Federal government to push provinces to keep marijuana taxation rates low: Report
If provincial governments thought taxing legalized marijuana would be a cash cow, the Trudeau government is reportedly aiming to leave them high and dry.
According to a source who spoke with the CBC, Finance Minister Bill Morneau will be pressuring his provincial counterparts to keep the taxation levels of pot low to ensure prices will undercut the illegal drug trade.
Morneau will be making the government’s pitch to provinces during meetings in Ottawa over the next two days.
Governments have traditionally used so-called sin taxes on alcohol and cigarettes as a significant revenue source and a tool to curb consumption of potentially harmful substances.
Is this proposed policy a half-baked double standard?
Earlier this year, the Trudeau government increased the excise tax on cigarettes to $21.56 per carton. Provincial governments also charge their own tax at varying rates.
For example, Ontario announced an increase in their tobacco tax in April to $32.95 per carton. According to a recent study by the National Coalition Against Contraband Tobacco, roughly a third of cigarettes sold in Ontario are illegal.
Prime Minister Trudeau famously announced his plan to “tax and regulate” marijuana on the campaign trail. And while government revenue has been used in the past as an argument for legalization, if taxes on the drug are kept low, how will governments offset the costs of legalization?
A provincial source also speaking with the CBC reportedly addressed their concerns regarding the potential cost of policing and roadside marijuana detection.
Legalized pot may also put strains on provincial healthcare coffers.
The Canadian Medical Association Journal published an article in May raising concerns about the implications of the Liberal policy, saying that it is “starkly at odds” with the government’s commitment to protect the health and safety of Canadians.
The article adds that the plan doesn’t do enough to protect kids and could have serious mental health and dependency repercussions.
The Trudeau government has promised that legislation to legalize marijuana in Canada will come into effect by July 1, 2018.