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Lawyers seek break from GST

Saturday, August 11

  • By: Tracey Tyler
  • Organization: Toronto Star
Government tax makes legal services too costly, says group appearing at bar association meeting

With the cost of legal services driving many Canadians to financial ruin, the federal government should stop adding to the burden by taxing lawyers' bills, the country's largest legal organization says.

The federal government takes nearly $1 billion from Canadians each year by applying the GST to lawyers' accounts, according to material filed for the Canadian Bar Association's annual meeting, which begins today in Calgary.

But with the cost of justice increasingly out of reach for ordinary people and growing numbers representing themselves in court, many lawyers say it's time for legislators to stop treating the country's legal system as a cash cow.

Today, a contingent will be calling on the association's general membership to approve a resolution urging that taxes be scrapped on lawyers' services.

They're also calling for better compensation for legal-aid lawyers – who, in Ontario, with a 5 per cent increase taking effect tomorrow, earn between $77 and $96 an hour – and asking federal penitentiaries and courthouses to set aside rooms for lawyers willing to provide legal advice to people without charge.

The resolution was inspired by the late Dugald Christie, a crusading Vancouver lawyer who left his corporate law practice to provide legal services to the poor. After launching a constitutional challenge to the B.C. government's decision to impose a 7 per cent tax on legal services, Christie was killed in a traffic accident last summer near Sault Ste. Marie, while cycling to the bar association's meeting in St. John's.

"It really stems from his passion to improve access to justice for everyone," said Robin Bajer, a B.C. lawyer who is bringing the resolution forward and worked with Christie on the case. "As a lawyer for low-income people, he really saw the effect of that tax."

The federal government says it can't confirm the association's estimate that $840 million a year is paid in GST on legal services.

Although the Ontario government doesn't tax legal services, a Toronto Star investigation this year determined a routine, three-day civil trial is likely to cost residents of the province approximately $60,000. Of that, $3,500 goes to the GST.

But it can be much worse. Kathrine Farris, a commercial real-estate consultant in Toronto, was billed $375,384.50 for legal services in connection with a $7.5 million wrongful dismissal and sexual harassment suit against her former employer. No longer able to afford a lawyer and now representing herself, Farris also owes $26,405 in GST (the tax has since dropped to 6 per cent), an amount she calls "disgusting."

But while some lawyers point fingers at the government, others argue that lawyers' hefty fees are a greater impediment. In his book, Lawyers Gone Bad, former Bay St. lawyer and University of Western Ontario law dean Philip Slayton attacks Canadian lawyers as greedy account padders.

However, high legal bills are often the result of other factors, including clients who sometimes make unreasonable demands, says lawyer Bibhas Vaze, who also worked closely with Christie.

"I think the public perception is that lawyers charge all this money and it goes straight into their bank accounts," he said. "It's not the case for your average, everyday sole practitioner or poor person's lawyer." Vaze says $150 an hour is "often not enough" to cover the basic costs of running a law practice or even the cost of photocopying or filing court documents.

Despite his untimely death, Christie's case was heard by the Supreme Court of Canada earlier this year. Taking up the fight on his behalf, colleagues argued that B.C.'s tax on legal services made it impossible for many people to retain lawyers, which interfered with their constitutional right to counsel.

Their argument failed, with the Supreme Court concluding Canadians had no such general right to a lawyer and upholding the tax as within the government's right to impose. However, the judges did not take issue with earlier findings made by the B.C. Court of Appeal that the tax often amounted to a serious hardship.

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