Ottawa willing to give more pot tax revenue to provinces to help cities

Finance Minister Bill Morneau willing to increase share next week with provinces and territories

Growing flowers of cannabis intended for the medical marijuana market are shown at OrganiGram in Moncton, N.B., on April 14, 2016. (Ron Ward/The Canadian Press)

Growing flowers of cannabis intended for the medical marijuana market are shown at OrganiGram in Moncton, N.B., on April 14, 2016. (Ron Ward/The Canadian Press)

The Trudeau government is willing to give provinces and territories a bigger share of the revenue from a federal excise tax on cannabis, provided that the extra money is devoted to helping municipalities cope with the impact of legalizing recreational pot.

The feds have proposed giving provincial and territorial governments half of the estimated $1-billion annual excise tax take once weed becomes legal next July.

But The Canadian Press has learned that Finance Minister Bill Morneau and his officials have signalled a willingness to increase that share when they sit down next week with their provincial and territorial counterparts.

The discussions have been taking place in preparation for a meeting of federal, provincial and territorial finance ministers Dec. 10-11, where the issue of cannabis taxation is expected to be front and centre.

Any increase in the provincial share will obviously mean less for federal coffers. But precisely how much less than 50 per cent the federal government is willing to accept has not yet been revealed.

A government official close to the discussions, who was not authorized to speak publicly about the matter, said it’s too early to float specific numbers. The final decision will rest on an assessment of the needs of the municipalities — and a willingness by provinces and territories to agree to devote the extra revenue to those needs, the official said.

Ontario Finance Minister Charles Sousa agreed that municipalities need to be recompensed for costs associated with marijuana legalization.

“I’ve always said all along that the municipalities and the province need to get a proper share to cover those costs,” he said Monday.

“We have a lot of out of pocket (expenses) right at the start … that needs to be recovered. So we will work closely, we want to make sure that municipalities are covered as well.”

However, before agreeing to anything, Sousa said he needs to see a breakdown of the costs that are going to be incurred and how much of those costs the federal government is prepared to assume. He said he expects to hear more on that front at the finance ministers’ meeting next week.

Mayors across the country have raised concerns about the potential cost to municipalities.

“We all need to know that legalization will not download unsustainable financial or operational burdens to municipalities,” the Federation of Canadian Municipalities says on its website.

Toronto Mayor John Tory has predicted municipalities will face additional costs for policing, enforcement, public health, zoning and licensing. He wrote Ontario Premier Kathleen Wynne last July, asking her to consider dedicating a portion of provincial pot revenues — possibly through a special levy — to municipalities.

“Whatever decisions are made, I have no doubt the result will be increased costs for the City of Toronto,” Tory wrote.

The federal government is sympathetic to the concerns of municipalities, the official said.

Under the current proposal, the federal government would impose an excise tax of $1 per gram of marijuana or 10 per cent of the final retail price, whichever is higher, with half the revenue going to provinces and territories.

Federal and provincial sales taxes would be applied on top of that.

A one-month public consultation period on the excise tax proposal closes Thursday, just ahead of next week’s meeting.

Premiers have been complaining since early October, when Prime Minister Justin Trudeau first unveiled the excise tax plan, that a 50-50 revenue split with Ottawa is not good enough. They maintain their governments will shoulder the lion’s share of the cost of legalization — including public education, policing and road safety — and should, therefore, get the lion’s share of the tax revenue.

Co-ordinating cannabis taxation with the provinces is crucial to the federal objective of drumming organized crime and gangs out of the illegal pot business and keeping marijuana out of the hands of minors. If the price of legal marijuana is not competitive, the black market will continue to flourish.

Under the federal proposal, sales and excise taxes would be levied on both fresh and dried marijuana, pot-infused oils and seeds and seedlings used for home cultivation.

They would also be applied to medical marijuana, on which only HST is currently levied. That proposal has drawn fire but the government argues it’s necessary to ensure there’s no incentive for people to seek out medical pot just because it’s cheaper.

The final price tag for legal weed will vary across the country, since provinces have different levels of sales tax.

Joan Bryden, The Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

The City of Victoria is holding a byelection Dec. 12 to fill one vacant council seat. (Don Descoteau/Black Press Media)
Here’s how to vote in the City of Victoria by-election

Dec. 12 election will fill one vacant Victoria council seat

A Cariboo bride could very well be without her uniform this Labour Day weekend after leaving a wedding dress in a box behind a grocery store in 100 Mile House. File photo.
The West Shore Firefighters Association dropped off a cheque on Nov. 28 for the Goldstream Food Bank. (Photo contributed by View Royal Firefighters Association)
West Shore firefighters give food bank a big boost

Four departments collaborate on initiative for Goldstream Food Bank

The Digital Divide–Community Technology Help Desk program looks to provide vulnerable Victoria residents with access to technology. (Black Press Media)
Technology lending library and help desk now available in Victoria

United Way Greater Victoria hopes the program will help close the digital divide

A snow moon rises over Mt. Cheam in Chilliwack on Feb. 8, 2020. Friday, Dec. 11, 2020 is Mountain Day. (Jenna Hauck/ Chilliwack Progress file)
Unofficial holidays: Here’s what people are celebrating for the week of Dec. 6 to 12

Mountain Day, Dewey Decimal System Day and Lard Day are all coming up this week

Robert Riley Saunders. (File)
First Nations Leadership Council demands justice for victims of B.C. social worker

Union of BC Indian Chiefs calls actions of Robert Saunders ‘nothing short of complete depravity’

Demonstrators, organized by the Public Fishery Alliance, outside the downtown Vancouver offices of Fisheries and Oceans Canada July 6 demand the marking of all hatchery chinook to allow for a sustainable public fishery while wild stocks recover. (Public Fishery Alliance Facebook photo)
Angry B.C. anglers see petition tabled in House of Commons

Salmon fishers demand better access to the healthy stocks in the public fishery

(Hotel Zed/Flytographer)
B.C. hotel grants couple 18 years of free stays after making baby on Valentines Day

Hotel Zed has announced a Kelowna couple has received free Valentines Day stays for next 18 years

Farmers raise slogans during a protest on a highway at the Delhi-Haryana state border, India, Thursday, Dec. 3, 2020. Prime Minister Justin Trudeau rejected the diplomatic scolding Canada’s envoy to India received on Friday for his recent comments in support of protesting Indian farmers. Tens of thousands of farmers have descended upon the borders of New Delhi to protest new farming laws that they say will open them to corporate exploitation. THE CANADIAN PRESS/AP-Manish Swarup
Trudeau brushes off India’s criticism for standing with farmers in anti-Modi protests

The High Commission of India in Ottawa had no comment when contacted Friday

Montreal Alouettes’ Michael Sam is set to make his pro football debut as he warms up before the first half of a CFL game against the Ottawa Redblacks in Ottawa on Friday, Aug. 7, 2015. Sam became the first publicly gay player to be drafted in the NFL. He signed with the Montreal Alouettes after being released by St. Louis, but abruptly left after playing one game. THE CANADIAN PRESS/Justin Tang
Study finds Canada a ‘laggard’ on homophobia in sports

Among females, 44 per cent of Canadians who’ve come out to teammates reported being victimized

Nurse Kath Olmstead prepares a shot as the world’s biggest study of a possible COVID-19 vaccine, developed by the National Institutes of Health and Moderna Inc., gets underway Monday, July 27, 2020, in Binghamton, N.Y. U.S. biotech firm Moderna says its vaccine is showing signs of producing lasting immunity to COVID-19, and that it will have as many as many as 125 million doses available by the end of March. THE CANADIAN PRESS/AP-Hans Pennink
Canada orders more COVID vaccines, refines advice on first doses as cases reach 400K

Canada recorded its 300,000th case of COVID-19 on Nov. 16

Apartments are seen lit up in downtown Vancouver as people are encouraged to stay home during the global COVID-19 pandemic on Thursday, Dec. 3, 2020. British Columbia’s deputy provincial health officer says provincewide data show the most important area B.C. must tackle in its response to the COVID-19 pandemic is health inequity. THE CANADIAN PRESS/Marissa Tiel
Age, income among top factors affecting well-being during pandemic, B.C. survey shows

Among respondents earning $20,000 a year or less, more than 41 per cent reported concern about food insecurity

Most Read