Tax toke: the budget office models GST on Cannabis

[lookinggoodguys]

http://beta.brisbanetimes.com.au/federal-politics/political-news/tax-toke-the-budget-office-models-gst-on-marijuana-20160129-gmhjli.html

 

Just what are they smoking down in the Parliamentary Budget Office? Big Fat Joints $$$$

The normally conservative federal institution has done some highly unusual economic modelling based on the question: how much money could the Turnbull government raise if it legalised and then applied the GST to marijuana?

http://beta.brisbanetimes.com.au/content/dam/images/g/k/r/4/w/z/image.related.articleLeadwide.620x349.gmhjli.png/1454157655956.jpg

The answer is about $300 million a year.

And that doesn't even include the increased tax toke – sorry, take – from the inevitable boom in sales of pizza and Doritos.

The PBO, which was set up to provide independent and non-partisan budget analysis to politicians, did the costings at the request of libertarian crossbench senator David Leyonhjelm, who wants marijuana fully legalised.

If such a policy were introduced in July 2017 it would raise $600 million in GST revenue in the first two years, the PBO found.

That money would flow on to the states but the policy would also help the federal government through reduced law enforcement costs.

The government would save about $100 million a year in reduced Australian Federal Police and Australian Border Force costs, the PBO says.

The costing is based on some key assumptions, chiefly that all states and territories would align with the Commonwealth in fully legalising marijuana, hemp growing and the production of hemp for human consumption.

It's also based on there being no restrictions on marijuana production, such as quotas or restrictive licensing.

It also assumes there would be no impact on excise collections from the sale of alcohol or tobacco.

"A number of studies have analysed whether marijuana is a complement to or substitute for alcohol and tobacco. However, the literature has not reached a consensus, with the findings of different studies in conflict," the PBO says.

The impact of the proposal was calculated by applying a 10 per cent GST rate to current estimates of household consumption expenditure on marijuana.

However the PBO predicts the proposal would result in an increase in marijuana supply and demand, from 333 tonnes in 2016-17 to 395 tonnes in 2018-19.

The PBO stressed these costings should be considered "low reliability".

"There is uncertainty regarding the price and quantity of marijuana currently consumed and the price and quantity of marijuana that would be consumed in a newly legalised market," the PBO writes.

"It is also difficult to separately identify marijuana law enforcement activities as these are often integrated within broader law enforcement activities."

Senator Leyonhjelm said he does not recommend the use of marijuana except for medical purposes but recreational use should be for adults to decide for themselves.

"Prohibition has achieved absolutely nothing except tie up police resources and provide revenue for criminal gangs," he said.

 

[Loco]

just got on to post this. Nice one lookinggoodguys!!!    The $$$    in taxes I think is what's going to really encourage our ever so compassionate government to progress this along. Good on you Senator Leyonhjelm for putting the economy before your conservative ideals. The LNP may not be absolutely useless pieces of after all...

 

 

Loco

[Faith]

I would venture the savings in law enforcement and incarceration would match it...I had a quick reckoning of colarado's tax revenue to see what qld would reap...roughly the same pop and I believe we consume more canna in Aus and it was a no-brainer...prohibition muct be worth so many millions to them  for the powers to keep pretending.  don't know what Colorado's sales tax would be but I would also venture that an aussie 'canna tax' would be somewhat similar to grog and suchlike.  ie not 10% ....I think beer is like roughly taxed @70% 

Faith  

[Sir PsychoHashy]

I would venture the savings in law enforcement and incarceration would match it...I had a quick reckoning of colarado's tax revenue to see what qld would reap...roughly the same pop and I believe we consume more canna in Aus and it was a no-brainer...prohibition muct be worth so many millions to them  for the powers to keep pretending.  don't know what Colorado's sales tax would be but I would also venture that an aussie 'canna tax' would be somewhat similar to grog and suchlike.  ie not 10% ....I think beer is like roughly taxed @70% 

Faith

 

That's pretty much what I thought was obviously missing from that report, in terms of government revenue on tobacco and alcohol the GST is merely the tiny tip of a very big iceberg, and it would be incredibly naive to believe that when legalised that all levels of government won't be looking to tax canna even worse, likely to the point that black market canna will still be a viable business. 

 

But governments have already been aware of potential revenues from canna legalisation, so we're still stuck on the political boundaries to legalisation.  I find it strange that what's happened in places like Colorado can happen in the US but we are still stuck in the same old rut over here, so we obvioulsy have some very powerful political influences going on behind the scenes here. 

 

Could be that there's a few aussie pollies waiting to see how things pan out in the States before trying it out here.  Problem with that is that if they end up with a Republican government at the Federal level at their next election, there's a good chance that the federal laws will be used to slap the states' canna legalisation back into the stone age, which will also put us back for even longer.

 

And as for the saving from law enforcement, the whole war on drugs is an unbelievably expensive politically motivated farce that continues to cost our economy massively.  If they simply made illicit drugs a medical rather than legal issue, and took control of supply through existing medical supply chains, they would take the arse completely out of the black market, and be able to use the money saved on law enforcement to constructively help people to deal with their drug issues.  I'm obviously talking hard drugs here, and personally wouldn't want canna treated in the same way, but it would be better than black market weed, particularly for medicinal usage.  I also believe that it would go a long way to stopping young people from taking up hard drugs.  If being registered as a drug addict and having to buy from a chemist was the way to get those drugs, I find it hard to believe any teenagers would see any of those drugs as "cool" in any way, shape, or form, so it would effectively control supply, and lower demand at the same time, pretty safe to say that the war on drugs has never even come close to acheiving that.