Starting July 1, all Canadians purchasing e-cigarettes will face higher taxes, with the most significant increases occurring in Ontario and Quebec, the country’s two most populous provinces.
The Canadian government has raised the federal e-cigarette tax by 12% as of July 1. Additionally, Ontario and Quebec have joined the federal government’s “Tax Partnership Plan,” which allows participating provinces to double the tax rate and retain half of the revenue. The Northwest Territories and Nunavut have also joined this plan.
Announced in 2022, this cooperative program permits provinces to impose taxes equal to the federal amounts. The federal government handles tax collection and accounting, and then it remits half of the revenue to the provinces. This arrangement is particularly appealing to financially strained provinces, which is why Alberta, Manitoba, New Brunswick, Prince Edward Island, and Yukon have agreed to join the plan on January 1, 2025.
When Ontario announced its participation last fall, the Conservative-led provincial government justified the collaboration with the Liberal-controlled national government by describing it as a public health victory, claiming it would reduce youth vaping.
Federal and Provincial Tax Rates
Federal tax rates for e-cigarettes are as follows:
- For the first 10 milliliters (or part thereof) in sealed containers (bottles, disposables, pods, or cartridges), a tax of CAD 1.12 is applied for every 2 milliliters.
- For each additional 10 milliliters (or part thereof) in the container, a tax of CAD 1.12 is applied for every 2 milliliters.
In Ontario, Quebec, the Northwest Territories, and Nunavut, e-cigarette taxes are double those of other provinces. By January 2025, Alberta, Manitoba, New Brunswick, Prince Edward Island, and Yukon will also see their taxes doubled.
The tax applies to all e-cigarette products containing e-liquid, regardless of nicotine content. Manufacturers pay the tax upon importing or wholesale distribution.
New products will be taxed at the higher rate starting July 1. However, products that enter the supply chain within 90 days before this date can still be sold at the old tax rate, meaning consumers might find products with the previous pricing for the next three months.
Impact on Prices
Overall, a 30-milliliter bottle of e-liquid will now cost Canadians an additional CAD 7.84 in federal taxes (an increase of CAD 0.84 from before July). A 5-milliliter disposable e-cigarette will incur a tax of CAD 3.36, and a pack of four refill pods containing less than 2 milliliters each will have a federal tax of CAD 4.48. In Ontario, Quebec, the Northwest Territories, and Nunavut, these taxes will be double.
Provinces not participating in the federal partnership plan, such as British Columbia, Newfoundland and Labrador, Nova Scotia, and Saskatchewan, already have their provincial taxes. Consumers in these regions will also face the new higher federal taxes.
