Ontario has become the latest province in Canada to announce a tax on vapour products, which experts say is a “great first step” to help curb the rising rates of youth vaping, but more needs to be done across the country.
In its fall economic statement last week, Ontario said it would impose an additional tax on vaping products sold in the province that would double the current federal duty rates.
Ontario is the first province to enter into an agreement with Ottawa, accepting its offer to levy the federal e-cigarette tax that has been in effect since October 2022.
Ontario, which plans to release additional information on the implementation of the new tax in the coming months, will receive the funds from the tax once it’s rolled out
British Columbia, Nova Scotia, Saskatchewan, and Newfoundland and Labrador already have provincial taxes in place on vaping products.
Statistics Canada data shows almost half of Canadians aged 20 to 24 and about one-third of youth aged 15 to 19 say they have tried vaping at least once in their lives.
“We’ve made a lot of progress to reduce smoking, but now we have a new generation of kids becoming addicted to nicotine through e-cigarettes,” said Rob Cunningham, senior policy analyst with the Canadian Cancer Society. “That shouldn’t be happening.”
Higher taxes leading to higher prices are an effective measure, but this should be part of a “multi-pronged” approach to discourage vaping among Canadian youth, Cunningham told Global News in an interview.
“I think this tax is going to be particularly beneficial to reduce youth vaping. It’s also going to have an impact on young adults 18 to 25 who are also starting (to vape),” Cunningham said.
Where provinces stand on vaping tax
B.C. was the first province to impose a sales tax of 20 per cent on vaping devices and liquids, which has been in effect since January 2020, according to the Ministry of Health.
Nova Scotia started imposing a vaping tax in September 2020, levying $0.50 per milliliter for vaping liquids and $0.50 per gram for vaping solids. The tax rate for vaping devices is 20 per cent of the suggested retail selling price, a spokesperson at N.S. Department of Finance and Treasury Board told Global News.
Vaping products in N.S. are also subject to a 15 per cent harmonized sales tax (HST), which is a 10 per cent provincial value-added tax and a five per cent federal goods and services tax.
To date, Nova Scotia has not implemented the federal e-cigarette tax.
Effective January 2021, Newfoundland and Labrador also has a 20 per cent provincial vapour products tax and like Nova Scotia, these products are subject to a 15 per cent harmonized sales tax (five per cent federal, 10 per cent provincial).
“While we have already implemented our own vapour products tax, we continue to monitor what steps the federal government and other provinces take with regards to taxation,” the Newfoundland and Labrador Department of Finance said.
“The vapour products tax is part of the province’s efforts to achieve our long-term goal of becoming one of the healthiest provinces in Canada by 2031,” the department added in a statement to Global News.
In Saskatchewan, a 20 per cent vapour product tax (VPT) on the sale of all vapour liquids, products and devices has been in effect since September 2021. These products are not currently subject to the provincial sales tax (PST), according to Saskatchewan’s Ministry of Finance.
“As the province already has our own VPT, it would be redundant for the government of Saskatchewan to also partner with the federal government on their similar tax for these products,” the ministry told Global News in an emailed statement.
Like Ontario, Nunavut has also signed an agreement with the federal government to participate in a co-ordinated vaping product taxation regime that will begin in July 2024.
“The proposed vaping tax will not be a significant revenue generator in Nunavut, but it is one tool to discourage vaping,” Nunavut’s Department of Finance said.
Meanwhile, some other jurisdictions have indicated an interest in taxing vaping products and are exploring their options.
Prince Edward Island has indicated it will be implementing a co-ordinated vaping product taxation regime with the federal government, according to a statement from the chief public health office and the Department of Finance. However, no timeline has been set yet.
New Brunswick does not have its own provincial vaping tax in place and has not yet entered into a bilateral agreement with the federal government for a co-ordinated vaping duty.
“We will continue to have a dialogue with the federal government on a potential duty in the future,” said Morgan Bell, communications officer at New Brunswick’s Finance and Treasury Board.
Alberta currently has no vape tax and its tobacco tax does not apply to vaping products.
“We are working with the federal government to join the coordinated vaping taxation framework, which would help discourage consumption of vaping products, especially among youth,” said Savannah Johannsen, press secretary at Alberta’s Office of Treasury Board and Finance.
Quebec, which recently imposed a ban on the sale of vaping products containing a flavour or aroma other than that of tobacco, is also looking at applying an additional vaping tax that would double the existing federal duty rates on vaping products in the province, said Charles-Étienne Bélisle, a spokesperson from the Ministry of Finance.
Manitoba has not announced its plans for a tax specifically targeting vaping products.
“Manitoba applies sales tax on vaping products, similar to tobacco products, but at this time has not introduced further plans to create a specific tax on vaping products, including the possibility of signing a coordinated vaping tax agreement with the federal government,” a provincial spokesperson told Global News.
Yukon said it will continue to explore over the coming months if and when it may join in sharing federal revenue on vaping products.
“We are continuing to look at all products which fall under the e-cigarette and vaping umbrella as we determine the best approach for implementing a tax on these products,” said Renée Francoeur, a Yukon government spokesperson.
The Northwest Territories did not respond to a request from Global News by the time of publication.
It is illegal to sell or provide vaping products to anyone under the age of 18 in Canada and some provinces have increased this age to 19 or 21.
Health Canada has cautioned that vaping nicotine, which is a stimulant drug found in tobacco, can “lead to physical dependence and addiction” and expose people to chemicals “that can be harmful to your health.”
The agency advises that young people and those who don’t use tobacco products not vape.
Jessica Buckley, president and CEO of the Lung Health Foundation, said youth vaping is a concern because “kids that vape are 3.6 times more likely to start smoking.”
Besides taxing, she said additional steps need to be taken such as banning vape flavours across the country.
As of November, there are six provinces and territories that ban or are set to ban most flavours of vape products: Nova Scotia, Prince Edward Island, New Brunswick, Northwest Territories, Nunavut and Quebec.
Cunningham said the federal government should step in and finalize a draft regulation presented in 2021 by Health Canada to ban flavours in e-cigarettes.
Buckley said an estimated 65 per cent of the youth who vape do it because of the flavours.
“We’ve been calling on the provincial governments and the federal government as part of our National Lung Health Alliance to ban flavours across the country as well because the flavours in vaping specifically for youth are extremely enticing,” she said.
Plain packaging for vaping products and regulating a minimum age of 21 for both tobacco should also be part of the comprehensive approach to curbing youth vaping, Cunningham added.
— with files from Global News’ Sean Previl and The Canadian Press