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Two academics who have separately studied the issue in the past say about $3-billion a year would be a reasonable, rough estimate of what the federal government could expect to collect from a marijuana tax (Jeff Chiu/AP)
Two academics who have separately studied the issue in the past say about $3-billion a year would be a reasonable, rough estimate of what the federal government could expect to collect from a marijuana tax (Jeff Chiu/AP)

Liberals will not count revenue from proposed marijuana tax in fiscal platform Add to ...

The Liberal Party’s platform will not count on a single dollar of new revenue from legalizing marijuana even though some estimates suggest that Ottawa could rake in billions from taxing pot in a similar way to alcohol and tobacco.

The federal Green Party, which also supports legalizing marijuana and has already released its full platform, is counting on $5-billion a year in pot revenue to help fund its spending promises.

The Liberal Party has not yet released a fully costed election platform. However, candidate John McCallum, who is involved in preparing the costing of the document, confirmed in an interview with The Globe and Mail on Thursday that the platform will not assume any revenue from legalization.

“We are booking zero,” Mr. McCallum said. “Yes there will likely be some revenue, but it’s a bit speculative as to precisely how much. So we are, I suppose, being super prudent in booking nothing at all.”

Liberal Leader Justin Trudeau was asked earlier this week in Montreal about the role marijuana revenue might play in the party’s fiscal framework, but his answer was not entirely clear. Mr. Trudeau has not yet made a stand-alone campaign announcement to explain his position on marijuana. He said in response to questions earlier this month that he would work with the provinces on details.

While the NDP has released a high-level costing plan, none of the three major parties has yet released a detailed election platform that lists all sources of expected revenue and the estimated amount of any new spending or tax breaks. These details are facing close scrutiny in the campaign given that decisions related to managing Ottawa’s bottom line are a key point of political debate.

Both Conservative Leader Stephen Harper and NDP Leader Thomas Mulcair are promising to run balanced budgets over the next four years, while the Liberals say they will fund new infrastructure spending by running three years of deficits and then a balanced budget in the fourth year.

In addition to the social policy debate over the pros and cons of legalizing marijuana, there has long been an ongoing discussion over how much revenue governments could expect to collect through legalization.

There do not appear to be any recent Canadian studies that have explored this issue in depth. However, two academics who have separately studied the issue in the past both said Thursday that about $3-billion a year would be a reasonable, rough estimate of what the federal government could expect to collect.

“I think it’s much greater than $3-billion, but that [figure] would be a nice conservative estimate,” said Peter Jaworski, a Canadian who works as an assistant teaching professor of business ethics at Georgetown University. He said the experience in U.S. states that recently legalized marijuana provide a guide to what Canada might expect. “Yes it’s controversial and yes it’s difficult, but I’m certainly not the only one to have crunched these numbers…. We can be very conservative about the numbers and still book revenue.”

The state of Colorado, with a population of 5.4 million, is on pace to collect over $125-million in tax revenue this year from the legalized marijuana trade. Canada’s population is 35 million, which extrapolates to revenue of $810-million a year as a rough guide if the same rules were applied to a population of Canada’s size.

Simon Fraser University economics professor Stephen Easton, who is also a senior research fellow with the Fraser Institute, arrives at a rough estimate of $3-billion a year as well. He said precise estimates are obviously a challenge because of the current underground nature of the marijuana trade. It is also hard to know how legalizing marijuana might affect Canadian consumption of alcohol and tobacco and the ensuing impact on tax revenue.

“It’s relatively terra incognita. We just don’t know,” he said.

Simon Fraser criminology professor Neil Boyd has also researched the issue and said it is “far more sound” for the Liberals to assume no revenue than for the Green Party to assume it could raise $5-billion a year.

As a point of comparison, tobacco taxes generate more than $7-billion a year in combined revenue for provincial and federal governments, according to a 2013 review of government records by Physicians for a Smoke-Free Canada. Tax revenue from alcohol sales, minus sales tax revenue, generates about $6-billion a year for provincial and territorial governments, according to the Canadian Centre on Substance Abuse.

Mr. Trudeau told reporters in Montreal on Tuesday that his party supports legalization because the current approach is failing to protect children.

“Mr. Harper continues to perpetuate a prohibition that makes it easier for our young people to buy a joint than it is for them to buy beer or even a cigarette, and that’s not right because we need to protect our young people from the negative impacts of marijuana on the developing brain,” he said. “At the same time, Mr. Harper continues to allow the marijuana trade to fund, to the tune of millions upon millions of dollars, criminal organizations, street gangs and gun runners. That is not acceptable and that is why we have committed to legalize, control and regulate marijuana.”

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