Canadian vapers are still reeling from the massive federal tax levied against them late last year. In the 2022 Canadian budget, the government announced plans to establish the first federal tax on vaping products1L. Perrault, “Taxation of Vaping Products,” Office of the Parliamentary Budget Officer, Nov. 3, 2022. [Online]. Available: https://www.pbo-dpb.ca/en/publications/LEG-2223-018-S–taxation-vaping-products–taxation-produits-vapotage.
The tax went into effect on October 1st, 2022, and includes all products that contain e-liquid. Now, Canadian citizens pay $1 in tax for every 2 mL2Government of Canada, “Calculating Vaping Duty,” Canada.ca, [Online]. Available: https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies/excise-duty-vaping-products/calculating-vaping-duty.html of liquid in the first 10 mL of a sealed container, pod, or cartridge. Then, they also pay $1 in tax for each 10 mL of extra liquid in the same container. In real-life terms, Ontarians pay $7 in tax for every 30 mL bottle of e-liquid.
This tax is made worse by the fact that it includes vape products that don’t contain nicotine. DIY vapers have to foot a massive tax bill for liquid bases, even though they don’t contain nicotine. The new tax makes it almost impossible for vapers in Ontario to afford to bulk-buy e-liquid bases, which is ironic considering the DIY community appeared as a more affordable alternative to store-bought liquid.
The fact that the government has targeted two of the least controversial e-liquid ingredients has also raised some question marks. Vegetable glycerin (VG) and propylene glycol (PG) are the two main components of e-liquid. They contain far fewer chemicals than nicotine, so why are they being hit with the same tax?
To make matters worse, there is another tax on the horizon. As part of the 2022 vape tax, the Canadian government offered provinces an opportunity to enter into a federal/provincial partnership. This scheme, which has received much backlash, allows provinces to double the federal tax and keep half of the profit.
Earlier this month, Ontario’s Finance Minister Peter Bethlenfalvy released his 2023 economic statement and announced that Ontario will adopt the additional levy. In simple terms, it will double the amount of tax that Ontarians already pay on vape products.
If passed, vapers in Ontario will have to pay $2 in tax for every 2 mL of liquid in the first 10 mL of a sealed container, pod, or cartridge, then $2 in tax for each additional 10 mL in the container. A 60 mL bottle of liquid will cost $14 in tax.
In the fiscal update, the Ontario government states that it hopes this measure will reduce teen vaping. “The World Health Organization and organizations like the Canadian Cancer Society have stated that taxation is a critical public policy tool to reduce vaping,” the update reads, “especially among young people.”
The Canadian Vaping Association (CVA) has asked the federal government to reconsider3Canadian Vaping Association, “Canadian Vaping Association Response to Ontario Budget,” GlobeNewswire, Nov. 06, 2023. [Online]. Available: https://www.globenewswire.com/news-release/2023/11/06/2774431/0/en/Canadian-Vaping-Association-Response-to-Ontario-Budget.html the additional provincial tax. In a statement released last week, the CVA notes that “a punitive vape tax will deter smokers from switching to a reduced-risk product.”
Given the massive existing tax that vapers in Ontario already face, it’s difficult to see this new provincial levy as anything more than a cash grab. Regardless, government officials in Ontario seem to moving full steam ahead to a double tax on vape products.
- 1L. Perrault, “Taxation of Vaping Products,” Office of the Parliamentary Budget Officer, Nov. 3, 2022. [Online]. Available: https://www.pbo-dpb.ca/en/publications/LEG-2223-018-S–taxation-vaping-products–taxation-produits-vapotage
- 2Government of Canada, “Calculating Vaping Duty,” Canada.ca, [Online]. Available: https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies/excise-duty-vaping-products/calculating-vaping-duty.html
- 3Canadian Vaping Association, “Canadian Vaping Association Response to Ontario Budget,” GlobeNewswire, Nov. 06, 2023. [Online]. Available: https://www.globenewswire.com/news-release/2023/11/06/2774431/0/en/Canadian-Vaping-Association-Response-to-Ontario-Budget.html