Ontario minimum wage protests over Tim Horton’s continue. But nobody is addressing the real issue. Specifically, how does working in a province become subject to a federal income tax? If the federal government explains how income tax really works, workers would care less about minimum wage or work benefits. That is what our research, called Apu’s Theory, does.
Ontario minimum wage increased from $11.60 to $14.00 an hour on January 1st, 2018. To stay in business, some Tim Horton’s owners cut back on optional benefits such as dental and health care coverage.
Outside Quebec, Canada’s legal system is based on common law principles. Human rights under common law are inalienable. This means nobody, including the government, can take them away or change them on you. In contrast, benefits can.
Some jobs have benefits. Some bus drivers get free lifetime transit passes when they retire. Airline workers and their families may get to fly for reduced fees. However, the benefit grantor can change or even remove them. In other words, such “perks”, or benefits, are alienable. This has nothing to do with human rights.
Governments are disconnected from reality. They think their revenue stream is an open tap that never stops. If they need more money, they just raise taxes. In this case, they raised the Ontario minimum wage. Presto, more revenue!
Ontario Premier Wynne says Tim Horton’s are acting like a bully. But Tim Horton’s are businesses. If costs exceed revenue, then it goes bankrupt and closes. The workers then have no jobs. This is not about greed.
Premier Wynne cannot understand this because governments like hers can go into debt and yet continue operating. Ontario’s debt is over $300 billion, or twice that of California’s (but with only 35% of California’s population). How do you continue being the government despite such a debt? In Ontario’s case, they cancelled two power plants to save Liberal seats in Oakville and Mississauga. That Power Plant Scandal costs Ontario taxpayers $1 billion dollars. But, hey, it helped her government get re-elected!
The Great White North Franchisee Association, which represents half of Canadian Tim Horton’s franchisees, says the Ontario minimum wage hike and other Ontario labour law changes will cost the average franchisee $243,889 a year. They also point out that franchisees are prohibited from raising prices.
The franchisees have no choice. They could not break the law and pay less than the Ontario minimum wage. So they cut back on the only area they could without violating the law or human rights – alienable benefits.
So, which is the real “act of a bully” here?
Minimum wage laws and workers compensation boards are under provincial jurisdiction. Both are a “Property and Civil Right” under provincial jurisdiction due to s.92(13) of the British North America Act stating:
Exclusive Powers of Provincial Legislatures
92.(13) In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next hereinafter enumerated, that is to say, Property and Civil Rights in the Province.
So how can a federal income tax apply to working within a province?
In 1935, the federal government passed the Employment and Social Insurance Act (since repealed). However, they knew that they had no jurisdiction over ordinary work within the provinces. Nevertheless, they asked the Supreme Court of Canada for a legal opinion (called a “Reference” case). That Court’s decision states, at page 428:
It being well understood, and in fact conceded, that the subject-matters of the Act fall within the legislative authority of the provinces, the Dominion Parliament may not, under pretext of the exercise of the power to deal with its property or to raise money by taxation, indirectly accomplish the ends sought for in this legislation.
The effect of the Act under submission is “to attach statutory terms to contracts of employment” … and its immediate result is to create civil rights as between employers and employees. The Dominion Parliament cannot use its power of taxation to compel the insertion of conditions of that character in ordinary employment contracts.
Since the federal government conceded they had no jurisdiction “to raise money by taxation” on ordinary work within the provinces, then why did they waste taxpayer’s money to get that legal opinion? We believe it was to justify finding a way to gain federal jurisdiction.
The 1948 Johnston versus Minister of National Revenue case states the Minister has the power to make assumptions. Furthermore, these assumptions will be treated as agreed “facts” if the taxpayer fails to rebut such “facts”. Then the government obfuscated the Income Tax Act (“ITA“) so you can’t figure out what you, and your income, have been deemed to be. (Conveniently, the ITA does not define what income is either). How can you rebut what you don’t know? OK, let’s talk about fairness. Does this sound fair to you? Or do you feel being bullied by the federal government?
Apu’s Theory concludes Canada’s ITA deems individuals working as federal ITA “officers” receiving income as “public money” belonging to Canada. This allows the federal government to legally sidestep that 1936 Reference case. Apu’s Theory also concludes that income tax seems to be “office rent” for using that federal office.
Until Canada’s government stops bullying Canadians and tell them how the ITA really works, Canadians will continue wasting time and energy protesting the wrong issues, such as the Ontario minimum wage increases.