Today, the Canadian government unveiled its proposed tax scheme for cannabis– at least $1 per gram plus GST.
It will be at least $1 per gram because the proposed excise tax adds $1 per gram or 10% of the retail price- whichever is higher. Add on the 5% GST, and that means Canadians can expect to pay at least 15% tax on their legal, recreational cannabis.
This will most likely lead to an increase in prices for recreational users, as dispensaries usually only charge GST (or HST), if they charge taxes at all.
Bill Blair, the Liberal MP in charge of legalization, told CBC, “I’m very comfortable that the level of taxation … 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”.
Provinces and municipalities fighting for more of that sweet tax money
The plan is that the revenue will be split 50/50 between the federal and provincial governments, but that is already leading to conflict as everybody wants to get a piece of that lucrative cannabis tax money.
The provinces are fighting for more and the municipalities are fighting to be included, arguing that they are doing the bulk of the work. The federal government has already set aside $274 million for law enforcement training, with $81 million being available to the provinces, but they say it is not enough.
In a letter to the federal finance minister, the Federation of Canadian Municipalities said, “Municipalities cover almost 60 per cent of Canada’s policing costs,” and they want more than what the the government has already committed.
Public consultations until Dec. 7
The public has until Dec. 7 to provide feedback on the proposed tax plan and it will be discussed during the next meeting of the federal and provincial finance ministers, scheduled for Dec.10.