Marijuana tax will support enforcement

Tax income from soon-to-be-legal marijuana is forecast at $615 million. But it could bring in much more, a Lethbridge business audience heard Wednesday.

And while the federal government will collect the new tax, 75 per cent of it will go to provincial governments to help communities with implementation costs.

That was one of just a handful of new or hiked consumer taxes included in the federal government’s budget, highlighted in a breakfast presentation by experts from KPMG.

Ebony Verbonac, a partner in the business services organization’s Lethbridge office, said the budget pegged the federal excise tax at $1 per gram. But the tax would not be collected on cannabis products obtained by a medical prescription, KPMG analysts note, or on packaged products with concentrations of no more than 0.3 per cent THC, the active ingredient.

Tax dollars sent to the provinces, Verbonac said, will likely support police officer training and test equipment purchases, as well as public awareness initiatives.

A much older tax, on cigarettes and tobacco, is also rising. The budget showed the excise tax is rising from about $2.69 to $2.98 on a 25-pack.

In future, said Finance Minister Bill Morneau, those prices will advance every April 1 as an “inflationary adjustment.”

While business leaders call for lower taxes, Lethbridge KPMG branch manager Ryan Stevenson pointed out ordinary Canadians are already covering half the nation’s expenses through their personal income taxes

Goods and Services Tax paid by consumers and businesses comes next — close to the amount actually collected through corporate taxes — followed by Employment Insurance premiums revenue.

With the federal debt rising, he said the government will be paying about $24.4 billion in debt servicing costs — about 7.7 per cent of its budget. By comparison, Stevenson said Alberta’s government will be putting aside 2.5 per cent of its budget to cover a $1.4-billion debt.

He said Canada’s net debt, compared to gross domestic product, remains lower than most developed nations.

Rather than increasing taxes, he pointed out, the federal government is counting on continued economic growth to generate the revenues it needs.