The cost of vaping in Ontario, Canada is set to increase considerably in the not-too-distant future after the government announced a new provincial tax on vape liquid in Finance Minister Peter Bethlenfalvy’s fall economic statement on November 2nd.
The move to impose an additional tax on the import and manufacture of vape liquid will effectively double the duty every Ontarian vaper has to pay on a bottle of vape liquid or a pre-filled pod.
Under the existing system, the federal government taxes vape liquid at $1 per 2ml for the first 10ml and a further $1 per 10ml after that. That equates to an extra $7 on the most common 30ml bottles or $1 per 2ml pod. Ontario’s new provincial tax will double that to $14 and $2, respectively.
This new chance to tax vaping is undoubtedly appealing to Ontario Premier Doug Ford’s provincial government because all revenues earned will go into its own coffers. Although there are no projections of how much extra money is expected to be raised, the additional tax revenue is likely to be helpful to a province facing a $5.6 billion budgetary shortfall this year and $5.3 billion in 2024.
Raising revenue is not the reason given for introducing the new tax, however. It is instead being promoted as a health measure, a way to discourage people (and particularly youth) from vaping and to prevent vaping from being a gateway to smoking.
The economic report states that “Research suggests youth vaping can lead to smoking,” even though evidence from the Canadian government says that smoking among teens has been in steady decline since the early 2000s and the smoking rate in Ontario overall is below the national average.
Opponents of the tax counter that assertion with the argument that making vaping prohibitively expensive is likely to result in more people smoking rather than fewer, and could also lead to young people purchasing vape liquids from unregulated black market sources.
The Convenience Industry Council of Canada also released a statement saying: “Doubling the taxes on vape products disincentivizes adult tobacco users from making the switch to a less harmful alternative while increasing the demand for cheaper, illegal alternatives sold online, often without age verification.” The statement went on to say that: “48 cents of every dollar a convenience store makes goes to taxes, any new taxes on products sold in our stores threatens the viability of our businesses in Ontario.”
Is Vaping Unfairly Taxed Compared to Smoking?
The fall economic statement highlighted the fact that “public health experts, the World Health Organization, and the Canadian Cancer Society say taxation is a useful tool to reduce vaping.” But if the fear of vaping being a gateway to smoking is the reason for the extra taxation, some might ask why vape juice is being taxed so heavily when compared to tobacco.
The current tobacco tax in Ontario is 18.475¢ per cigarette or approximately $3.70 a pack, which is a third of the cost of a packet of twenty. 2ml of vape juice costs $3 on average, and a third of that is the federal tax. The new provincial tax will mean that around 50% of the cost of vape liquid will be taxes, compared to only 33% for cigarettes.
According to Statista, Cigarettes in Ontario cost less than almost anywhere else in Canada. At around $12.50 a pack, 20 cigarettes could cost less than just the tax added to 30ml of vape juice once this new taxation rule comes into force.
Other Canadian Provinces Will Follow Ontario
Ontario isn’t the first province to grab extra tax income from vapers, and it won’t be the last. Quebec has already announced its intention to follow suit in doubling the tax on vape liquid and Alberta and Prince Edward Island are both said to be considering introducing provincial vape taxation.
British Columbia, Saskatchewan, Newfoundland and Labrador, and Nova Scotia have all implemented provincial taxes since federal vape taxation was introduced in 2022.