Constitution 150 Blog

To celebrate the Canadian Constitution and to foster constructive discussion, we invite you to submit a short blog post on any topic relating to the Canadian Constitution. In the same way as the Constitution GO contest, the criteria concerning the content of the blog aren’t strict, and we would like to see different points of view regarding the Constitution. For an example, please see the post below.

The blog posts will be posted on our website in the language they were written in (french or english) and comments are welcomed. Please send your blog posts to

Thank you!


Our first post is by Andrew Joseph Froh

Our Constitution, Your Tax Dollars

The year 2017 will mark the 150th anniversary of Canada’s Constitution. However, 2017 will also mark the 100th anniversary of a historical event that is far less appreciated: the introduction of the income tax. The two events are connected to each other, even though our Constitution is the only one getting a party.

Section 91(3) of the Constitution Act, 1867 gives Parliament power over “the raising of Money by any Mode or System of Taxation.” Before 1917, Parliament raised revenue primarily through customs with high tariffs on the importation of goods. Our first Prime Minister, John A. Macdonald, introduced these tariffs in 1878 through The National Policy. This economic program was meant to protect Canadian manufacturers from American competition and the lower tax rate was supposed to attract more immigration.

Tariffs are an example of indirect taxation in which the tax is paid by one person in the sale of goods and services but then passed onto the final consumer as part of the total price. The National Policy slowly became dismantled as the Canadian and American economies merged, although it proved one of the most contentious issues between the Liberals and Tories in Canada’s formative years.  Yet none of the political parties had relied on the Constitution to impose an income tax, an example of direct taxation where the taxpayer directly pays the government.

This brings us to 1917, when Canada was still fighting alongside the Allies in WWI. Parliament has always been responsible for our military, navy, and national defence under section 91(7) of the Constitution. Canada incurred over $2 billion in debt during WWI, and Parliament was desperate to fund what seemed like a war with no end. Sir Thomas White, the finance minister under Prime Minister Robert Borden, tabled a resolution to the House of Commons for an income tax.

The Income War Tax Act was merely 10-pages long and meant to be a temporary wartime measure. However, once the war ended, the massive debt accrued during WWI meant that Canada could not forgo the income tax. The following government under Prime Minister William Lyon Mackenzie King saw both the introduction of the welfare state and another world war. The income tax continued to develop and became essential to Canada’s ability to finance public services and redistribute resources. The Income Tax Act today is an intimidating 3,300-page long document and is significantly more complex than its predecessor.

But what about your province’s revenues? Section 92(2) of the Constitution Act, 1867 gives the provincial legislatures power to impose “Direct Taxation within the Province in order to the raising of a Revenue or Provincial Purposes.” This means that the provinces cannot use indirect methods of taxation and the revenue must be used for purposes found under section 92 of the Constitution. All of the provinces except Quebec eventually entered into tax collection agreements with the federal government for the collection of personal income tax. So every April 30 you only have to file one return with the Canada Revenue Agency, which then redistributes the appropriate amount to the province you live in.

Parliament, in contrast, operates with the federal spending power. This allows Parliament to spend money however it sees fit and in whatever area it desires, irrespective of provincial jurisdiction. This can lead to the two levels of government butting heads over tax policies. The unrestricted federal power to tax under section 91(3) of the Constitution still influences politics today. For example, Prime Minister Justin Trudeau’s recent decision to implement a carbon tax has its foundations in the same constitutional authority, and has already resulted in many tense federal-provincial discussions.

Tax is as much a permanent feature of Canadian governance as the Constitution itself. Income taxes are now an especially important source of revenue for so much of what we enjoy as citizens everyday, from the hospitals we are born in to the highways we travel on. It is unlikely that they will be leaving us anytime soon. So the next time you file your income tax return, or even pay GST on your double-double, take a moment to realize you are participating in a constitutional activity with foundations that are 150 years-old.

This content has been updated on 17 January 2017 at 13 h 04 min.