It’s officially tax time in Canada, and you might be wondering why residents of Québec must fill out two income tax forms. Surprisingly, this is one of Maurice Duplessis’ many legacies to the people of Québec.
The power to tax is both a federal and provincial power: the federal government holds its power under section 91(3) of the British North America Act and the provincial government holds its own power to collect taxes for provincial purposes under section 92(2) of the same law. Prior to the Second World War, only the provinces had taken advantage of taxation of their populations. With war costs rising, Prime Minister William Lyon Mackenzie King asked the provinces to give the federal government temporary, though complete, control over taxation, including direct taxation of provincial matters. Taxes paid for provincial matters would go directly to Ottawa. Premier Adélard Godbout, as he was then known, agreed to the measure. In return, the provinces would receive back a form of payment from the federal government to carry on their duties.
However, Maurice Duplessis was back in power, and according to him, federal taxation was, in what seems to be current teenage vernacular of our times, “so 1940s”—or, rather, it smacked of provincial subordination. As most measures made by the federal government, subsequent governments did not bother to reverse the war measure, finding it very convenient to have taxes forwarded their way. The other provinces agreed: they were getting money, too, in the end. Duplessis, on the other hand, wished for things to come back to the way it was, pre-Second World War. His nationalist idea was quite simple: stop the increasing federal centralism and have Québec be in control of its own taxes, among other things. To this end, he created the Royal Commission of Inquiry on Constitutional Problems, colloquially called the Tremblay Commission because its head was Judge Thomas Tremblay, the chief justice of the Cour de magistrat de Québec (which has now evolved into the Court of Québec through the mergers of several different courts in the 1980s). Judge Tremblay also happened to be a longtime friend of Duplessis and a supporter of the Québec Conservatives.
The Tremblay Commission requested many different reports and heard different opinions, though Duplessis would march on. In 1954, Duplessis passed the Income Tax Act (Loi créant un impôt provincial sur le revenu, 2-3 Elizabeth II, c. 17), which officially marked the comeback of provincial taxes for individuals, having followed a tax for companies that had been rolled out in 1947. The federal government would not let this issue go down without a fight, and the Québec law was called into question by the federal government. This issue was not made any better with Duplessis insisting that Québec to be exempted completely from federal taxes, but after a talk with Prime Minister Louis St. Laurent, the federal and provincial governments came to an agreement: Québec would have the control over its own taxes, just as Duplessis wanted, and in return, the federal government would get its own cut. In general numbers, the federal tax level for its time was at around 5%, whereas Québec would collect 10% on its side.
The Tremblay Report would come out in 1956. Not only confirming what Duplessis wanted tax-wise, it also made a constitutional argument that the federal government was based on the provinces’ support of the institution and called for more provincial autonomy. Maurice Duplessis prevailed once again.
Read the Income Tax Act here.