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

A Kelowna clinic decided to immunize their patients in a drive-thru flu clinic earlier this month. (Twila Amato - Black Press Media)
Interior Health anticipates increase in flu vaccinations this season

Some 300,000 doses of flu vaccine ready for distribution across Southern Interior

COVID-19. (Image courtesy CDC)
Interior Health reports 18 COVID-19 cases, highest daily count since July

The total of COVID-19 cases in the region is now at 662

Deana Conde Garza, executive director of the Boys and Girls Club of Williams Lake and District, has been gathering items, such as an old wheelchair from her uncle’s farm in Alberta, for the club’s upcoming Haunted Hospital event. (Monica Lamb-Yorski photo - Williams Lake Tribune)
Boys and Girls Club of Williams Lake creating Haunted Hospital for Halloween fundraiser

Family pods of six or less can register online to attend, event goes Oct. 29 and Oct. 30

Williams Lake Minor Hockey Association president Mike Rispin addresses city council at its regular meeting Tuesday, Oct. 20 to ask the City to rescind its no-spectator policy. The order was rescinded that evening and on Friday, Oct. 24 the City released COVID-19 policy updates. (Monica Lamb-Yorski photo - Williams Lake Tribune)
COVID-19 policy updated at Cariboo Memorial Recreation Complex

The City, council, CRD staff and user group representatives met to clarify the guidelines

DriveBC webcam shot of Highway 20 near Anahim Lake Friday, Oct. 23 at 11:30 a.m. shows snow-covered roads. A travel advisory is in effect. (DriveBC webcam image)
Travel advisory in effect for Highway 20 from Williams Lake west to Firvale

Winter driving conditions continue to have an impact

B.C. provincial health officer Dr. Bonnie Henry gives a daily briefing on COVID-19 cases at an almost empty B.C. Legislature press theatre in Victoria, B.C., on March 25, 2020. (Don Craig/B.C. government)
B.C. sees 223 new COVID-19 cases, now 2,009 active

Two new care home outbreaks in Surrey, Burnaby

White Rock RCMP Staff Sgt. Kale Pauls has released a report on mental health and policing in the city. (File photos)
White Rock’s top cop wants to bill local health authority for lengthy mental-health calls

‘Suggestion’ included in nine-page review calling for ‘robust’ support for healthcare-led response

Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

A Le Chateau retail store is shown in Montreal on Wednesday July 13, 2016. Le Chateau Inc. says it is seeking court protection from creditors under the Companies’ Creditors Arrangement Act to allow it to liquidate its assets and wind down its operations.THE CANADIAN PRESS/Ryan Remiorz
Clothing retailer Le Chateau plans to close its doors, files for CCAA protection

Le Chateau said it intends to remain fully operational as it liquidates its 123 stores

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

RCMP stock photo (Black Press)
Charges laid against Prince George man, 39, in drug trafficking probe

Tyler Aaron Gelowitz is scheduled to appear in court Nov. 18

Green party Leader Sonia Furstenau arrives to announce her party’s election platform in New Westminster, B.C., on October 14, 2020. THE CANADIAN PRESS/Jonathan Hayward
B.C. Green party says it’s raised nearly $835,000 in 38 days

NDP Leader John Horgan is holding his final virtual campaign event

U.S. border officers at the Peace Arch crossing arrested two men on California warrants this week. (File photo)
Ottawa predicts system delays, backlogs unless court extends life of refugee pact

Canada and the United States recognize each other as safe places to seek protection

Most Read