As of April 1, the B.C. Liberals’ ill-fated experiment with the harmonized sales tax came to an end. As a result, you no longer pay an extra seven per cent tax on services you purchase. There is one exception: legal fees.
When the government finally complied with the referendum calling for the elimination of the HST, it also elected to reintroduce a special tax on legal fees. The tax is not paid by lawyers. It’s paid by lawyers’ clients. You will pay the special tax if you hire a lawyer to help purchase a house, draft a will or for any other reason.
This special tax was introduced in 1993 by the then-New Democratic Party government. It was implemented for the express purpose of providing legal-aid services to the poor. While no tax is popular, this was a laudable goal. Even in 1993, the legal-aid society struggled to help those in need.
Many people are prepared to accept a special tax, implemented for a particular purpose, if the money raised is spent as promised. A gas tax that is actually used to build roads is likely to be viewed as reasonable, even if it’s not welcome.
A few years after it was introduced, the special tax on legal services started to collect more money than the government was transferring to the legal-aid society. In May of 2000, while still in opposition, the future Liberal attorney general criticized the NDP for failing to deliver all of the money collected by the special tax to the legal-aid society.
As pointed out in a recent commentary by Kasari Hovender and Kendra Milne, once elected, the B.C. Liberal government cut legal-aid funding by 40 per cent. In 2002, the government shut 45 legal-aid offices around the province. What the government decided to keep was the special tax on legal services. It simply diverted the money that was collected to other purposes.
It was this conduct that resulted in an unprecedented vote of non-confidence in the then-attorney general by the Law Society of B.C.
Undeterred, year after year, the B.C. Liberal government continued to collect the special tax on legal services while failing to spend the money as was intended.
In 2011, the Public Commission on Legal Aid confirmed that the legal-aid system in B.C. remains desperately underfunded. As a result, the poor are routinely denied legal assistance with matters that are vitally important to them.
Our willingness to ensure a just society where the rule of law is a reality for the poor as well as the rich is a measure of our collective success. On this score, we have failed woefully for more than a decade.
The decision to re-enact the special tax on legal services without a corresponding dedication of the funds collected to their intended purpose represented a serious moral failing.
As pointed out by the B.C. Liberals, when they were last in opposition, this is simply wrong.
Michael Mulligan is a lawyer in Victoria.
