Understanding the New Ontario Vape Tax

Starting July 1, 2024, Ontario introduced a new vape tax impacting consumers and businesses. This tax aims to regulate and generate revenue from the rapidly growing vaping market. It aligns with broader Canadian efforts to tax vaping products similarly to tobacco, which reflects a push to address the booming industry and its implications. 

With the vaping industry evolving, the Ontario vape tax seeks to balance public policy objectives with the economic aspects of vaping. This new measure highlights a trend in Canada where provinces are implementing specific taxes to manage the use and sale of vaping products. 

Today, let’s explore what this tax means for you and how it fits into Canada's larger picture of vaping regulation.

Ontario implemented a provincial vaping excise tax on July 1, 2024, that mirrors the rate of the Federal Excise Tax. According to Canada’s “Memorandum D18-3-2: Excise duty framework for vaping products,” this move aims to raise the cost of all e-liquids used in vaping products. On the same date, the federal government also increased its vaping tax by 12%, aligning with the new provincial tax.

Previously, federal tax rates were $1 per two millilitres for the first 10 millilitres of liquid and $1 for every additional 10 millilitres. With the new rates, a product taxed at $1 on June 30 will cost $1.12 on July 1. Ontario's combined federal and provincial tax will amount to $2.24 per two millilitres.

This cooperative approach to taxing vaping products reflects broader efforts to manage and regulate the industry. The 2024 federal budget projects an increase in revenue of $310 million over the next five years from these higher tax rates. Businesses must comply with the new rates or face significant penalties. 

Prices have changed on July 1st, 2024. Products stamped with the old tax rates can be sold until September 30, 2024. So, there’s a window to purchase products at the lower tax rate before new stock with updated taxes arrives.

Keep an eye out for promotions and clearance events at local vape shops or online retailers. Many may offer discounts or bundle deals to ease the impact of the new taxes. WAKA offers free shipping on orders over CA$79 and a special "Buy 5 Get 10" promotion on selected products (soMatch MB6000, PA600, and SMASH) through September 30th.

For frequent users, buying larger quantities of e-liquid or devices in advance might offer savings. Bulk purchases often come with a lower per-unit price, which can help offset the tax increase's impact.

Prices for vape products can vary between retailers. Compare in-store and online prices to find the best deals and take advantage of special offers.

Opt for generic or store-brand e-liquids and devices, which are usually less expensive than name brands. These vape products often offer similar quality at a lower cost.

If feasible, reduce the frequency of purchases or consumption. Switching to lower nicotine concentrations or using less frequently can decrease overall spending on vape products.

Navigating the new tax landscape on vape products requires strategic adjustments for consumers and retailers. Here are some tips on adapting to the changes: 

Switching to refillable vape devices can be more cost-effective than disposable products, as they often have a lower cost per use. You can consider alternative nicotine products, such as nicotine pouches, which provide a more budget-friendly option.

With the ongoing price increases, review and adjust your budget to accommodate the higher costs of vape products. Allocate funds for this change and prioritize your purchases to avoid financial strain. Keep track of your spending on vape products to ensure they align with your adjusted budget.

Note that the federal government has given manufacturers a 90-day window to sell products produced or imported before the new tax takes effect. This means prices might increase slowly but will eventually reflect the new tax rates once current stock is depleted.

To manage the impact of new taxes, implement gradual price increases rather than sudden hikes, which can drive customers away. Clearly explain the reasons for these adjustments to your customers, as transparency helps build trust and understanding.

Provide excellent customer service to address concerns about the new tax and its impact on prices. Offering personalized recommendations and cost-effective alternatives can enhance satisfaction and help customers manage their expenses effectively.

Enhance or introduce loyalty programs to reward repeat customers with points, discounts, or exclusive offers, encouraging continued patronage despite price increases.

Manage inventory to balance products priced under the old tax regime with those reflecting new taxes, preventing overstocking or stockouts. Additionally, discounts on existing stock should be offered before the new tax takes effect to clear inventory and attract customers.

Consumers and retailers must adapt strategically as the new Ontario vape tax becomes effective. Consumers should take advantage of pre-tax purchases, explore promotions, and consider alternative products to manage increased costs. 

Retailers must adjust pricing gradually, maintain transparency, and optimize inventory to stay competitive. Staying updated and proactive will help you navigate these changes effectively. For great deals and savings on vaping products, check out WAKA's disposable vape device offers and take advantage of the best deals!