The federal government is proposing to slap an excise tax on legalized cannabis next year. Under the preliminary plan tabled at Justin Trudeau’s meeting with provincial premiers, Ottawa would apply a tax of $1 per gram up to prices of $10, then 10 per cent on prices over and above that – with proceeds being carved up 50/50 between the feds and provinces. And that made for some interesting moments in yesterday’s closing news conference. “I emphasize once again that nobody’s mindset on [the legalization process] is about bringing in tax revenue on this,” Justin Trudeau said. “[It’s about a system] to remove the black market from accessing the billions of dollars of profits that they do every year off this.” We’ll assess the challenges of implementing a pricing structure that allows the government to achieve that goal.
TAX REFORM PROPOSAL EXPECTED ‘IN A NUMBER OF WEEKS’
That’s the timeline established by Trudeau Tuesday afternoon after he wrapped up meeting with the premiers. “We listened to Canadians,” Trudeau said. “We certainly heard the premiers and their concerns, and I think were able to point out and allay a number of the concerns around unintended consequences.” The Finance Department added more parameters in a news release, saying the next steps will be based on five principles; with Finance Minister Bill Morneau saying “the focus of these changes is a small number of wealthy incorporated individuals.” We’ll continue gathering reaction.
EVERYTHING MIGHT HAVE TO GO AT SEARS
The monitor overseeing Sears Canada’s insolvency process says the embattled retailer might have to launch a sweeping liquidation if it fails to strike a deal with executive chairman Brandon Stranzl (or any other interested party) to keep the lights on as a going concern. And that 'everything must go' strategy might have to start pronto. “[We] are cognizant of the fact that liquidation sales in the retail industry yield better results if they are completed before and during the lead up to the December holiday season,” FTI Consulting Canada said in a report filed with the court on Monday. This adds another layer of intrigue to a hearing today where Sears is expected to seek approval from the court to extend the stay period under CCAA to November 7 and 11 additional store closures (affecting 1,200 employees).
OTHER NOTABLE STORIES:
-Quebec Finance Minister Carlos Leitato yesterday left the door open to taxing Netflix
-Every single Yahoo account holder was “affected” by the 2013 hack. We'll look to gather commentary on how much pressure companies are going to be feeling to bolster data protection standards after this bombshell and Equifax.
-The European Commission today accused Luxembourg of giving Amazon 250-million euros in illegal tax benefits.
-Reuters is reporting Petronas is shopping around some of its Canadian assets via BMO Capital Capitals
-Bloomberg is reporting Donald Trump has been handed a list of recommended Fed chair candidates, including many of the names long-speculated to be in contention. The story points out Trump could also select a “wild-card candidate.”
NOTABLE RELEASES/EVENTS
-Notable earnings: Monsanto, PepsiCo
-Notable data: ISM U.S. services index
-7:00 a.m. ET: Toronto Real Estate Board releases monthly sales
-8:00 a.m. ET: Microsoft CEO Satya Nadella delivers speech at Economic Club of Washington
-9:00 a.m. ET: Ontario provides update on basic income pilot program
-10:00 a.m. ET: Former Equifax CEO Richard Smith testifies before U.S. Senate Banking Committee
-10:00 a.m. ET: Sears Canada court hearing
-12:00 p.m. ET: Google expected to unveil new Pixel phone at launch event in San Francisco
-12:30 p.m. ET: Alberta Justice Minister Kathleen Ganley holds news conference on Alberta Cannabis Framework (embargoed technical briefing at 11:30 a.m. ET)
-2:15 p.m. ET: U.S. Federal Reserve Chair Janet Yellen delivers opening remarks at banking conference in St. Louis
-5:00 p.m. ET: Jean Chretien and Bill Clinton in conversation at Canadian American Business Council event in Montreal
Every morning BNN's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnn.ca/subscribe.
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