The controversial HST is a federal tax, imposed on British Columbia by an act of Parliament, lawyers for both the provincial government and six leading business groups argued on Tuesday.
In separate but similar presentations, they attacked efforts by the province's spirited anti-HST forces to have the tax struck down by the B.C. Supreme Court, implying that neither the B.C. courts nor the provincial government can alter a federal tax law.
Business coalition lawyer Peter Gall said the HST serves a national purpose. Claims by lawyers for anti-tax leader Bill Vander Zalm that the tax had to be approved by the provincial legislature flies in the face of constitutional reality, he told the court.
The HST would remain in effect in B.C. even if Mr. Vander Zalm's legal suit succeeds, said Mr. Gall. "It is imposed by an act of Parliament and not the [tax]agreement entered into by the provincial and federal governments."
That tax agreement, known as CITCA, is at the heart of Mr. Vander Zalm's legal challenge. It contains the nuts and bolts of how the HST should be implemented, but was not submitted to the provincial legislature for ratification. It was passed, instead, by a cabinet order-in-council.
Mr. Vander Zalm argues this amounts to a violation of the Canadian Constitution that requires parliamentary approval of all taxes.
However, both Mr. Gall and George Copley, the province's veteran constitutional lawyer, said that CITCA is merely a federal-provincial understanding. It does not impose a tax on the people of B.C.
"CITCA is not coercive. It is not a law," Mr. Copley told Chief Justice Robert Bauman, who is hearing the case.
The HST is posed by an amendment to the federal Excise Tax Act, he said, calling CITCA a perfect example of co-operative federalism.
Asked by Judge Bauman whether the HST is a provincial sales tax, Mr. Copley replied: "No, it isn't, my lord."
Their submissions drew a fiery response from Mr. Vander Zalm's lawyer, Joseph Arvay, before the judge adjourned proceedings for the day. Anti-HST supporters in the courtroom clapped and cheered as Mr. Arvay packed up for the day.
Mr. Arvay charged that the HST could never have been implemented without CITCA, and the government's decision not to bring it before the provincial legislature was an affront to democracy.
"That agreement is why we have the tax. … Where's the accountability?" he demanded, his voice rising.
The issue should not be decided on some dry, text-book analysis of the Constitution, Mr. Arvay said.
"Give the people of this province their real rights, that reflect democracy. The only way to do that is to make the [provincial executive]accountable."
No federal tax should be imposed on a province without its consent and that consent must be authorized by the legislature, Mr. Arvay declared.
He urged Judge Bauman to strike down CITCA. "Declare that agreement a nullity. That is the only way to ensure democracy and accountability in this province."
Earlier, Mr. Gall said the courts should stay out of federal-provincial matters.
"It will rigidify the process in an unhealthy way that is not consistent with democracy," he asserted, evoking murmurs of disapproval from the anti-HST gallery.
Mr. Vander Zalm's legal challenge was the first of two HST-related issues to be heard this week by Judge Bauman.
On Wednesday, the business coalition will press for a ruling that a 700,000-name petition seeking to have the provincial government reconsider the 12-per-cent HST should not be considered, since the tax is federal and the province has no authority to change it.
The business group includes the B.C. Chamber of Commerce, the Council of Forest Industries and the Mining Association of B.C.