December 11, 2017 / 1:22 PM / Updated 3 hours ago
Canada, provinces end dispute on how to split pot tax revenues
OTTAWA
(Reuters) - The Canadian government and the country’s 10 provinces on
Monday settled a disagreement on how to split the revenues from a
proposed federal tax on marijuana sales once the narcotic drug is
legalized next July, Finance Minister Bill Morneau said.
Morneau
told reporters that for an initial two years, 75 percent of the money
would go to the provinces and 25 percent to Ottawa.
Liberal
Prime Minister Justin Trudeau plans to allow recreational marijuana
nationwide by July 2018, which will make Canada the first Group of Seven
country to do so.
Trudeau says legalization is needed to keep the drug out of the hands of underage users and reduce related crime.
The
federal government had initially suggested a 50-50 revenue split, an
idea the provinces rejected on the grounds it was not enough to help
cover the extra costs of enforcing the new rules once they take effect.
Morneau
said he and his provincial counterparts also agreed to stick to
Ottawa’s proposal for a tax on all cannabis products of C$1 (78 cents)
per gram (0.04 ounce), or 10 percent of the retail price, whichever is
higher.
“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,” said Morneau.
The
responsibility for setting up networks of stores to actually sell the
drug lies with the provinces, who along with some police officials have
complained Ottawa is moving too fast toward legalization and not taking
extra costs into account.
Morneau said the
additional tax revenue would allow the provinces to help meet the costs
of municipalities dealing with the pot trade on a daily basis.
He
estimated the tax would raise around C$400 million a year for the first
two years, at which point Ottawa and the provinces will meet to
reassess the initiative.
The federal take will
be capped at C$100 million a year, with any revenues exceeding that
amount going to the provinces. The finance minister of Ontario, Canada’s
most populous province, said he was very pleased by that part of the
deal.
“If there is a surge in the marketplace, we can accommodate it more effectively,” said Charles Sousa.
Morneau
spoke after a two-day meeting with counterparts from the provinces as
well as Canada’s three sparsely populated northern territories, which
also agreed to the revenue split.
Reporting by David Ljunggren; editing by Chris Reese, Peter Cooney and G Crosse
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