Canada Increases Taxes on e-cigarette Products Starting July 1

Jul.11.2024
Canada Increases Taxes on e-cigarette Products Starting July 1
Canadian provinces raise taxes on e-cigarettes, with Ontario and Quebec doubling federal rates in new "tax partnership plan.

According to a report from Vaping360 on July 10th, starting from July 1st, all Canadians purchasing e-cigarettes will have to pay higher taxes, with significant increases in taxes on e-cigarettes in the country's two most populous provinces.


The Canadian government has increased the federal e-cigarette tax by 12% starting from July 1st. At the same time, the provinces of Ontario and Quebec have joined the federal government's "tax-partner plan," allowing participating provinces to double the tax rate and retain half of the revenue. Similarly, the two Canadian territories, the Northwest Territories and Nunavut, also joined the tax-partner plan on July 1st.


This collaborative plan was first announced in 2022, allowing provinces to collect tax revenue equal to federal taxes. For each province, this tax plan does not require any effort at all, as the federal government handles the collection and accounting of taxes, and simply sends half of the tax revenue to each province.


For financially struggling provinces, this is an arrangement that is almost irresistible, which is why four other provinces and one territory have agreed to join this tax plan on January 1, 2025: Alberta, Manitoba, New Brunswick, Prince Edward Island, and Yukon.


Last fall, when Ontario announced it would be joining the program, the conservative-led provincial government defended its decision to work with the national government controlled by the Liberal Party by calling the program a public health victory, stating it would reduce the phenomenon of youth vaping e-cigarettes.


The federal taxes paid by Canadians are as follows:


For the first 10 milliliters (or part thereof) in sealed containers (bottles, disposable products, pods or cartridges), a charge of 1.12 Canadian dollars is applied for every 2 milliliters; for each additional 10 milliliters (or part thereof) in the container, a charge of 1.12 Canadian dollars is applied for every 2 milliliters. The e-cigarette tax in Ontario, Quebec, the Northwest Territories, and Nunavut is twice that of other provinces. By January 2025, the taxes in Alberta, Manitoba, New Brunswick, Prince Edward Island, and Yukon will also double.


This tax applies to all e-cigarette products that contain e-cigarette liquid, regardless of whether they contain nicotine. The tax is to be paid by manufacturers when the products are imported or sold wholesale.


Starting from July 1st, new products will be taxed at a higher rate (usually passed on to consumers), but can still be sold at the old tax rate within the 90 days before the products enter the supply chain. Therefore, consumers may encounter products with the old tax rate retained in the prices in the next three months.


In general, a 30ml bottle of bottled e-cigarette liquid will result in all Canadians paying an additional $7.84 in federal taxes (an increase of $0.84 from July). A disposable e-cigarette with 5ml will be taxed at $3.36, while a pack of four refill pods containing less than 2ml of e-cigarette liquid will have a federal tax of $4.48. Consumers in Ontario, Quebec, the Northwest Territories, and Nunavut will pay twice the tax on these products compared to other provinces.


The provinces of British Columbia, Newfoundland and Labrador, Nova Scotia, and Saskatchewan, which do not participate in the federal carbon pricing plan, already have their own provincial taxes. This means that consumers in those provinces will also be paying higher federal taxes.


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