Case being heard before Ontario Superior Court

From the...

Breach of contract

Tasha Kheiriddin
National Post

Friday, November 12, 2004

TORONTO - On Monday, the Ontario Superior Court and Canadian voters will witness legal history. For the first time, taxpayer protection legislation and a politician's election promise will come before a Canadian court of law. The case is that of the Canadian Taxpayers Federation (CTF) and John Williamson, and Greg Sorbara, Dalton McGuinty and the Ontario government.

The lawsuit involves two causes of action. First, the CTF is asking the court to declare that the manner in which the Ontario Health Tax was established violates the province's Taxpayer Protection Act (TPA). Finance Minister Sorbara introduced the Health Tax in his government's May 18 budget. Since July 1, it has been siphoning between $50 and $900 a year from every taxpayer in Ontario, ostensibly to improve health care. Not only did the levy rouse public indignation, it is poor policy: collected through general revenues, it's impossible to track; labour unions are launching legal challenges to have employers pay it; and it's slowing consumer spending, as

  Dalton McGuinty signs the CTF Taxpayer Protection Promise on Sept. 11, 2003, undertaking not to raise taxes in his bid to become Ontario's premier.


evidenced by slumping sales tax revenues and a recent report by RBC Financial Group.



                                                    -Dalton McGuinty


The folly of the tax aside, the question for the court is whether the law was broken when the tax was imposed. The Ontario TPA prohibits the government from raising certain taxes or imposing new ones without public approval, either through an election or referendum. The TPA was a response to the government's flagrant disregard for taxpayers under former Ontario premier Bob Rae's fiscally irresponsible New Democrats. High taxes and a $63.5-billion provincial debt left the Ontario economy reeling, and taxpayers demanded change.

After years of petitioning by the CTF, Mike Harris's Conservatives passed the TPA in 1999, by 76 votes to nine, thanks to the bipartisan support of the opposition Liberals. Mr. McGuinty described his party's support as "the price of admission to government." He himself had promised during the 1999 provincial election to enact such a law, should he form the government.

Yet in 2004, the Ontario Liberals imposed the health tax without any public mandate. Even the government's pre-budget consultations made no mention of the tax. Worse, McGuinty had spent the fall 2003 election campaign trumpeting his message of "I won't lower your taxes, but I won't raise them, either." He took this pledge a step further, by signing the CTF Taxpayer Protection Promise on September 11, 2003, undertaking not to raise taxes or run deficits and to respect the TPA.

Which brings us to the second ground of the lawsuit, breach of contract. The court is being asked to declare McGuinty personally in breach of the agreement he signed with the CTF. Since the election, the Premier's public statements have been to the effect that he could not keep the deal because he was blindsided by a deficit of $5.6-billion, as opposed to the $2.2-billion that was expected. While there's no excuse for the previous government's failings, the CTF has introduced evidence into court suggesting the Liberals knew the real size of the deficit before the election. Yet Mr. McGuinty still signed the CTF's Taxpayer Protection Promise. He knew he needed to demonstrate fiscal prudence to win the election and he used the CTF contract to do it.

If existing taxpayer protection laws do not protect taxpayers, they need to be strengthened. If politicians can't be held accountable for their promises, then the public need other means, such as recall laws, to hold them to account.


Some may say that a court of law is no place to take a broken political promise. Unfortunately, in our current system, the CTF had little choice. There are no other mechanisms in Ontario to hold politicians accountable between elections. This case reveals the need for recall and referendum laws, such as those in British Columbia and many American states. B.C. has already seen one MLA, Paul Reitsma, resign as a result of a recall petition. Voters also came within 500 signatures of recalling then-NDP Cabinet minister Paul Ramsey. And few need reminding about governor Gray Davis's recall in California. While these laws may not be used often, the very threat can be enough to make politicians think twice about taking the electorate for granted.

Whatever the court's decision, the CTF believes it must take a stand on behalf of taxpayers, and have our courts pronounce on the legality of the Health Tax and the validity of Mr. McGuinty's promise to Ontario voters. If existing taxpayer protection laws do not protect taxpayers, they need to be strengthened. If politicians can't be held accountable for their promises, then the public need other means, such as recall laws, to hold them to account. For if politicians can get away with lying to win elections, we will only end up being told more lies. Let's remind our elected officials that taxpayers are the ones who underwrite government, and not the other way around.

Tasha Kheiriddin is the Ontario Director of the Canadian Taxpayers Federation;
                                                 National Post 2004