Vape Tax Canada 2025: New Federal & Provincial Excise Duty Explained

Often, we need to plan our expenses. So we hear questions like- How much does my vape cost?, How much does vape juice cost?, How much does my disposable cost? Or how much my vape pods cost?

In recent years, Canada has witnessed significant changes in the taxation landscape concerning vaping products. These changes, implemented at both federal and provincial levels, aim to regulate the vaping industry and curb youth consumption. This also helps in creating a unified tax framework, along with additional revenue, which will be used for public health investment.

In this article, we will see how the taxation system affects the cost. We will also focus on the specifics of these tax hikes, their implications, and the broader context surrounding them. Also, we will cover the new updates system in provinces of New Brunswick, Manitoba, Prince Edward Island, Alberta and Yukon.

Introduction of Federal Excise Duty on Vaping Products

The federal government introduced an excise duty on vaping products to align them with other tobacco products. This duty applies to vaping substances, whether they contain nicotine or not, and is calculated based on the volume of the substance.

Coordinated Vaping Duty System:

• Under this system, provinces can opt to implement an additional excise duty. Participating provinces share the revenue collected from this additional duty.
• This regulation formalises the entry of five new jurisdictions—New Brunswick, Manitoba, Prince Edward Island, Alberta, and Yukon—into the coordinated vaping Duty system, under the authority of the Excise Act, 2001.

How did this change the taxation?

Effective July 1, 2024, the federal excise duty rates increased by 12% as per Budget 2024. The updated rates are as follows:

• $1.12 per 2 ml or fraction thereof for the first 10ml of vaping substance in a product.
• $1.12 per 10ml or fraction thereof for quantities exceeding the initial 10ml.

These rates apply uniformly across all provinces and territories unless overridden by additional provincial duties.

Effect of Coordinated Vaping Duty System

In provinces participating in the Coordinated Vaping Duty System, the combined excise duty rates are:

• $2.24 per 2 ml or fraction thereof for the first 10 ml. ( $1.12+ $1.12).
• $2.24 per 10ml or fraction thereof for amounts exceeding 10 ml.( $1.12+ $1.12).

This effectively doubles the excise duty in these provinces compared to non-participating regions.

Under this, an additional provincial vaping duty (equal to the federal rate) is imposed.

• As of July 1, 2024, Ontario, Quebec, the Northwest Territories, and Nunavut implemented the additional provincial excise duty.
• From January 1, 2025, new provinces Alberta, Manitoba, New Brunswick, Prince Edward Island, and Yukon joined the system.  If you are staying here and find an increase in the cost of vapes, it is due the taxation. 

Spotlight on Alberta & Manitoba

As of January 1, 2025, Alberta’s & Manitoba’s vape tax will mirror the federal rates. This doubles the overall tax:

• $11.20 on a 10ml bottle. This was $5.6 earlier.
• $15.68 on a 30ml bottle. This was $7.84 earlier.
• $22.40 on a 60ml bottle. This was $11.20 earlier.

Comparison by volume 

Let us now compare the taxes with a table of the participatory provinces:

 

Criticisms and Concerns

1. Impact on users quitting smoking

It is a known fact that vaping is 95% less harmful than smoking. Experts have also proven successful shift from smoking to vaping has helped them to quit smoking. This new taxation may help them to think again.

2. Small retailers are more stressed.

With already existing competition and high operational costs due to high competition, the new tax system forces them to think more about their viability.

3. Potential Rise in Illicit Markets

There's apprehension that higher prices might drive consumers towards unregulated, black-market vaping products. Here, quality standards cannot be monitored, which may lead to unnecessary health risks and may prevent people from choosing to vape to quit smoking.

Conclusion

While the new taxation system is designed to deter youth usage, it also presents real challenges for adult consumers seeking harm reduction and for small businesses navigating increased costs. It is better to stock up from non-participatory provinces and be mindful of choosing products within the individual budget range. Always keep in note that vaping helps to quit smoking.

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