B.C. open to municipalities’ cannabis tax proposal
WHISTLER — The provincial government is considering a request from municipalities for 40 per cent of B.C.’s share of federal excise tax revenue from cannabis.
“I’d say we’re open to having that discussion. I think that’s important and I’m glad for the work that they’ve done because it will help us in our conversations,” said Finance Minister Carole James.
On Thursday, Union of B.C. Municipalities (UBCM) delegates will consider a special resolution that outlines the revenue-sharing proposal. Non-medical cannabis will be legalized on Oct. 17.
The excise tax is $1 per gram or 10 per cent of the final retail price, whichever is higher, and it will apply to medical and non-medical cannabis. Provincial and territorial sales taxes will be charged on top of that.
The federal government will take 25 per cent of tax revenue, and pass the rest on to provinces and territories.
In the short term, the UBCM executive has asked for a two-year agreement that would see municipalities receive 40 per cent of B.C.’s share of federal excise tax revenue, which is expected to be $125 million over the first two years of legalization — $50 million in the first year and $75 million in the second. Revenue above and beyond $125 million would be split equally between the province and local governments.
The money would be disbursed to local governments on a per-capita basis, and all municipalities would receive a minimum of $10,000, regardless of population.
The long-term plan is to develop an agreement that will look at either continuing to use the short-term framework or increasing the provincial sales tax on cannabis to a maximum of 10 per cent, with the revenue going to local governments instead of excise tax revenue.
UBCM president Wendy Booth said the idea is to ensure that local governments do not have to absorb the costs associated with legalization of non-medical cannabis.
When asked if the UBCM’s request was reasonable, Minister of Public Safety and Solicitor General Mike Farnworth said, “We have been really clear that we know that local government is interested in revenue sharing. It’s happening in every other province, absolutely we’ve not dismissed anything out of hand.”
Farnworth said the provincial government is also aware that First Nations are looking for a share of cannabis revenue, and the Ministry of Finance is working on that.
Revenue sharing is one of the last issues the province has to resolve when it comes to cannabis legalization, Farnworth said.
“Really, at this point I would say the revenue sharing, the excise tax, that’s really the major outstanding piece,” he said.
Farnworth couldn’t say whether revenue sharing would be finalized by the time cannabis was legalized in October.
“It’s very firmly in (the Ministry of Finance’s) jurisdiction. They are very much alive to the issue and they are working on that issue,” he said.