BEAMSVILLE, Ontario, Nov. 06, 2023 (GLOBE NEWSWIRE) -- Last year the federal government introduced an excise tax on nicotine vapour products and invited the provinces to participate at a matched rate. The Ontario Budget details Ontario’s plans to enter into a vapour product agreement with the federal government. The Canadian Vaping Association (CVA) is urging the federal government to reconsider its proposal to impose an additional provincial levy, as this would effectively double the already substantial tax burden. Instead, the CVA suggests a more equitable approach where the federal government shares the revenue generated by the current levy with the provinces.
The stated intention of the tax is to reduce the appeal of vapour products to price sensitive youth. Recognizing the relative harms of vapour and smoke is fundamental to setting an appropriate excise levy. Vaping is widely recognised as significantly less harmful than smoking. A punitive vape tax will deter smokers from switching to a reduced risk product. Previously, cost was among the incentives to switch from smoking to vaping. With the introduction of the excise tax, depending on product type, vape products are now almost as expensive as cigarettes, despite the significant reduction in risk.
As vapour product regulation becomes increasingly restrictive, there is a concerning trend of growing availability of illicit products. Enforcement of the unregulated market is already challenging, and enforcement agencies lack the required resources to slow its growth. The introduction of a provincial excise tax will stimulate demand for cheaper products that will be filled by individuals willing to break the law. Legal businesses will find it nearly impossible to compete with the unregulated market that remains largely unchecked. The consequence of such punitive taxation will be widespread business closures, significant job losses, and an increase in criminal activity.
Furthermore, research on the effects of taxes on vape products indicates that such levies can incentivize the purchase of cigarettes. Vapour products and cigarettes are considered economic substitutes, meaning that changes in the price of one can influence the demand for the other. In a press release discussing this study, Michael Pesko, one of the study's authors, stated, "We estimate that for every one e-cigarette pod no longer purchased due to an e-cigarette tax, 6.2 additional packs of cigarettes are purchased instead. The public health implications of e-cigarette taxes in this scenario are likely to have a negative impact."
“Ontario has been a leader in common-sense vaping regulations, leading to one of the lowest rates of youth vaping in the country. Implementing such an aggressive tax model will have dire consequences, including the dismantling of the regulated industry and the shuttering of hundreds of small businesses. Handing the market over to criminals poses a significant threat to youth protections and risks undoing all the progress made in curbing youth experimentation.
“The CVA encourages the province to leverage its negotiating influence with the federal government to establish a fair revenue-sharing framework for the existing tax revenue. Preserving the regulated market, rather than destroying it, will lead to higher tax revenues. The additional revenue generated can be used by the province to increase enforcement resources and support educational programs for youth,” said Darryl Tempest, Government Relations Counsel to the CVA.
Contact
Darryl Tempest
Government Relations Counsel to the CVA Board
dtempest@thecva.org
647-274-1867
