As reported in Fairfax over the weekend, the Parliamentary Budget Office (PBO) has modeled the revenue implications of including marijuana sales in the GST, at the request of Senator David Leyonhjelm:
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.
Legalising marijuana makes a lot of sense. Sure, while it might not be healthy, it has less harmful effects than alcohol. On any given Friday or Saturday night, the nation’s emergency wards are loaded full of people with alcohol-related injuries, often through alcohol-related violence. By contrast, how often do you see or hear of stoners getting into fights or acting like louts? And yet alcohol is legal and pot isn’t. Inconsistent much?
Moreover, legalising and regulating marijuana sales could provide a nice new revenue source for the government, whilst ensuring purity of supply. It would also reduce profits to organised crime, which currently supplies a lot of the illegal drugs.
Colorado, which legalised marijuana two years ago, has reaped the revenue benefits (see below table), with some of this funding flowing to schools. There has also been no material adverse impact on crime or public health, and lower law enforcement costs.
Washington, too, has reaped the Budget benefits of legalising marijuana, with sales and tax revenue topping the hundreds of millions of dollars, not to mention the savings in law enforcement costs.
Other jurisdictions are taking note. 10 states across the US: Nevada, California, Arizona, Maine, Massachusetts, Rhode Island, Vermont, Ohio, Michigan and Connecticut, are considering legalizing marijuana in some form. Likewise, Canada’s Prime Minister has already stated that he wants to legalise marijuana, and Mexico is moving in that direction, too.
So what is Australia waiting for?
