Is the $40 a day payment ‘legal’?

Since the announcement that the BC government will pay parents $40 per day that schools are closed in the Fall due to strike activity by BC teachers, I’ve seen some chatter from some saying that this payment is illegal. I believe this argument is based on the perception that education is paid for through school taxes and that revenue must be returned to schools.

To determine whether this payment is illegal, we need to know a few things. What is a tax? As set out in Lawson the key defining feature of a tax is that there is no requirement that the revenues be ‘spent purposefully.’ That is, revenues from a tax can be directed towards any public endeavor. This compares to user fees and regulatory charges, where the revenues must be directed towards providing the good or service for which is being charged. For example, fees levied for the provision of garbage must be used to pay for the provision of garbage services.

That said, some taxes have built into their enabling legislation the fact that the revenue must be earmarked for a specific purpose. The authority for the School Tax and the criteria for funding school boards is provided in the School Act. The relevant sections are in Part 8. Under this Act, the BC government provides a grant to school boards to pay for the delivery and support of educational programs. That grant is comprised of revenues obtained from the School Tax (which funds about 34% of education costs) along with revenues from other sources. As per 117(1)(e) the grant can be withheld or reduced in the case of a strike or lockout.

Now the complicating section is 119(1), which says that “in order to raise revenue to finance the Provincial funding and the debt service expenses of boards, the Province may levy a school tax…” It is this wording that I think needs to have careful scrutiny of a lawyer. It may be that this wording means that the School Tax portion must be earmarked solely for “funding and debt service expenses of boards.” If true, then if the BC government does pay parents $40 a day for each day schools are closed during the strike, this payment cannot be paid out of the revenues generated from the School Tax.

Now the BC government has not stated the source of the revenues related to their $12 million dollars a day in savings during a strike. It could well be that the revenue source for that money is revenue from other sources and not the School Tax. In that case, they can do whatever they want with that money. If, though, some of the money is from revenue from the School Tax, the payment may, in fact, be illegal. I don’t know. I am not a lawyer, but I think there is enough here to follow up on. I would be interested in hearing a legal opinion on this.


BC’s $40 a day payment taxable

The BC government has still not made many details about the $40 a day payment if the teacher’s strike continues, but according to Finance Ministry spokeswoman Jennifer Cador the payment has been confirmed as being taxable. Unfortunately, the Finance Ministry has found it too burdensome to let you know in whose hands it will be taxable. The Finance Ministry also suggests that income and disability support payments will not be affected, but no information about other income benefits such as GST/HST tax credit, CCTB, etc.