UBCM, in collaboration with GFOABC, is preparing a survey with regard to the costs to local government of cannabis legalization. The data from this survey will support UBCM in its ongoing discussions with the province on the appropriate sharing of the excise tax on cannabis so that the one time and ongoing costs to local government to implement the legalized cannabis framework are not funded through the property tax.
The federal government has agreed to provide provinces and territories with 75% of revenue derived from the cannabis excise tax, a 10% tax on the final retail price of cannabis. Originally, the distribution was to be 50-50; however, this was met with criticism from a number of provinces, including British Columbia who argued that provinces and local governments would assume the majority of responsibilities. The federal government eventually provided the additional 25% to provinces and territories specifically in recognition of local costs.
UBCM has been engaged with the Province over the past two years in the lead up and adoption of legislation legalizing non-medical cannabis. At the 2018 UBCM Convention, local governments endorsed a resolution seeking to advance a short- and long-term strategy for cannabis excise tax revenue sharing in recognition of the one time and ongoing costs anticipated by local government. This strategy has been discussed with MLAs and Ministry of Finance representatives, however the Province has yet to commit any of its excise tax revenue to address local costs.
Among the many issues arising from legislative changes, the tracking of incremental costs has been of interest to provincial governments, particularly in supporting the idea of excise tax revenue sharing. UBCM, with input from GFOABC, has been working to develop a model that will provide consistency with regard to types of costs, and facilitate analysis of information based on various criteria (e.g. size of local government, expenditure type, etc.).
The survey will be distributed to local government Chief Financial Officers on May 1.
Published by UBCM April 17, 2019