BEAMSVILLE, Ontario, Feb. 10, 2023 (GLOBE NEWSWIRE) -- The Government of Canada has implemented a punitive vape excise tax and has invited the provinces to join the regime at a matched rate. Quebec intends to match the federal levy of $5 for the first 10mL in any sealed container, and $1 per 10mL for additional liquid in the container. For context, prior to excise tax a 30mL product sold for an average price of $19.99, with the addition of federal and provincial excise tax, the price will nearly double to $39.25 including QST.
Vaping being more affordable than smoking was previously among the incentives for smokers to switch to a less harmful product. This tax eliminates that incentive and punishes people who smoke for trying to end their addiction to combustible tobacco and improve their health.
The excise tax prioritizes short-term financial gains over longer-term improvements to public health and reductions in health care costs. Nicotine vaping is widely recognized as significantly less harmful than smoking. The Royal College of Physicians has reaffirmed for the 7th consecutive year that vaping is unlikely to exceed 5% of the harm from smoking.
The Government of Quebec must consider the relative risk of the product and ensure price remains part of the incentive for smokers to make the switch. Price should not be a factor in whether someone can afford to quit smoking. If nicotine vaping becomes more expensive than smoking, as some health organizations have advocated for, sales of cigarettes will increase and drive the rapidly expanding illicit vape market. Increased tobacco use will result in increases in health care costs, smoking related illness and premature death. The human cost of the policy must be a primary consideration.
Recently, the Honourable Minister Carolyn Bennett, Minister of Mental Health and Addictions and Associate Health Minister stated, “Vaping products offer the 3.8 million Canadians who smoke a less harmful source of nicotine than tobacco products, and do help people to stop smoking.” Health Canada has recently updated its website to bring awareness to the benefits of vaping for people who smoke. Excise tax creates a barrier for adult smokers to access these products and is counter to the recommendations of our national health agency.
“It is a principal of good taxation policy that legislators pass regulation rather than adopt taxes to achieve regulatory goals. The stated objective of this tax is to deter youth usage. Canada already has strong regulation to protect youth, but it has lacked consistent enforcement. Strengthened enforcement is a far more effective strategy than taxation,” said Darryl Tempest, Government Relations Counsel to the CVA Board.
The combined federal and provincial levies will undoubtedly lead to the closure of some of Quebec’s specialty vape shops, the only age-restricted access point for vape products. Constricting the legal market will also lead to predictable increases in the illicit market. High vape taxes will not achieve the stated policy objective and will instead push consumers to the illegal market. This will ultimately weaken youth protections as criminals are not concerned with proper age verification procedures.
Additionally, manufacturers incur significant costs to comply with Canada’s stringent requirements for the legal market. Illicit sellers do not bare regulatory costs or charge customers excise tax, resulting in products that are significantly cheaper than their legal competitors. Legal vape businesses will be at an incredible competitive disadvantage, as the price of illicit products will be approximately 50% cheaper. In effect, the unintended consequence of heavy-handed taxation is heavily discounted contraband vape products readily available to youth.
As Quebec is currently the only province to announce its intentions to join the excise regime, differences in provincial taxes will create an incentive for Quebecers to source their products from other provinces disadvantaging domestic producers.
“Federal excise collection is projected to far exceed the budget amount. Instead of individual provincial taxes at an increased tax rate, the federal government should enter a revenue sharing agreement with the provinces. This would greatly simplify the process and minimize further harm to public health,” said Tempest.
The Canadian Vaping Association implores the Government of Quebec to reconsider a provincial vape tax. A thorough review of the existing research on the impact of vape taxes should be completed before implementation is pursued any further.
Contact info: Darryl Tempest, Government Relations Counsel to the CVA Board, dtempest@thecva.org, 647-274-1867
