The Governor in Council referred two questions to the Supreme Court of Canada concerning the constitutional validity of proposed amendments to Quebec's sales tax designed to harmonize it with the federal goods and services tax.
The Court held that the proposed value-added tax, including the input tax refund mechanism and various exemptions, constitutes direct taxation within the province.
The tax is therefore within the legislative authority of the province under section 92(2) of the Constitution Act, 1867.
