Feds agree to give provinces 75 per cent of pot tax revenues

Finance Minister Bill Morneau announced the agreement today

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 today after a day-long meeting with his provincial and territorial counterparts.

Morneau says 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 like law enforcement.

READ: Pot shops speak out on B.C.’s proposed rules on age, retail plan

Morneau said that over the first two years, the federal government expects legalized pot to generate only 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.

“Our estimates suggest that the size of the taxation revenue is roughly … about up to $400 million for the first couple of years. 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.

“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.

Earlier today, Ontario Finance Minister Charles Sousa said the federal Liberal government had successfully made the case that it, too, would have costs, but was showing flexibility on related revenue and cost-sharing questions.

After a meeting with his Atlantic counterparts in Halifax, Nova Scotia Premier Stephen McNeil let slip that a two-year deal had been reached, and that provinces would have the ability to include a markup above and beyond existing taxation levels.

Ottawa’s initial estimates suggested the total pot of tax revenue from marijuana sales could eventually reach $1 billion per year.

“If there is a markup that a respective province wants to do it would be outside of that taxation model, so that was the flexibility that we as a province were looking for and I would say indeed it was what we were hearing across the country,” McNeil said.

“The two-year window will give each of us the time to go back to the table and say this is actually what policing is costing and this is what the education component is.”

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 already committed more than $1 billion over five years towards pot legalization in areas like policing and border security.

When asked about the federal push to ensure enough money goes to cities and towns, Quebec Finance Minister Carlos Leitao said each province will do it their own way.

“Of course, the provinces will work with their municipalities, but it’s for us to decide what that percentage will be,” he said. “And every province is different, every city is different, so there is no preconceived amount for the provinces.”

During the meetings, the ministers also discussed the federal government’s proposed 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.

— with files from Terry Pedwell

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

Just Posted

Pandemic exposes “culture of non-compliance”

Building Trades Council calls for public inquiry into construction site sanitation

Drive-in theatre proposed for Grand Forks

City councillors will vote next month on whether to permit the use of the private property

Morning start: This famous singer is from the West Kootenays

Here is your Kootenays’ morning start for Tuesday, May 26

Expect traffic delays near Castlegar

Two road resurfacing projects getting underway on Highway 3

Bears are back, so is Rossland/Trail WildSafeBC

The organization will deliver service this season mindful of pandemic precautions

Drug-pricing petition garners thousands of signatures

Petition started by Chilliwack mom also drew support of Chilliwack-Hope MP Mark Strahl

‘Paralyzed by fear’: B.C. woman details anxiety, grief at Italian relief hospital

Sheila Vicic spent two months in Italy as the country grappled with COVID-19

Dr. Bonnie Henry given new name in B.C. First Nation ceremony: ‘one who is calm among us’

The provincial health officer was honoured in a May 22 ceremony at elementary school in Hazelton

CAMH survey looks at binge-drinking, financial anxiety during COVID

Alcohol may be used as a coping mechanism for those whose careers may have been sidelined due to the pandemic

Half of Canadians say governments are hiding something about COVID-19: poll

More than a third of people believe the virus was created in a lab

Kelowna man charged with harming a hamster

The 20-year-old Kelowna man faces several animal cruelty charges

High tech fish transport system set up to ‘whoosh’ salmon past Big Bar landslide

Fish will spend roughly 20 seconds inside the system, moving at roughly 20 metres per second

Trudeau to seek 10 days of paid sick leave for Canadian workers, says talks are ongoing

Paid sick leave is key to keeping COVID-19 spread under control, prime minister says

Most Read