OTTAWA, Dec 11 (Reuters) - The Canadian government and the 10 provinces on Monday settled a disagreement on how to split the revenues from a proposed federal tax on the sale of marijuana once the drug is legalized, Finance Minister Bill Morneau said.
Morneau told reporters that for an initial two years, 75 percent of the money would go to the provinces and 25 percent to Ottawa.
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The federal government had initially suggested a 50-50 split, an idea the provinces rejected on the grounds it was not enough to help cover the extra costs of enforcing the new rules once they take effect next July.
Morneau said he and his provincial counterparts also agreed to stick to Ottawa's proposal for a tax on all cannabis products of C$1 (78 cents) per gram (0.04 ounce), or 10 percent of the retail price, whichever is higher.
Keeping the tax relatively low would help authorities keep the drug out of the hands of underage users and reduce related crime, he added. The Liberals plan to allow recreational marijuana across the entire country by July 2018, making it the first Group of Seven country to do so.
Morneau spoke after a two-day meeting with counterparts from the provinces as well as Canada's three sparsely populated northern territories, which also agreed to the revenue split.
($1 = 1.2857 Canadian dollars) (Reporting by David Ljunggren; Editing by Chris Reese and Peter Cooney)