Provincial tax on the free distribution of promotional catalogues is a valid direct tax.
The respondent company distributed catalogues free of charge to customers in New Brunswick.
The province amended its Social Services and Education Tax Act to retroactively tax promotional distributors for the free distribution of goods.
The company argued the tax was indirect and therefore ultra vires the province.
The Supreme Court of Canada held that the tax was direct, as it was unrelated to any purchases made from the catalogues and there was no traceable way the tax could be passed on.
The appeal was allowed and the tax was declared intra vires.
