Increase in Taxes on Electronic Cigarettes in Canada from July 1st
Starting July 1, Canadians will see an increase in the cost of their e-cigarettes, with a significant increase in the country's two most populous provinces, Ontario and Quebec.
Federal Increase in Taxes on Vaping
The Canadian government has implemented a 12% increase in the federal tax on vaping products, effective July 1. At the same time, the provinces of Ontario and Quebec joined the national government's "fiscal partnership" program, allowing the tax rate to be doubled and half of the revenue to be retained. Two Canadian territories, the Northwest Territories and Nunavut, also joined this fiscal partnership on the same date.
Federal-Provincial Partnership for Taxation
Announced for the first time in 2022, this partnership allows provinces to collect an amount equivalent to the federal tax. For the provinces, this program does not require any additional administrative effort. The federal government does the collection and accounting, then simply sends a check for half of the revenue to the participating provinces. This attractive system has already convinced four other provinces and one territory to join the program on January 1, 2025: Alberta, Manitoba, New Brunswick, Prince Edward Island and Yukon.
When announcing Ontario's joining the partnership last fall, the Conservative provincial government justified the decision as a victory for public health, saying it would reduce vaping among youth. and would prevent users from falling into the so-called (and mythical) cigarette trap.
Financial Impact on Canadian Consumers
All Canadians are subject to federal tax, calculated as follows:
- $1,12 per two milliliters for the first 10 mL (or portion thereof) in a sealed container (bottle, disposable, pod or cartridge)
- $1,12 for each additional 10 mL (or portion thereof) in the container
For vapers in Ontario, Quebec, the Northwest Territories and Nunavut, the tax is doubled. This will also be the case from January 2025 for those living in Alberta, Manitoba, New Brunswick, Prince Edward Island and Yukon.
The tax applies to all vaping products containing e-liquid, with or without nicotine. It is collected from manufacturers upon import or wholesale. Starting July 1, new products are taxed at the higher rate, although products already in the supply chain before that date can be sold at the old rate for a period of 90 days. Consumers could therefore benefit from the old prices for up to three months.
Concretely, a 30 mL bottle of e-liquid will cost Canadians $7,84 more in federal tax (i.e. $0,84 more than before). A 5 mL disposable device will be taxed at $3,36, and a pack of four refill pods of less than 2 mL each will have a federal tax of $4,48. In Ontario, Quebec, the Northwest Territories and Nunavut, these taxes will be doubled for all these products.
The provinces of British Columbia, Newfoundland and Labrador, Nova Scotia and Saskatchewan have not joined the federal partnership program, but they already have their own provincial taxes, and consumers there will also pay the new federal tax higher.
