Govt Could Offset GST Rise by Regulating Cannabis

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The Government could give Kiwis a financial break from the latest GST rise if it legalised, regulated and taxed cannabis sales.

“Responsible cannabis users would be happy to pay a tax on what they bought if it meant not being threatened by criminalisation any longer,” Acting President of NORML NZ, Stephen McIntyre, said today.

“Cannabis enforcement cost the Police $116 million in 2005/06.* These costs would be largely avoided under a legally regulated, R18 market. Such savings could go into further tax cuts, could be re-allocated into Government spending such as education and health, or they could go back into other law enforcement activities.”

“But this is not only about tax payer’s money being better spent. Police officers have far more urgent things to do with their time than busting cannabis users. “$116 million equates to 333,684 police hours every year that could be better served by more efficient follow ups to home burglaries, violent assaults and incidents of domestic abuse. It also equates to having around 120 extra officers on the beat.”

In addition to savings in law enforcement, a controlled and regulated cannabis market will provide income for the Government from both excise tax and GST placed on sales. A new study by Harvard economist Jeffrey Miron released this week has found the financial benefits and savings from drug legalisation in the USA to be in the region of US$41.3 billion.

Applying those figures to New Zealand’s population indicates potential benefits and savings here could be in the region of NZ$800,589,000. “If true, NORML calculates that could be enough to reduce the GST rate back to 10%.”**

Mr McIntyre said that while there was still some work to be done on the final analysis, NORML NZ had already begun studying the economics of cannabis legalisation here and will be releasing its findings later.

Sources:
* NZ Law Commission: “Controlling and Regulating Drugs“; 2010;
** Miron, Jeffrey A. & Katherine Waldock: The Budgetary Impact of Ending Prohibition, Cato Institute; 2010

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