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

Williams Lake First Nation inks historic cannabis deal with B.C. government

The agreement paves the way for WLFN to sell cannabis to the government, and open stores across B.C.

Unofficial holidays: Here’s what people are celebrating for the week of Sept. 20 to 26

Rabbit Day, Hobbit Day and One-Hit Wonder Day are all coming up this week

Interior Health reports three additional COVID-19 cases in region

The number of cases in the region since the beginning of the pandemic are now at 492

Vehicle found “burnt to a crisp” off of Hwy 5

Update from Clearwater RCMP detachment

COVID-19: 4 more deaths, 366 new cases in B.C. since Friday

A total of 8,208 people in B.C. have tested positive for COVID-19 since January

16 COVID-19 cases reported in Interior Health region

One person is in hospital and 34 people are isolating

Group wants Parliament, courts to hold social media to same standard as publishers

Daniel Bernhard made the comments shortly after Friends of Canadian Broadcasting released a research paper

B.C.’s Chase Claypool catches first NFL touchdown pass

Abbotsford grad establishes new record for longest scrimmage TD by a Canadian

B.C. has highest number of active COVID-19 cases per capita, federal data shows

B.C. currently has 1,803 active cases after weeks of COVID-19 spikes in the province

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

181 days gone: Family continues to look for man last seen in RCMP custody 6 months ago

Brandon Sakebow’s last known location was leaving Mission RCMP cell, police say; family has doubts

B.C. unveils new cannabis sales programs to help small, Indigenous growers

Government did not say how it will define small producers, but says nurseries will be included in the policy

Most Read