Canada was not always the "cultural mosaic" it is today. In the mid-19th century, the Canadian government imposed a tax and later banned Chinese immigrants, moves based solely on their race. More than 120 years later, it's a wrong that Chinese-Canadians and the Canadian government are still trying to make right.

What is the Chinese head tax?

It was a tax imposed on anyone coming to Canada from China between 1885 and 1923. The federal government first imposed a $50 head tax on Chinese immigrants in 1885. This amount was raised to $500 in 1903, the price of a house at the time or the equivalent of two years' salary in China. It was replaced in 1923 by the Exclusion Act, which barred all Chinese immigrants from Canada until 1947.

How did this tax come about?

It was imposed after Canadians felt Chinese immigrants were taking work away from non-Chinese workers.

At first, when a wave of Chinese immigrants came to Canada in the mid-19th century, they were welcomed as a useful source of cheap labour. Escaping poverty and social unrest at home, some Chinese immigrants came to the United States first, before heading north to Canada. In 1860, others began to arrive in British Columbia directly from China.

In 1861, a Victoria newspaper was welcoming: "We have plenty of room for many thousands of Chinamen. There can be no shadow of a doubt but their industry enables them to add very largely to our own revenues."

In the 1880s, Canada brought in 15,000 Chinese to build the Canadian Pacific Railway through the mountains of British Columbia. About 17,000 Chinese migrants helped build the railway — with 700 dying in the process — for half wages. But in 1885, after the CPR track was complete, many thousands of labourers were laid off. And at a Royal Commission on Chinese Immigration, Chinese were often described as taking work away from non-Chinese people. The government responded with the Chinese head tax to curb further emigration from China.

How many people did it affect?

An estimated 81,000 Chinese immigrants paid the head tax, raising $23 million for the Canadian government and the provinces that were collecting. In today's currency, that would be more than $1.2 billion.

The fee was collected from 1885 until 1923, when it was replaced by the Chinese Exclusion Act. After the First World War, wartime industries closed, and demobilized soldiers were looking for work. On July 1, 1923, amid a post-war recession, Chinese became the only people Canada has ever excluded explicitly on the basis of race. For the next 24 years, virtually no Chinese were allowed to immigrate to Canada. The act banned immigrants from China until after the war, in 1947, but it wasn't fully repealed until 20 years later.

Only a handful of those who paid the head tax are still alive, along with about 250 widows of men who paid the charge.

What kind of effect did it have?

Obviously, the fee made it costly, and therefore harder, for Chinese immigrants to come to Canada. But it also had the side effect of separating families - some could only afford to send one family member to Canada, who would save money to fetch the rest. But, when the Chinese Exclusion Act was implemented in 1923, families were then separated for extended periods of time, as long as 20 years in some cases. Chinese-Canadians were offended by the act, and observed July 1 as "Humiliation Day," closing shops and boycotting Dominion Day celebrations. It made many Chinese-Canadians feel like second-class citizens.

What is being done about it today?

In the 1980s, there was a growing movement in Canada demanding payment and a government apology to make up for the injustices of the Chinese head tax. The Chinese Canadian National Council (CCNC) has been seeking redress for those affected by the head tax since 1984, asking for financial compensation and a formal apology from the government.

In December 2000, three Chinese-Canadians — backed by the CCNC — launched a class-action suit against the government. It was unsuccessful, primarily on the grounds that the Charter of Rights and Freedoms — introduced in 1982 — can't be applied retroactively.

The decision was appealed. But the appeal was dismissed in Ontario Court of Appeal in 2002 and the Supreme Court of Canada in 2003. Ultimately, the courts felt the claim was a political issue, not a legal one.

And in 2003, the CCNC launched a new redress website and a Canadians for Redress Campaign.

In November 2005, the federal government, then led by Paul Martin and his Liberals, signed a $2.5-million deal to set up educational projects to commemorate those who paid the tax. The deal was struck with the National Congress of Chinese Canadians and 14 other Chinese-Canadian groups signed a deal with the federal government. But, the cabinet decided not to offer an apology because it could open the government to legal action. The agreement angered other Chinese-Canadian groups, including the Chinese Canadian National Council, who complained they had not been consulted.

In January 2006, then industry minister David Emerson said, after talking to lawyers, a full apology was in order. Then prime minister Paul Martin issued a personal apology on a Chinese-language radio program.

On April 4, 2006, newly elected Prime Minister Stephen Harper promised he would formally apologize for the head tax.

On June 22, 2006, Harper made a formal apology in Parliament. About 100 people, including some who paid the head tax and their families, boarded a train in Vancouver a week earlier to travel to Ottawa and hear the apology, in a journey dubbed the "Redress Express." The public gallery in the House of Commons was filled with hundreds of people.

Harper apologized on behalf of the people and government of Canada for the head tax and the exclusion of Chinese-Canadians.

"We feel compelled to right this historic wrong for the simple reason it is the decent thing to do … a characteristic to be found at the core of the Canadian soul," he said.

Harper also offered symbolic payments to compensate head-tax payers, or their spouses, and funding towards community projects. Susan Eng, of the Ontario Coalition of Head Tax Payers and Families, called it a historic day.

In October 2006, Harper said payments of $20,000 would start in the fall and the money would go to about 400 survivors or their widows. "Addressing it directly and honestly has been an issue we felt strongly about for some time," Harper said.