Ottawa wants 10 per cent pot tax
OTTAWA—Ottawa wants to impose a 10 per cent tax on marijuana sales and split the revenues with the provinces but premiers want a bigger slice, arguing their jurisdictions are bearing most of the costs of implementing and policing the federal government’s plan to legalize pot.
Prime Minister Justin Trudeau used a meeting of provincial and territorial leaders Tuesday to table Ottawa’s proposal for a federal excise tax on marijuana, when it becomes legal next July 1.
Under the plan, each gram of marijuana would have a tax of $1 on sales up to $10 and a 10 per cent tax on sales worth more than $10. Tax revenues would be split 50-50 with the provinces.
But that revenue-sharing proposal rankled premiers who have voiced worries about Ottawa’s timeline to legalize pot, as well their own costs to set up the retail system to sell it and added policing costs to enforce laws such as impaired driving.
B.C. Premier John Horgan said the tax proposal “caught us a bit by surprise” and complained that provinces — facing costs in distributions, regulation and enforcement — may now have to share “whatever modest” revenue there might be.”
“I think many Canadians believe if we can tax this product, we’re going to be swimming in cash but that’s just not been the experience in the United States. It’s not likely to be the experience here,” Horgan told reporters.
That was echoed by Manitoba Premier Brian Pallister, who said that provinces and the federal government are headed into uncharted territory.
“We really don’t know what the ramifications are of this. This is a historic change. We don’t know the real costs. We do know the lion’s share of the work and expenses will be borne by provinces,”
“We might be splitting a cost, not a net proceed,” Pallister said.
Ontario Premier Kathleen Wynne said the Tuesday’s tabling of the pot tax proposal was “the beginning of a discussion.”
“We are looking at this through the lens of public safety and health and undermining the black market,” said Wynne, who also flagged that Ontario municipalities are worried about looming enforcement costs.
Trudeau said he had the premiers’ concerns “loud and clear.”
“There are significant new costs going to be associated with bringing in a framework and legalized regime like this,” Trudeau told a news conference that wrapped up the daylong meeting.
Trudeau, who was joined for discussion on marijuana by Liberal MP Bill Blair — the government’s point man on pot — pledged that Ottawa wanted to act in a “co-operative” manner.
“We recognize that this is something that still requires much discussion with the provinces on levels of excise tax, on revenue sharing but mostly on the work we need to do to make sure this gets done right,” he said.
“I would like to reassure you. The objective around the table is not to want to make lots of money by legalizing marijuana.”
Ontario has said that only those 19 and older will be allowed to buy marijuana, while it appears Quebec will set the age at 18.
But Wynne predicted few problems with so-called cross-border pot tourism, noting there is already a similar difference between the two provinces in the age to consume alcohol.
“Our objective is to make sure that we put all of the conditions in place for the highest levels of public safety, particularly for young people,” Wynne said.
“We already have discrepancies and we will continue to manage them.”
Premiers took Ottawa to task on another front Tuesday as they pressed the prime minister and Finance Minister Bill Morneau on the potential impact of the Liberal’s controversial reforms to taxes on privately incorporated businesses.
Don Morgan, Saskatchewan’s deputy premier, said the changes would have a harmful impact on family farms and medical professionals in his province.
“We hope that we were heard today . . . . We regard it at best as a work in progress but we urge the federal government to take time to reconsider,” Morgan said.
Morneau offered some reassurance that the changes will be slightly adjusted to accommodate public concerns.
But Morneau, who met earlier with premiers at a first ministers conference in Ottawa, downplayed hopes the government would ditch proposals that have enraged many small business owners who say they need to shelter income at lower tax rates within their company to expand the business or get through hard times.
Morneau dodged a direct question from reporters about when he’d bring in the tax changes, but a Liberal caucus source told the Star the final version of the proposed tax reforms will be introduced in the fall fiscal update.
With files from Tonda MacCharles