Question

Tax low to get high: Should governments should weed taxes down? And why

Answer 1

The government moved forward on its election promise by legalising marijuana in July 2018. It has been argued that the taxes on legal pot must be kept low or else people will continue to use it through black market. According to reports, more than 300 organised crime groups generate nearly $7 billion a year just by selling illegal pot in Canada.

Thus to keep the market out of the hands of these mobs, the government should reject the "sin taxes" on marijuana. These taxes on alchohol and cigarettes already encourage more black market transactions that are worth billions of dollars a year. Instead, it has been suggested that in the initial period, only the HST(Harmonized Sales Taxes) i.e. nearly 12% to 13% should be imposed.

Already, it can be predicted that even if this low tax policy would be passed, then too black market pot wouod continue to some extents. Canada's biggest licensed marijuana companies produce less than 5% of the total marijuana consumed in the country. The rest is all through black market. In many parts of the country like Ottawa, Toronto, Vancouver, people subscribe to online social networks that are run by marijuana suppliers who provide facilities like bulk discounts and even home delivery services.

Now, there are two sides of seeing this. On one side, taxes can be lowered to curb the black market activities. On the other hand, marijuana is a luxury product, hence considering that, there must be high taxes on it like on alchohol and cigarettes.