No Lands or Property… Shall Be Liable to Taxation

Backgrounder, Gerard A. Lucyshyn, Public Finance & Fiscal Federalism

Section 125 of the Constitution Act, 1867, states: “No Lands or Property belonging to Canada or any Province shall be liable to Taxation.”1 This constitutional protection is at the center of many long standing arguments between the federal government and municipalities. Recently, the issue of privatizing the Canadian Broadcasting Corporation (CBC), the increases in allocation to the Department of Canadian Heritage in Budget 2016, and evaluating Canada’s national historical sites has seen this old argument reemerge.2

The CBC is a federal corporation with a government imposed mandate to provide Canadian entertainment content representing Canada’s multiculturalism and bilingualism. As a crown corporation, it is apart of the Payment in Lieu of Taxes Act, 2000 (PILT). Privatization of CBC would remove PILT and become subject to the same municipal tax liabilities as private sector corporations. Private corporations pay property taxes in the similar manner as any other residential property, and in some municipalities, are also subject to business occupancy taxes. Federal owned/leased land and crown corporations are exempt from paying taxation by the constitution, however, PILT payments are made to municipalities in exchange.

PILT is a federal legislation that governs the Payment in Lieu of Taxes program. The program is responsible for making payments/transfers to municipalities in exchange for municipal taxes on federal owned/leased land. In 2015 Alberta, Saskatchewan, and Manitoba received a total of $61 million dollars from the program for payment in lieu of taxes. Alberta was the lead recipient with PILT payments of $26,862,090, followed by Manitoba at $22,501,417, and Saskatchewan at $11,683,295.3

 

Read the entire paper here: FB123_NoLands_DC2717-F2