Ottawa Ontario - Canadian Pacific Railway (CP) lawyers have been in court since 2007 attempting to enforce a clause in the landmark contract that led to construction of Canada's first transcontinental railway.
 
A bid by CP to get a tax holiday because of a contract from 1880 has been dismissed by a federal judge.
 
Blacklock's Reporter said the railway paid $758 million worth of income tax last year.
 
"CP has paid," wrote Justice Alan Diner, noting the 141-year-old contract was signed decades before Parliament or provinces introduced income tax on corporations.
 
CP lawyers have been in court since 2007 attempting to enforce a clause in the landmark contract that led to construction of Canada's first transcontinental railway.
 
Terms included a $25 million subsidy, 25 million free acres of land, and a 20 year monopoly on Prairie rail service.
 
It also included Clause 16 that stated the railway "shall be forever free from taxation by the Dominion or by any province."
 
"CP contends that when "forever" and "taxation" are given their plain meaning Clause 16 is a universal exemption from all forms of taxation," wrote Diner, who called it an "extraordinary" measure that "cannot translate" to a perpetual tax holiday.
 
Parliament on 15 Feb 1881 passed the Canadian Pacific Railway Act that incorporated the contract into law.
 
It has never been repealed.
 
"As of 1880 the federal government did not directly tax the income of individuals or corporations," wrote Diner.
 
"There existed indirect federal taxation," mainly tariffs on imported kerosene, and a federal excise tax on rum.
 
"Since Canadian Pacific Railway was established, new taxes have been introduced by different levels of government."
 
Federal lawyers argued the railway paid tax for more than a century without protest and "lost its right do so" now, including charges under Saskatchewan's 1908 Railway Taxation Act, the federal 1914 War Measures Act, the 1916 Business Profits War Tax Act, the 1917 Income War Tax Act, and GST under the 1991 Excise Tax Act.
 
CP has identical lawsuits ongoing in provincial courts in Alberta, Saskatchewan, and Manitoba.
 
A 1917 Royal Commission on Railways wrote Canadian taxpayers were generous with CP.
 
"The people have been liberal in promoting railway building," wrote the commission.
 
Cash subsidies from 1880 to 1917 totaled the modern equivalent of $1.1 billion, along with tariff exemptions, easy-term loans, and free land.
 
Author unknown.