Pubdate: Wed, 02 Nov 2016
Source: Toronto Star (CN ON)
Copyright: 2016 The Toronto Star
Contact:  http://www.thestar.com/
Details: http://www.mapinc.org/media/456
Author: Bruce Cheadle
Page: A8
Cited: http://mapinc.org/url/wNIRvRti

MILLIONS, NOT BILLIONS, FOR POT'S TAX REVENUE

Report says government goals with legalized cannabis would call for
delicate fiscal balance

OTTAWA- The parliamentary budget watchdog is being a bit of a buzz
kill when it comes to forecasting government revenue windfalls from
legalized marijuana.

"We're talking millions and millions - not billions and billions - of 
dollars of revenues," Jean-Denis Frechette, the parliamentary budget 
officer, said Tuesday after releasing a study entitled "Legalized 
Cannabis: Fiscal Considerations."

The 77-page report finds that the federal government may have little
fiscal space to heavily tax cannabis the way it does tobacco without
pushing the legal price well beyond that of currently illicit pot.

What's more, the Liberal government's stated aims of decreasing
marijuana use and accessibility for young Canadians while choking off
pot revenues from organized crime will require a delicate balancing
act, the study found.

Price legal pot too high and the black market will continue to
flourish. Too low and governments could be seen to be encouraging its
use.

The report projects sales tax revenue in 2018 could be as low as $356
million and as high as $959 million, with a likely take of about $618
million based on legalized retail cannabis selling for $9 per gram -
in line with current street prices.

Government revenues will increase in the future for a variety of
reasons, the report says, including more consumption and price
competition among increasing numbers of licensed producers.

But overall, said assistant PBO Mostafa Askari, "the message is that
there really isn't very much room for revenue over time." He said U.S.
states that have legalized have found that revenue streams can't be
tapped too aggressively without pushing the market back
underground.

CIBC World Markets issued a report last January suggesting federal and
provincial taxes could pull in as much as $5 billion a year from legal
marijuana. A B.C. Liberal party report in 2013 suggested $4 billion
annually in taxes from legalized pot.

But the government has consistently played down any revenue
windfall.

"It was never about a money maker," Prime Minister Justin Trudeau told
The Canadian Press last December shortly after assuming office. "It
was always about public health, public safety."

Pot proceeds, he said, would not go into general revenues but would be
earmarked for addiction treatment, mental-health support and education
programs.
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MAP posted-by: Matt