Ontario plans to double the tax on vaping items. Yes, some vapers may quit. But others will go back to smoking
If you are a smoker in Ontario trying to quit — and if you are a smoker, you should be trying to quit — making the switch to lower-risk vaping products is about to get much more expensive. In his fall economic statement earlier this month, Ontario Finance Minister Peter Bethlenfalvy announced the province would be partnering with the federal government to double the tax burden on vape products.
Right now a 30mL bottle of vape liquid faces a federal tax of $7. Under the new policy, that will double to $14. Those who prefer pre-filled pods will see the tax rise from $1 per unit to $2. In the partnership with Ottawa, the province gets to keep half of the tax revenue generated from the scheme.
Ontario has justified the move as an attempt to curb the prevalence of vaping, especially among young people. That’s certainly an important goal, but minors should never have access to vape products and adults who sell to them or help them get around that rule should be prosecuted.
But many adults are using vape products to quit smoking, which means making vaping more expensive could be a serious net negative for public health. Vaping with the goal of quitting smoking is a huge step in the right direction for people’s health. Public Health England estimates that accessing one’s nicotine through vaping brings a 95 per cent reduction in health risk compared to getting it from tobacco. Most of the danger of smoking come from inhaling combusted materials. Vaping all but eliminates that danger, which is why making it more expensive is a big health policy mistake.
A 2017 study from researchers at the University of California found, using U.S. census data, that vaping had indeed contributed to a significant increase in smoking cessation. Moreover, vaping outperforms other smoking cessation methods. The U.K. National Health Service website spells out that “You’re roughly twice as likely to quit smoking if you use a nicotine vape compared with other nicotine replacement products, like patches or gum.”
So why would Ontario want to make vape products more expensive for smokers, and what will be the effect of these tax hikes?
Vape prices are clearly going to rise. In a 2020 working paper published by the National Bureau of Economic Research, six U.S. economists analyzed sales data from 35,000 U.S. retailers and found that for every one-dollar increase in taxation vape prices rose between $0.91 and $1.16. The tax is almost entirely passed on to consumers.
How will vapers respond to these price hikes? Many will go back to smoking. The same NBER study showed that a $1-increase in vape taxes increased cigarette sales by a whopping 10 per cent.
So the tax hike will make what has been shown to be an effective cessation tool more expensive, which will likely push former smokers back to smoking — even as our federal government claims to be steadfast in its commitment to have fewer than five per cent of Canadians smoke by 2035.
In 2007, 31 per cent of Canadians identified as regular smokers. By 2020, that number was down to just 11 per cent. That’s certainly good news. We all know the devastating impact smoking can have. Approximately 48,000 Canadians still die each year from tobacco-related illnesses. But while that decline in smoking is clearly something to celebrate, making it harder for those who are still smoking to quit isn’t.
If we’re to have any shot at achieving the smoke-free 2035 goal, we should see vaping as a tool that will help us get there. Heavy-handed tax hikes create more smokers, and no one wins if that happens.
Originally published here