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The Canadian government’s decision to increase excise duties on vaping products will discourage smokers from using vaping to quit, increase the sale of illegal products and will not reduce youth vaping, industry associations are warning.
Thomas Kirsop, managing director of the Vaping Industry Trade Association, said it is “paradoxical” that the federal government is increasing the excise tax on vaping products at the same time as its information on quitting smoking identifies vaping as a “less harmful alternative to smoking”.
Kirsop said the tax increase also comes as the government has revived a proposal to restrict flavours in vaping products.
“If the federal minister of health, Mark Holland, succeeds in his legacy project to ban sweeteners and eliminate flavoured vaping products, the taxation issue will not matter,” Kirsop told ECigIntelligence. “The illicit market that fills the void left by a decimated legal sales channel will not be applying stamps and remitting excise taxes on their products.”
During an interview, Darryl Tempest, executive director of the Canadian Vaping Association, also warned the tax increases, coupled with restrictions on flavours, would flatten the vaping industry and drive consumers to illegal vaping products. “You can’t tax the dead,” he said.
New measure and coordinated tax regime both start 1st July
Tempest believes the flavour restrictions could be unveiled by the end of June. However, anti-smoking groups are applauding the tax increase. The Heart and Stroke Foundation predicted it would reduce vaping among young Canadians.
The foundation said that since the introduction of vaping in Canada, use has “skyrocketed among youth and young adults, with one in four Grade 10 to 12 students” saying they vape.
In its budget tabled on 16th April, the federal government announced plans to increase the excise tax on vaping products. The measure is to take effect on 1st July, the same day the government plans to introduce its new coordinated federal-provincial vaping product taxation regime.
The first phase of the coordinated tax regime will apply to the provinces of Ontario and Quebec as well as the Northwest Territories and Nunavut. Details were unveiled in the Canada Gazette on 8th May. Other provinces, such as Alberta and Manitoba, have announced they also plan to join the tax regime.
In provinces that do not participate in the coordinated tax regime, the federal excise duty of CAD1 (USD0.73) per 2 ml of vaping substance will rise to CAD1.12 (USD0.82) per 2 ml. In provinces that participate in the regime, it will go from CAD1 per 2 ml to CAD2.24 (USD1.65) per 2 ml, with an equivalent provincial tax on top of the federal rate.
The government predicts the tax hike will increase federal revenues by CAD310m (USD226.6m) over five years.
– Elizabeth Thompson ECigIntelligence contributing writer
Photo: Jerin John
