What You Need to Know About Federal and Provincial Taxes on VAPE
The Canadian federal government and some provincial governments have announced an increase in consumption taxes on VAPE products. In my opinion, this is a meaningless change that only increases the burden on law-abiding citizens, making life more difficult, while making life more comfortable and relaxed for "some people."
Federal Tax Increase
On May 14, 2024, the Canada Revenue Agency (CRA) announced a 12% tax increase on all VAPE products, effective July 1, 2024. This increase affects all products currently bearing a consumption tax stamp, including all VAPE liquids. The 12% increase will significantly impact the cost of VAPE products. Of course, this is just a small increase; the most terrifying part is the addition of provincial taxes on VAPE.
Provincial Tax Changes
In addition to the federal tax increase, the provincial governments of Ontario, Quebec, Nunavut, and the Northwest Territories have also announced the introduction of provincial consumption taxes. This new tax will match the federal consumption tax rate, effectively doubling your tax burden. Yes, doubling. It means that provincial governments will also collect the same amount of tax as the federal government, which feels like a child crying: "If you have it, I must have it too."
Detailed Explanation of the New Tax Rates
Here are some comparative data:
Current Tax Rate:
Purchasing a 20mL disposable VAPE: $6 federal consumption tax.
Starting from July 1, 2024:
Purchasing a 20mL disposable VAPE: $6.72 federal consumption tax + $6.72 provincial consumption tax = $13.44 VAPE consumption tax.
This tax increase means that the tax on VAPE products will double starting in July. The combined effect of federal and provincial taxes will have a significant impact on consumers.
Specific Tax Rate Comparison:
| Volume | Federal Tax (Current) | Federal Tax Increase (12%) | Provincial Tax Increase (12%) | Total Federal and Provincial Tax (per unit) |
|---|---|---|---|---|
| 0.1 - 2mL | $1 | $1.2 | $1.2 | $2.4 |
| 2.1 - 4mL | $2 | $2.24 | $2.24 | $4.48 |
| 4.1 - 6mL | $3 | $3.36 | $3.36 | $6.72 |
| 6.1 - 8mL | $4 | $4.48 | $4.48 | $8.96 |
| 8.1 - 10mL | $5 | $5.60 | $5.60 | $11.20 |
| 10.1 - 20mL | $6 | $6.72 | $6.72 | $13.44 |
| 20.1 - 30mL | $7 | $7.84 | $7.84 | $15.68 |
| 50.1 - 60mL | $10 | $11.20 | $11.20 | $22.40 |
These tax increases will significantly impact the overall cost of VAPE products.
Key Dates for Tax Rate Changes
July 1, 2024: Federal and Provincial Consumption Tax Increase Takes Effect
- Implication: Retailers can clear out old inventory, meaning consumers can still purchase VAPE products at the old tax rate.
- Impact: From this day onwards, the prices of VAPE products will significantly increase due to the tax rate hike.
September 1, 2024: New Consumption Tax Stamps Become Effective
- Implication: The new federal VAPE consumption tax of 12% takes effect.
- Requirement: All products must bear the new consumption tax stamp. Products without the stamp will no longer be allowed for sale.
September 30, 2024: Provincial-Specific Stamps Become Effective
- Implication: The provincial VAPE consumption tax of 12% takes effect, leading to a total price increase of 112%.
- Requirement: Products must bear the specified province's stamp and can only be sold within that province.
October 1, 2024: Royal Canadian Mounted Police (RCMP) Begin Enforcement
-
Implication: The RCMP will start strict enforcement. Non-compliance may result in severe penalties, including potential criminal charges.
