Taxing retroactively is legal

Imposing taxes retroactively seems contrary to a rational, moral approach to taxation, but it is legal.

Recently in Quebec, the Parti Québécois government announced a 25% increase in taxes on all alcohol served in bars and restaurants — applying the tax retroactively to all the alcohol currently in stock on the premises. For businesses with large wine cellars, this is a costly surprise.

Finance Minister Nicolas Marceau defended the retroactive tax. “We proceeded as we always do,” he told the CBC. "There's nothing new.”

But bar and restaurant owners say this recent retroactive tax is unfair and are asking the government to reconsider. Unfortunately for these aggrieved business owners, the Canadian constitution does not prohibit retroactive law making except in the criminal sphere. Quebec is within its legal rights.

“The increase in the special taxes on alcohol of 50¢ a litre for wine and spirits and 17¢ for beer will have a major impact on restaurants with alcohol permits,” Jean Lefebvre, vice president of the Quebec branch of the Canadian Restaurant and Foodservices Association, told Food Service and Hospitality Business Magazine.

“With the minister talking about the difficult state of the economy, it’s a surprise the government would target our members in this way,” Lefebvre added. “Are we partners in the economic growth of Quebec, or only a cash cow for the government when it wants to balance its budget?"

Unfortunately for Quebec restaurant owners, when governments are in dire need of raising revenues, they can justify retroactive taxation. Even though Canadians argue they should be protected from such unpredictable and unfair impositions, it is doubtful that they will ever receive such protection. The Charter of Rights and Freedoms does not extend such protection, nor is it likely to be construed as doing so in the near future.