Tax revenues of legal pot will be less than first predicted
Posted November 1, 2016 9:03 am.
This article is more than 5 years old.
OTTAWA, ON. (NEWS 1130) – The parliamentary budget watchdog says that tax revenues from marijuana sales, once it’s legalized in Canada as promised next spring, will be modest. A report from the Parliamentary Budget Office shows it will be in the millions of dollars, rather than the billions.
The parliamentary budget officer says sales tax revenue could be about $618 million in 2018, or even as high as $959 million depending on tax rates and that’s based on projections that legalized pot will cost $9 per gram. In the grand scheme of government budgets — that’s not a lot of cash.
The majority of tax revenues — about 60 per cent — will flow to provincial governments, with the rest going into federal coffers.
The report also says the federal government may have little fiscal space to tax marijuana in the same way as tobacco currently is without pushing the legal price well beyond that of illegal pot. Even with only a sales tax, legal cannabis prices in 2018 will likely be as high as illicit market prices this year.
The parliamentary budget officer is also projecting that 4.6 million Canadians will consume pot in the first year it is legalized, rising to 5.2 million by 2021.
