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

Walnut Grove’s Shawn Meehan (front) has started another band, Trigger Mafia. This local country rocker has put country on the shelf, and is going hard-core rock with this group, releasing their first single last Friday to radio. It started as a way to pass the time during the COVID lockdown, and evolved. (Special to Langley Advance Times)
VIDEO: Langley musician drives rock revival with COVID twist

Trigger Mafia goes straight from the garage to radio with raw lyrics

Patricia Celan, named Miss Charity seven years ago while a teen living in South Surrey, is now in postgraduate psychiatry training and was recently named Mrs. Canada International 2021. (Contributed photos)
Domestic-violence awareness a focus for former White Rock woman named Mrs. Canada International

Patricia Celan, in postgraduate psychiatry training, earned her first crown in 2013

The peninsula’s Community Christmas Day Dinner at White Rock Baptist Church – seen here in 2019 – has been cancelled for 2020, because of pandemic-inspired limitations on gatherings. (File photo)
Annual Community Christmas dinner ‘just not possible’ this year

Organizers vow that 40 years-plus Semiahmoo Peninsula tradition will return, post-COVID

A surveillance camera in a photo posted to the Project Iris page on surrey.rcmp-grc.gc.ca.
Quality surveillance video helps catch crooks, Surrey Mounties say

Charges laid in connection to break-and-enter in Guildford area

Strawberry Hill Hall is being renovated and moved to another location on its existing corner lot in Newton. (Photo: Tom Zillich)
Surrey’s historic Strawberry Hill Hall being moved a few metres in $1.2M reno project

Childcare spaces coming to corner lot where hall has stood for 111 years

Sooke’s Paul Larouche enjoys gold panning along the Sooke River, looking for small treasures. (Aaron Guillen/News Staff)
VIDEO: Island man finds niche audience by gold-panning on YouTube

Paul Larouche, 29, with over 215,000 subscribers, opens up about his journey

CBSA. (Black Press Media File)
4 sentenced in B.C. steroid smuggling, distribution ring that spilled into U.S.

Canadian Border Services Agency announced the results of a lengthy investigation it called ‘Project Trajectory’

Search and Rescue Technicians carry a stretcher to the CH149 Cormorant during a 442 Squadron Search and Rescue Exercise in Tofino on February 28. (Photo by: Cpl Joey Beaudin, 19 Wing Imaging, Comox)
Father and son found dead after weeklong search near Pemberton

The father and son had set out for a day of mushroom picking last Thursday

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 full moon rises over Mt. Cheam on Saturday, Feb. 8, 2020. (Jenna Hauck/ The Progress)
Rare full moon, Daylight Saving makes for a uniquely spooky Halloween – despite COVID-19

We can’t host costume parties but this weekend is still one for the history books

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

A woman wears a face mask and plastic gloves while browsing books as a sticker on the floor indicates a one-way direction of travel between shelves of books at the Vancouver Public Library’s central branch, after it and four other branches reopened with limited services, in Vancouver, on Tuesday, July 14, 2020. (THE CANADIAN PRESS/Darryl Dyck)
B.C. reports 234 new COVID cases, 1 death of senior who had attended small birthday party

Roughly 5,700 people are isolating due to being exposed to a confirmed case

Photo courtesy of Correctional Service of Canada.
Prisoner convicted of first-degree murder escapes Mission Institution

When 10 p.m. count was conducted, staff discovered Roderick Muchikekwanape had disappeared

Provincial Health Officer Dr. Bonnie Henry speaks Thursday (Oct. 29) during a news conference held at Fraser Health office, in video posted to Facebook. (Photo: Government of British Columbai/Facebook)
COVID-19 ‘disproportionately’ affecting Fraser Health: Henry

Health region has about 75 per cent of B.C.’s active cases

Most Read