What You Should Know About Canada’s New Vape Tax

On April 7, 2022, the Canadian government proposed a federal tax on e-cigarettes. This tax is part of the Sales and Excise measures and is expected to come into effect in early October. This article explains what taxes are and what they mean for the e-cigarette community. 

The Proposed Tax

Sales tax is a statutory tax levied on certain goods such as alcohol, tobacco, and cannabis products. Excise duty on e-cigarette products was first proposed by the Canadian government in 2021. With the implementation of the new excise framework, all vapor products containing nicotine will be taxed and require state excise stamps. The official statement states, "Excise tax applies to e-cigarette materials manufactured in or imported into Canada and intended for use in e-cigarette devices in Canada." 

Starting October 1, 2022, all manufacturers will be required to start collecting and sales tax on their products. Taxes are calculated per milliliter. The cost increase due to tax is about $7 per 30ml, $10 per 60ml, and $16 per 120ml, meaning a 13-23% increase in e-liquid cost. 

Implications of the Tax

This tax will be introduced at the federal level, but opens the door to the possibility of further taxation at the individual state and territory level. The tax bill states that the purpose of introducing excise taxes is to curb the harmful consumption of tobacco products. However, a study published in the Journal of Risk and Uncertainty found that taxing vaping products increased tobacco consumption. As a result, taxing e-cigarette products is counterproductive in reducing tobacco harm. 

Aside from being a safer option, it's important to note that smoking e-cigarettes are cheaper than smoking traditional cigarettes, even with the new excise tax. Additionally, the tax only applies to products that contain nicotine, not hardware such as coils.