Canada ranked in $186 million in 5 1/2 months from taxes on cannabis
Since the last few decades, in Canada, the illegal market of cannabis has been growing at a rapid pace. After some medical experts pointed out the health benefits of cannabis, the Canadian government has wasted no time to legalize the buying and selling of cannabis. Before starting the business of cannabis in Canada, you need to follow the recommendations of any reputed Canadian Tax Consulting Service. You need to pay either an excise tax of 10% on the sale price of cannabis or $1 for each gram of cannabis, whichever amounts greater.
After legalization, within the first five and half months, federal and provincial governments of Canada have raked in $186 million in tax revenue from the sale of cannabis. For the first time, this achievement has been made. This revenue has been earned through excise taxes and taxes on GST. Surprisingly, these two types of taxes have generated evenly distributed amounts.
Collections & statistics of recent past
From the last October to the end of March of the current year, provincial governments collected total excise tax revenue of $79.1 million and on the other hand, the federal government earned $18.8 million tax revenue. At the same time period, federal GST of $35.5 million was collected. From the total sale of cannabis, provincial tax revenue of $52.7 million had been generated.
Benefits of some financial decisions
Pre-legalization agreements between provincial governments and the federal government helped the provinces to collect the major share of the total revenue amount. In this regard, it must be mentioned that Ottawa collected 25% of excise tax revenue alone and the other provinces collected the remaining 75%.
The “States Can” showed some earlier data mentioning the details of the growth of the revenue from excise taxes on a quarterly basis. From the fourth quarter of 2018 to the first quarter of 2019, excise taxes increased by 12.4%. During this same time period, GST revenue for the federal government and provincial governments increased by 68.1%. This milestone was reached due to the growth of the volume of sales made by licensed producers, distributors and retailers.
Future Prospects
According to market experts, as the government legalized businesses of cannabis recently, this step would check the growth of the illegal market. But, the tax rates must not be increased frequently. Otherwise, the illegal market will expand again and the government will start to lose revenue.
If you want to start a business of cannabis, you can approach The Accounting and Tax. We are one of the reputed corporate tax consultants in Toronto and we will take full responsibility for your business licenses and corporate tax matters. Our financial advisors and tax consultants are experts in dealing with the latest tax rules and regulations.
