Students, booze, police, and tax policy

When you mention that you live in Victoria, BC, many people have visions of a quiet sleepy town, where the dinner rush begins at 4pm and scooters driven by aging seniors dominate sidewalks. While those things are true, Victoria is also home to a large university (University of Victoria) and college (Camosun College). During the September to April months, nearly 40,000 students overrun our sleepy region.

While there are many benefits of this large student population, one of the negative side effects of this large student population is the swarming of our downtown bars. That many drunken, young, and hormonal students in a very tiny geographic area always leads the requirement for an increased police presence in the downtown core during the fall and spring terms (we don’t have winter terms, because we don’t have a winter) to deal with fights, public intoxication, vandalism, and related problems.

The problem is that the City of Victoria shoulders the burden of the associated police costs yet most of these students live in adjacent cities, notably Saanich and Oak Bay. Therefore those imposing the costs are not contributing towards the provision of those services. Instead, City of Victoria property tax payers are the ones bearing the cost.

And with the province set to loosen up the provinces liquor policies, the City of Victoria is concerned that these police costs will only escalate, especially since the new laws allow drinking at public events and many public events are held, you guessed it, in the downtown core.

To help cover these police costs, the City of Victoria is considering charging a drink levy, namely five cents a drink. While this article calls this levy a tax, it is not. Well, I should say, it cannot be. Municipalities in BC do not have the authority to charge taxes, other than property taxes. Instead, the levy would either have to be a user fee or a regulatory charge. Since it is clearly not a user fee, I assume that Victoria councilors imagine it as a regulatory charge.

What is a regulatory charge? As set out in 620 Connaught:

Regulatory charges are not imposed for the provision of specific services or facilities. They are normally imposed in relation to rights or privileges awarded or granted by the government. The funds collected under the regulatory scheme are used to finance the scheme or to alter individual behaviour. The fee may be set simply to defray the costs of the regulatory scheme. Or the fee may be set at a level designed to proscribe, prohibit or lend preference to a behaviour, e.g. [a] per-tonne charge on landfill waste may be levied to discourage the production of waste [or a] deposit-refund charge on bottles may encourage recycling of glass or plastic [citing Westbank].

However, as my research clearly shows, municipalities cannot enact a regulatory charge which purpose is to change behaviour. Only the federal government has that authority, because a regulatory charge that changes behaviour is an indirect tax and only the federal government is granted the authority to charge indirect taxes. This means that regulatory charges enacted by the province and, by extension, municipalities can only be “imposed in relation to rights or privileges awards or granted by the government.” In that case, the funds have to be used to finance the regulation, a similar condition that is imposed on user fees.

And that is where it is not clear to me that this per drink levy is within the authority of the City of Victoria. The City of Victoria is limited to regulatory charges that offset the costs of the regulatory scheme. For example, liquor licenses are a regulatory charge, the revenues from which can only be used to offset the regulatory costs associated with providing liquor licenses. Notice there is a tight link between the costs of the regulation and the regulatory charge.

In the case of the per drink fee, it would seem that the City will use the fees to offset the costs of policing. I don’t immediately see the link between the right or privilege granted (providing liquor), the charge (per drink charge), and the revenues being used to fund police services. While I will noodle this over a little more, it would appear that the City of Victoria is contemplating a tax for which is does not have the authority to implement.

 

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