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Overview of Vaping Taxes in Canada: Federal and Provincial Updates 2024

Summary of Vaping Taxes in Canada as of April 2024

In April 2024, an overview of the tax landscape for vaping products in Canada shows significant developments, as federal and provincial governments collaborate on taxation frameworks for these products. Since October 2022, a federal excise tax has been implemented on vaping products, and this system has been progressively adopted by provinces, with full coordination expected by January 1, 2025.

Federal Developments:

In April 2021, the Canadian federal government announced its plan to impose a specific excise tax on vaping liquids starting in 2022. By April 2022, legislation was enacted, with the tax being applied from October 1, 2022. The tax scheme includes $1 per 2 ml (or fraction thereof) for the first 10 ml and $1.00 for every subsequent 10 ml or fraction. For vaping solids, the rate mirrors that of the liquids, imposed per gram. This excise tax is applicable at the manufacturing level and aims to regulate the burgeoning vaping market by attaching a minimum tax per unit of nicotine, thus potentially affecting pricing structures significantly.

Provincial Actions:

Even before the federal initiative, some provinces had already introduced specific taxes on vaping products:

  • British Columbia imposed a 20% HST on vaping devices and liquids from January 1, 2020.
  • Nova Scotia initiated a tax of $0.50 per millilitre on liquids and a 20% tax on devices from September 15, 2020.
  • Newfoundland and Labrador, and Saskatchewan followed with a 20% sales tax on vaping products starting January 2021 and September 2021, respectively.

Post the federal announcement, several provinces expressed interest or confirmed participation in the coordinated taxation framework. Notably:

  • Alberta and Prince Edward Island prepared to join the federal framework by early 2022.
  • Quebec signed an agreement in November 2023 for coordination effective July 2024.
  • Ontario passed relevant legislation in December 2023, setting a coordination start date of July 2024.
  • New Brunswick, Yukon, and Manitoba also announced their intention to participate, targeting full implementation by January 2025.

This cooperative approach aims at harmonizing the tax landscape across Canada for vaping products. The federal government encourages provincial participation to ensure a 50/50 revenue split from the additional duties imposed under this framework, enhancing the regulatory oversight and public health objectives related to vaping.

Implications for Public Health:

The ongoing adjustments and the introduction of new taxes on vaping products reflect a concerted effort by Canadian authorities to manage the impact of vaping on public health. By imposing these taxes, the government intends to deter excessive use, particularly among young demographics, while generating revenue that could support health initiatives or further research into the effects of vaping.