Provinces to get 75 per cent of marijuana tax revenues,
OTTAWA — The federal government has agreed to give the provinces and territories a 75 per cent share of the tax revenues from the sale of legalized marijuana, a portion of which will be meted out to cities and towns to help them defray the cost of making pot legal across Canada.
Finance Minister Bill Morneau announced the two-year agreement Monday after a day-long meeting with his provincial and territorial counterparts.
Morneau said Ottawa will retain the remaining 25 per cent share to a maximum of $100 million a year, with any balance over and above that limit going to the provinces and territories.
The larger share, he added, will allow the provinces to “fairly deal with their costs and so they can work with municipalities,” which had been asking for at least a one-third portion of the revenue to help ease the burden of costs such as law enforcement.
B.C. Finance Minister Carole James said in a statement: “This agreement is a win for our province as we made a very clear case that British Columbians will bear the majority of costs when cannabis is legalized.
“We negotiated an agreement for B.C. that means the majority of cannabis revenue will flow to the provinces so we can invest in programs to keep people safe and remove the criminal element from cannabis,” James said.
Morneau said that over the first two years, the federal government expects legalized pot to generate about $400 million in tax revenues, adding that the ministers are scheduled to gather again a year from now to assess how the framework is working.
“Our expectation is that by keeping prices low, we will be able to get rid of the black market. However, that will happen over time,” Morneau said during a closing news conference, his counterparts lined up behind him, including B.C. Finance Minister Carole James.
“Our estimates suggest that the size of the taxation revenue is roughly … about up to $400 million for the first couple of years,” Morneau said.
“What we’ve agreed at our table today is that we need to come back together. We’re going to come back together in December 2018 to look at how the market’s working, and how the federal government, provinces and municipalities are dealing with this change,” he said.
“Of course, we’ll stay very much on top of this, but after two years it’s time to rethink the approach to make sure we’re getting it right.”
All 14 jurisdictions at the table agreed to the key principles reached at the meeting, Morneau said, calling it a “very good outcome.”
The original model put forward by the federal government proposed an even 50-50 split, a plan that was immediately shot down by the provinces, many of which wondered aloud what sort of costs Ottawa would be incurring to deserve such a share.
The Federation of Canadian Municipalities has said it wants a third of the revenues earmarked to help municipal governments handle administrative and policing costs, but how that share of the pot is divvied up will be up to the municipalities and their provincial or territorial counterparts.
The federal government has committed more than $1 billion over five years toward pot legalization in such areas as policing and border security.
During the meetings, the ministers also discussed proposed federal tweaks to the formula behind equalization payments, as well as the three-year review of the Canada Pension Plan. They also explored the state of the global economy and heard a presentation from Bank of Canada governor Stephen Poloz.
Talks also took place on a national strategy to improve the sharing of information on corporate ownership between jurisdictions, a measure designed to clamp down on tax avoidance, tax evasion, money laundering and terrorist financing.
“We agreed to take concrete steps to make sure that we had knowledge of who owns companies across our country so that we can do a better job at ensuring that we don’t have tax evasion, that we don’t have money laundering, that we don’t have terrorist financing in any part of our country,” Morneau said.