HTTP/1.0 200 OK Content-Type: text/html Move Carefully On Cannabis Taxes
Pubdate: Fri, 06 Oct 2017
Source: Hamilton Spectator (CN ON)
Copyright: 2017 The Hamilton Spectator
Author: John Roe
Page: A8


The first legal sales of recreational marijuana in Canada are still
months away, but some provincial premiers are already demanding a
bigger piece of the action.

Prime Minister Justin Trudeau's opening offer this week to evenly
split a 10-per-cent excise tax on cannabis sales between Ottawa and
the provinces was quickly scorned by premiers such as Alberta's Rachel
Notley and Quebec's Philippe Couillard.

With heady visions of new revenue streams cascading into their
provincial coffers, these and other premiers told Trudeau the
provinces will bear most of the costs of legalizing cannabis. Hence,
they deserve most of the tax dollars that will come with it - not just

This grubbing for money is not just unseemly, it's

Trudeau has repeatedly insisted he's legalizing cannabis it to keep it
out of the hands of youngsters and prevent the marijuana industry from
being controlled by criminals. The goal is not to enrich governments.
Now, as Canada's political leaders decide how best to tax recreational
pot, they must remember this.

Simply put, if taxes are too high and the price of legal marijuana far
exceeds the price of illegal pot, the black market will continue to

And children will still have access to marijuana sold by unscrupulous,
criminal dealers.

Governments have learned this lesson the hard way with tobacco: Sales
of black market cigarettes have always boomed whenever government
taxes got too high. Marijuana would be the same. At first glance,
Trudeau's call for a federal excise tax of $1 on recreational
marijuana sales worth up to $10, and 10 per cent on sales above $10
looks reasonable.

But that tax won't be the only way governments wring cash out of

Presumably, there will be sales taxes on recreational marijuana, and
in Ontario that would add another 13 per cent.

And, presumably, the growers and producers of recreational marijuana
will pay property, corporate and payroll taxes. All this will impact
the product's retail price. So, instead of wanting a bigger share of
the marijuana excise tax, or even calling for a tax higher than
Trudeau's proposal, the premiers must first ensure that what consumers
pay for legal pot isn't exorbitantly higher than what they would for
the illegal variety.

In doing this, the premiers should provide a fair estimate of the new
costs the provinces face with legal pot.

Of course, police will require new training, especially to stop
drug-impaired drivers. And, yes, there will be public education campaigns.

But what about the savings in police, court and jail budgets when the
state will no longer be arresting, trying and incarcerating people for
smoking or possessing recreational pot? Surely this will help, not
hurt, provincial budgets. In an era when every provincial government
wants more tax dollars but balks at the unpopular solution of boosting
income or sales taxes, the prospect of heavily taxing an entirely new
substance could be irresistible.

The premiers will have to be strong and aware of the dire consequences
of becoming addicted to marijuana taxes.
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