Those who plan to purchase legal marijuana next year will also be paying the taxman — to the tune of at least $1 for every gram, plus GST.
The proposed federal tax scheme, announced Friday, will be available for public comment until Dec. 7, 2017, as Canada prepares to legalize the drug by next summer.
To check out Finance’s proposal in full, click here (section three provides an overview of the proposed cannabis duty base and design, and section 10 and 11 discuss implementation of the framework). Finance’s official press release is here.
The plan would add an excise tax of $1 per gram or 10% of the final retail price, whichever is higher, with the revenues to be divided equally between Ottawa and the provinces.
“I’m very comfortable that the level of taxation that has been determined as appropriate in this case achieves our goals of keeping the price sufficiently low to be competitive with an illicit market, while at the same time not creating an incentive for the consumption and purchase of this drug,” said Liberal MP Bill Blair, the government’s point man on legalizing marijuana.
“It’s a matter of finding the right level of taxation and price in order to achieve both of those very important public purpose aims. I believe that the work that we have done sets a very appropriate level.”
GST will be also be applied, so if the retail price of a single gram of pot is $8, consumers would pay a $1 excise tax and $1.17 in GST for a total of $10.17.
The taxes would be levied on both on fresh and dried marijuana, pot-infused oils and seeds and seedlings used for home cultivation.
The 50-50 tax revenue split idea has already rankled at least one premier who complained that the provinces won’t be getting a fair share, considering they will be doing the bulk of the heavy lifting on legalization, including policing, distributing and regulating the sale of marijuana. That was B.C.’s John Horgan.
The discussions are still ongoing, said Blair, noting that the consultation period will end just before the provincial and territorial finance ministers gather Dec. 10 and 11 in Ottawa to sit down with federal counterpart Bill Morneau.
“It is part of an ongoing discussion that our finance minister is having with his counterparts, provincially and territorially,” Blair said. “It would be inappropriate of me to presume the results of the discussions that are currently taking place […] there is still work to be done in the consultations.”
Municipalities, too, have recently indicated they deserve a share of the revenues.
“We have recognized right from the outset that municipalities are an important stakeholder, and that they have a significant role to play in ensuring that the regulatory regime that is put in place is effective in achieving our public purpose aims, of protecting kids and keeping communities safe,” Blair said.
“As I’ve travelled across the country, I’ve always made a point in virtually every town I’ve gone into to go and meet with the mayor and the local chief of police to hear that perspective, and we’ve carried their concerns back, and we’ve responded to that already in a quite significant way.”
The government has already committed resources to municipalities, including $81 million for municipal and Indigenous police services to help offset the cost of additional training and resources, he added.
Patient advocate groups and a licensed producer are fuming over the government’s proposals.
Canadians for Fair Access to Medical Marijuana and the Arthritis Society say medical pot should be treated the same way as all other prescription medications, meaning it should be exempt from taxation.
The executive vice-president of licensed producer Aurora Cannabis Inc. said Ottawa’s proposal unveiled today unfairly penalizes patients, calling it outrageous and wrong.
Cam Battley says sick people do not need the additional cost burden, and patient advocates have long been calling for the removal of existing sales tax on the drug as well.
Liberal MP Bill Blair says the federal government plans to tax both medical and recreational cannabis equally because it does not want to create an incentive for people to misuse the system to seek out cheaper product.
Published at Fri, 10 Nov 2017 13:49:10 -0500