New Provincial Excise Tax on Vape Products

Table of Contents

1. Introduction
2. Overview of the New Excise Tax on Vape Products
   • What is the Excise Tax?
   • Effective Date
   • Products Affected
   • The Federal Excise Tax: Doubling the Burden on Consumers
3. Detailed Breakdown of the New Excise Tax Rates
   • Excise Tax Tiers Based on Product Size
   • Impact on Pricing: Combining Federal and Provincial Taxes
   • Changes in Product Availability
   • Tips for Consumers to Mitigate the Impact
4. Compliance Requirements for Retailers
   • Tax Registration
   • Reporting Obligations
   • Penalties for Non-Compliance
5. Conclusion and Recommendations
   • How Consumers and Retailers Can Stay Informed
   • Impact of the Tax
6. FAQs

On July 1, 2024, the Ontario government implemented a new excise tax on vape products containing nicotine – like disposables, pods and e-liquid bottles. This tax is tiered based on the size of the product. In addition to the provincial tax, consumers must also pay a federal excise tax on these products, effectively doubling the excise tax burden.

An excise tax is a levy imposed by the government on specific goods, in this case, nicotine-containing vape products.

The new provincial excise tax will be applied to all relevant products periodically between July 1, 2024 and September 30, 2024. As of October 1, 2024, all products sold must have the new provincial tax applied.

The tax applies exclusively to vape products containing nicotine, including disposables, e-liquid bottles and pre-filled vape pods sold within Ontario.

Consumers are already subject to a federal excise tax on nicotine-containing vape products. With the introduction of the provincial tax, consumers will now face approximately twice the amount in excise taxes, leading to significantly higher prices.

Excise Tax Tiers Based on Product Size
The new excise tax is tiered based on the volume of the nicotine-containing liquid in the product. Here’s a breakdown:

• 0.1 mL to 2 mL: $2.24 per mL
• 2.1 mL to 4 mL: $4.48 per product
• 4.1 mL to 6 mL: $6.72 per product
• 6.1 mL to 8 mL: $8.96 per product
• 8.1 mL to 10 mL: $11.20 per product
• 10.1 mL to 20 mL: $13.44 per product
• 20.1 mL to 30 mL: $15.68 per product
• 30.1 mL to 40 mL: $17.92 per product
• 40.1 mL to 50 mL: $20.16 per product
• 50.1 mL to 60 mL: $22.40 per product

When combined with the existing federal excise tax, the cost of nicotine-containing vape products will increase substantially. This cumulative tax impact will lead to significant price hikes, particularly for larger products, where both federal and provincial taxes are highest.

Retailers might reduce their offerings of larger products due to the higher cumulative taxes, potentially leading to a decrease in availability for consumers. Smaller products might become more prevalent as they carry a slightly lower tax burden. [good to mention provincial product availability will vary at 180]

• Buy in Bulk Before July 1, 2024: Consider purchasing larger quantities before the tax increase to save money.
• Explore Alternatives: Look into nicotine-free products or other cessation tools.
• Budget Accordingly: Prepare for higher costs if you plan to continue using nicotine-containing vape products.

Retailers selling nicotine-containing vape products must ensure they are registered for the new provincial excise tax and fully compliant with all regulatory requirements before the July 1, 2024, deadline.

Accurate record-keeping and regular reporting of sales are crucial to avoid penalties. Retailers must submit detailed reports on their sales of nicotine-containing vape products and ensure timely payment of the applicable taxes.

Non-compliance with the new tax regulations can result in significant fines, legal actions, or even the revocation of retail licenses. Retailers must be diligent in meeting all tax obligations to avoid these severe consequences.

Both consumers and retailers should stay updated on any changes or additional regulations. Regularly checking official government websites and consulting with tax professionals is advisable to ensure full compliance.

The introduction of the provincial excise tax, combined with the existing federal tax, will have a significant impact on the pricing and availability of nicotine-containing vape products. Consumers should be aware of these changes and consider alternative options or adjust their budgets accordingly.

Will this tax apply to all vape products?
No, it only applies to vape products containing nicotine – so things like open-pod devices and replacement coils will not be affected.

Are there any exemptions based on nicotine strength?
No, the tax is based on the volume of liquid, not nicotine strength.

How will this tax affect imported vape products?
Imported nicotine-containing vape products will be subject to the same tax rates as domestic products when sold in Ontario.