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OPINION: Trudeau should just say no to city pot tax grab

Jordan Bateman is the B.C. director of the Canadian Taxpayers Federation.
Image Credit: Contributed
September 15, 2016 - 12:30 PM




City politicians, never shy about demanding more money from beleaguered taxpayers, are now trying to get a cut of future cannabis taxes.

In last year’s Liberal election platform, Prime Minister Justin Trudeau promised to legalize marijuana, touting a “new system of strict marijuana sales and distribution, with appropriate federal and provincial excise taxes applied.”

By leaving out the possibility of city taxes, Trudeau raised the hackles of spend-crazy mayors across the nation. Now the mayors are pushing back – they want a piece of the green.

Later this month, at the Union of BC Municipalities (UBCM) meeting in Victoria, city politicians will debate resolutions from the Duncan, Nelson and Prince George city councils calling on the federal and provincial governments to send a portion of marijuana taxes to local governments.

The motion will likely pass, as cities are always asking senior levels of government for more money. But Trudeau and the premiers should hold firm – don’t give cities any control over, or revenue from, cannabis legalization.

Cities don’t get a cut of alcohol or cigarette taxes, so why should marijuana be treated differently? Besides, if the pro-legalization activists are correct, cities will come out ahead by cutting policing costs in their communities.

Nelson’s own motion notes that enforcement costs will be “significantly reduced,” which means property taxpayers across the province should see savings in their local police contracts. This has been a cornerstone of the marijuana legalization argument for years: we spend too much money policing minor pot offences. Dump those efforts, save some bucks.

Or, as Vancouver Mayor Gregor Robertson has said, “Widespread access to marijuana for our youth, grow-ops that provide funds for organized crime, and significant costs to taxpayers for enforcement are all compelling reasons to re-examine our failed approach to prohibition.”

In a 2012 letter to senior governments, Robertson, along with seven other BC mayors, including Burnaby’s Derek Corrigan and North Vancouver City’s Darrell Mussatto, plainly stated that marijuana should be legalized because “increasing law enforcement costs also significantly impact municipal budgets … our public finances will benefit from an evidence-based, public health approach to marijuana.”

The flip side must also be true. By legalizing marijuana, those law enforcement costs will decrease, and “significantly impact municipal budgets” in a positive way. Unless the mayors have been fibbing about the reasons why police costs keep going up.

Of course, this enforcement will only be reduced if government at all levels resist the temptation to tax marijuana at too high a rate. Tax pot like cigarettes, and the entrenched black market will never disappear – the difference in price will simply be too large for consumers to ignore. The high taxes on tobacco in Ontario have helped keep a contraband market afloat there – costing Ontario taxpayers up to $1.1 billion per year in lost tax revenue.

This is another strike against giving cities a share of the revenue. The more governments with their hands in the marijuana tax till, the higher the tax rate will be. The higher those taxes, the more likely the black market continues.

If anything, the Trudeau government should lay down the law on cities, making it clear it won’t stand for tricky local taxes, ridiculously expensive business licence schemes, or onerous red tape on cannabis businesses. Those added costs will only keep organized crime alive.

Legalizing marijuana is perhaps the greatest tax policy experiment in Canada in the past 50 years. The end results are not entirely predictable. But it’s not hard to predict that cities will keep looking for more tax dollars in every way they can. Trudeau should just say no to their demands.

- This opinion-editorial is the second in a series of four on B.C. municipal government issues from the Canadian Taxpayers Federation. To read the first in the series go here.

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