to enact regulatory law
dealing with firearms than it has to enact regulatory law dealing
with motor vehicles.  Neither is in the federal Parliament's list
of areas where it may enact regulatory law.

If the provincial governments accept these encroachments without
resistance, one wonders what further encroachments will be made
in other areas to take over provincial tax bases and legislative
powers.  It seems to be a very dangerous precedent.

If the Firearms Act, taken as a whole, fails the "pith and
substance" test and is struck down as ultra vires of the federal
Parliament, the C-68 Criminal Code amendments automatically fall,
because they are based on licensing documents issued under the
Firearms Act.  The results will probably be rather chaotic.

Undoubtedly, the Firearms Act will be challenged in this way.  If
it falls, the provincial Legislatures will probably be required
to pay or repay all the damages, fees, confiscations of property,
etc. that have been imposed under invalid law.

It may well prove difficult to recover such funds from the
federal Parliament responsible for the legislative errors. 

HISTORICAL BACKGROUND, HOGG 6.1

S. 122 of the BNA Act transferred the "customs and excise laws
of each province" to the new federal Parliament.  S. 91(3) gave
the federal Parliament the power to raise money "by any mode
or system of taxation."  Those two provisions gave the federal
Parliament the power to raise the revenues it needed.

The BNA Act gave the provincial Legislatures lesser powers for
their lesser funding needs.  S. 92(2) conferred on them the power
to raise only "direct" taxes (on property or income, and unlike
federal "indirect" customs and excise taxes).  S. 92(9) vested
provincial Legislatures with exclusive power to charge "licensing
fees," using language that seems oriented toward business
licenses, but which may well apply to other licensing fees.

The distinction between taxes and other charges imposed by
governments is sometimes unclear.  Black's Law Dictionary defines
"license" as "certificate or the document itself which gives
permission."  A "licensing fee" is the charge imposed by law to
purchase that document and gain that permission.

Black's defines "tax" as "a pecuniary burden laid upon
individuals or property to support the government, and is a
payment exacted by legislative authority."  One must pay a tax,
but no specific benefit is given for that payment.

30.1(c) The s. 92(9) exclusive provincial power to charge
"licensing fees" apparently allows the province to raise revenue
for general purposes through licensing fees, as opposed to
charging a licensing fee as a method of defraying the costs of a
regulatory scheme authorized by some other provision.

S. 92(9) does not explicitly limit the province's raising of a
revenue by direct means.  Therefore, to what extent, if at all,
does s. 92(9)'s exclusive authority to raise revenue by
"licensing fees" interact with s. 92(2) by authorizing
"forbidden" indirect taxing through license fees?  That question
has never been thoroughly or definitively tested in the courts.

La Forest's careful study of case law ["Disallowance and
Reservation of Provincial Legislation," Queen's Printer, 1965 and
"The Allocation of Taxing Power under the Canadian Constitution,"
Canadian Tax Foundation, Toronto, 2nd Ed., 1981] led him to the
conclusion that s. 92(9) authorizes indirect taxation through
licensing fees only if the money is directed to defraying the
expenses of an otherwise valid regulatory scheme. [30.10(c)]

That leaves s. 92(9) with no independent force of its own, but La
Forest felt that it seemed to be the better view, because of "the
overriding implication of s. 91 and 92 that the power to levy
indirect taxation should be reserved to Parliament."

If, however, Black's is correct, then the power of the provincial
Legislature to charge "licensing fees" is the power to charge a
fee for "a document... which gives permission."  Obviously, that
can only be done in areas where the provincial Legislature is
authorized to "give permission."  It has to be in an area where
the Legislature has regulatory authority.

PROVINCIAL POWERS, HOGG, 30.10(b)

Provincial legislation may impose licensing fees, which are
not necessarily taxation, and, if they are not, need not be
direct.  They are not taxes if they can be supported as
regulatory charges imposed under one of the province's
regulatory powers.

Conversely, if a government imposes charges in the guise of
"licensing fees" in an area where that government has no
authority to "give permission" under one of that government's
regulatory powers, then the charge is a tax.  It is simply a
charge imposed by a government with nothing given in return.

Licensing fees, registration fees, bridge tolls, water rates,
etc., imposed by a provincial Legislature, although they may
appear to be indirect taxation, are not taxes if their purpose is
merely 	to defray expenses.  Even if a charge is too high and
produces a surplus, the charge will not be characterized as a tax
so long as the court is satisfied that it is not a colorable
attempt to levy indirect taxation.

HOGG, 30.10(b): "The federal Parliament, not
being confined to direct taxation, can impose both direct and
indirect charges under its taxation power [s. 91(3)], but a
federal regulatory charge, like a provincial regulatory charge,
may well have to fall under some head of regulatory power. 
Thus, the distinction between taxes and charges may become
relevant to the validity of a federal law."

That is most significant.  If the licensing fee is not
imposed under some specifically named regulatory power vested in
the federal Parliament, it cannot be  for "a document... which
gives permission."  If the government which imposed the charge
has no authority to "give permission" as part of a regulatory
scheme which it is empowered to operate, then a "licensing fee"
does not fit the circumstances.  It must be a tax.

If the charge is imposed as a licensing fee by the federal
Parliament, that is an apparent violation of both the exclusive
jurisdiction of the provincial Legislature to impose a licensing
fee for the raising of a revenue, and an encroachment on the
revenue-raising power of the provincial Legislature.

If it is not a tax, then it must be levied under some
regulatory power vested in the federal Parliament.  There does
not seem to be any such power--rather a "Catch-22" situation.

EXAMPLES OF REGULATORY VERSUS CRIMINAL LAW DISTINCTIONS

Before 1976, the Criminal Code contained a dealer's permit. 
There was no fee, the permit did not expire, and it could be
denied only "in the interests of the safety of the applicant or
any other person."  It was clearly a safety matter.

Currently, the licensing dealer's permit can only be obtained by
paying a large fee, expires annually, and subjects the holder to
a variety of impositions enacted by Order in Council.  It has
drifted away from being proper criminal law, and has become in
pith and substance a regulatory licensing scheme.

There is no question that much of Part III of the Criminal Code
has minimal connections to crime and criminal investigations. 
The vast bulk of all activity controlled by Part III's regulatory
sections consists of regulating the lawful property of law-
abiding Canadians.  It has become, in pith and substance, a
regulatory licensing scheme which clearly does not belong in the
Criminal Code.

Currently, the Criminal Code (and in the future, if it passes,
the Firearms Act) establishes a licensing scheme for charging
"licensing fees," each thinly disguised as a "specifically-
tailored defence to a particular [criminal] charge" (in the words
of the Morgentaler decision).

Bill C-68 strips away that disguise, nakedly calling some of the
documents "licenses."  Further, it "grandfathers" a firearms
acquisition certificate, a minor's permit, a museum approval, a
dealer's permit, a museum permit, and even the designation of a
person, each as a "license" [FA s. 113 to 119 inclusive].

This unmasking of the licensing scheme, as it is understood by
the Minister of Justice, should be most valuable as evidence in
the courts on the status of various "licensing" documents.

It is apparent that the bulk of the firearms control law forms
a regulatory licensing scheme--and one which does not fall under
"some head of regulatory power" vested in the federal Parliament.

The conclusion is obvious: The federal Parliament does not have
the authority to impose charges through this licensing scheme. 
It lies outside Parliament's regulatory powers, and beyond its
power to "give permission."  It has no authority to impose
charges for "licensing fees" where it cannot "give permission."

Even if it did, the cost of a dealer's permit (or Firearms Act
"license") can now be hundreds of dollars.  Whether the document
is a "specifically-tailored defence to a particular [criminal]
charge" as described by Morgentaler, or a naked "license" as
described by the proposed Firearms Act, questions arise.

What are the Constitutional, legal, moral, and ethical problems
involved in the government's selling either "defences" to
criminal charges, or, and perhaps worse, "licenses" which are
legally defined as permission to commit the particular crimes? 

Where a particular action is defined within the Criminal Code as
an offence punishable by imprisonment, that action is a heinous
act so damaging to society that it is defined as a criminal
offence.  Shooting at an innocent person is such an offence.

Where the action is peaceful possession or acquisition of a
firearm for sporting purposes or as part of a collection of
historical artifacts, however, serious questions arise.  How and
why is that a crime?  Where is the harm to society?

That is where the "pith and substance" question arises.  Is the
firearms regulatory law contained in the current Part III of the
Criminal Code a licensing scheme, "in pith and substance," or is
it proper criminal law?

If it is a regulatory licensing scheme, and it would seem to be,
then it is ultra vires of Parliament.  At the very least,
licensing fees would be absolutely prohibited within it.

Governments and courts are very rigid about the division of
powers to impose charges between the federal Parliament and the
provincial Legislatures.  They have to be, to prevent
encroachment by either onto the other's revenue-raising areas.

Additionally, recent increases in federal licensing fee charges
have had severe effects in British Columbia and elsewhere. 
Recent increases in federally imposed fees for the dealer's
permit have eliminated about three quarters of all firearms
dealers in British Columbia (down from 774 to 181). 

That, in turn, has lost to the provincial Legislature many
business licensing fees properly authorized and charged by the
province and municipalities within the province.  It has reduced
local government's licensing fees and other expected revenues.

The licensing fees imposed by the federal Parliament apparently
violate the exclusive jurisdiction of the provincial Legislature
to raise revenue through "licensing fees."  They are an
encroachment by Parliament on Legislature revenue fields.

THE ILLUSIONS PROBLEM

The Morgentaler case established that where a "specifically-
tailored defence" is offered within the Criminal Code, it must be
available.  It cannot be "illusory, or so difficult to obtain as
to be practically illusory," or the Supreme Court of Canada will
strike down the law--as it did in Morgentaler.

The form of many laws within Part III of the Criminal Code is
identical to that of the failed abortion law: "Every person who
[does this] commits a criminal offence unless the person has
[this licensing document]."

Morgentaler identified such a licensing document as "a
specifically-tailored defence to a particular [criminal] charge." 
The licensing document apparently had to be identified in that
rather odd way to make the situation fall within the limits of
law.  It could not be a "license," because that would be a
document that "gives permission" to commit that particular
criminal offence, which is a ludicrous concept.

At what point does the fee make the offered "defence" illusory? 
What fee is the poorest of all Canadians confidently expected to
be able to put up to buy his defence against a criminal charge?

If a poor man and a rich man each inherit 100 firearms, is the
poor man unable to receive his inheritance because he cannot
afford to buy the firearms acquisition certificate or pay the
"user-pay" license fees the government now proposes to charge?

Is the poor man prohibited from entering the business of firearms
dealer because he cannot afford the multi-hundred-dollar dealer's
permit or "license"?  If he does enter that business, does that
make him a criminal, or would Morgentaler's effects result
in the law being struck down?

The firearms control legislation is very vulnerable, particularly
to Morgentaler attacks on the basis that some licensing
document is "illusory, or so difficult to obtain as to be
practically illusory."

It is also vulnerable to attacks based on the division of both
regulatory and revenue-raising powers, as allotted to the federal
Parliament and the provincial Legislatures by s. 91 and 92.

If the Firearms Act and the proposed amendments to the Criminal
Code actually pass, the firearms control laws become much more
vulnerable to both types of attack.