Langley City Councillor Gayle Martin said she was “floored” by a letter from provincial finance minister Carole James that suggests B.C. municipalities shouldn’t expect to see much tax revenue from legalized marijuana.
“I was absolutely astounded,” Martin told the March 19 meeting of council.
Council had just received a letter from James that said while the province and the federal government are still negotiating a revenue sharing agreement, B.C. isn’t expecting to see a lot of money.
“The federal and provincial governments intend to keep cannabis taxes low to support the objective of reducing illicit market activity,” James said in her March 12 letter.
“As such, it is expected that cannabis taxation revenues will not generate significant provincial revenues.”
James said the province recognizes marijuana legalization “will lead to additional costs for local governments,” adding “we will be able to have more informed discussions once full details of the regulatory and taxation regimes are known and governments have more certainty in terms of expected future costs and revenues.”
James was responding to a Jan. 18 email that was sent on behalf of the Langley council to the minister of municipal affairs and housing.
The City sent the email in support of a campaign by West Kelowna mayor Doug Findlater for a formal revenue sharing agreement that would give 50 per cent of the provincial share of marijuana taxes to towns and cities.
Legalization will mean added costs, Findlater said, pointing to a Federation of Canadian Municipalities report that warns making marijuana legal could have an impact on policing, fire services, building codes, city planning, municipal licensing and standards, public health and more.
“It (legalized marijuana) is really going to tax a lot of our services,” Martin said, and predicted local taxpayers would be resistant to tax increases to cover those costs.
“All municipalities have to keep up the fight … to get a share of the revenue,” Martin said.
Langley City council approved a resolution in January that backed the West Kelowna proposal, that noted the “current discussions regarding revenue sharing of the tax revenue on cannabis sales involve the federal and provincial governments with no inclusion of local governments.”
Ottawa has agreed to split tax revenue from marijuana with the provinces and territories, with Ottawa keeping 25 per cent and provinces pocketing 75 per cent.
If Ottawa collects more than $100 million, anything above that ceiling will go to the provinces and territories.
The fine details of the agreement are still being worked out.
The last federal budget referred to an agreement to keep cannabis taxes to $1 per gram or 10 per cent, whichever is higher.
“As part of this arrangement, it is the federal government’s expectation that a substantial portion of the revenues from this tax … provided to provinces and territories will be transferred to municipalities and local communities, who are on the front lines of legalization,” the budget stated.