Federal Government to Charge GST on Marijuana Sales, Stoking Price Concerns

Article by Daniel LeBlanc and Laura Stone, Global News

Federal government to charge GST on marijuana sales, stoking price concerns. A man lights a marijuana cigarette during a protest on Parliament Hill in 2012. After plans for the federal excise tax were tabled on Tuesday, premiers promised to fight to collect more than half of all revenue

Ottawa will charge GST on recreational marijuana in addition to the planned excise tax of $1 a gram, threatening to make legal cannabis more expensive than its black-market competition.
The federal government’s plan to legalize marijuana by July 1 is designed to replace the illegal market with a heavily regulated industry, but experts say the final sales price will be key to its eventual success or failure. Parliamentary Budget Officer Jean-Denis Frechétte warned Wednesday in a blog post that an excise tax would likely push the price of legal marijuana above black-market prices observed in 2015-16.
Ottawa announced the planned excise tax on Tuesday, stating that the revenue would be shared equally with provincial governments.
The Department of Finance said on Wednesday that it would also charge the goods and services tax on recreational marijuana, just like it does with alcohol and tobacco.
“The treatment of cannabis products is in keeping with this approach,” said Chloé Luciani-Girouard, a spokeswoman for Finance Minister Bill Morneau.
The debate over taxing marijuana comes amid warnings from the federal budget watchdog that high taxes on the drug will only boost the illegal market.
According to the Parliamentary Budget Officer, governments have little leeway to tax marijuana and remain competitive with unlicensed producers. The PBO estimated in a report last year that legal cannabis would cost about $7.50 a gram before taxes, compared with $8.80 for illicit cannabis.

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One comment

  1. They have already overpriced themselves with a tainted product not worth the heavy price tag anyway.
    $280oz($10grm) plus Excise Tax plus GST on top of that – its insanity thinking that price is anywhere near competing with the “Free Market”. I pay $180 – $240 oz. for small batch craft cannabis depending on the type, strength, availability of strain and there is no tax at all on that amount so how do they possibly think they are competitive here?? 420 community will just go farther underground where we have always thrived.
    If criminalization over decades was not enough to stop people supplying amazing quality cannabis to sell then how do Government think that this Legalization will have any affect? Their lack of knowledge is a scary thing.

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