The Canadian Vaping Association cautions that Quebec’s proposed vaping excise tax will harm public health objectives

BEAMSVILLE, Ontario, Dec. 14, 2022 (GLOBE NEWSWIRE) — A tobacco-free Quebec has been our collective goal. Quebec’s smoking population continues to decline, reducing Quebecer’s risk of serious illnesses caused by combustible tobacco. The Canadian Vaping Association (CVA) has opposed the taxation of vaping products nationally due to the unintended consequences and increased risk to youth. Vaping is an effective regulated product, with quit rates that are double that of cessation products such as patches and gum. This innovative product has contributed to the growth of Quebec’s economy. Tobacco control require viable solutions such as vaping to help adult smokers fight their addiction cigarettes. Increased costs for vaping products in line with cigarettes will not serve the nation’s goal of becoming free of combustible tobacco.

Vaping has the potential to help nearly 1.3 million Quebecers who smoke by offering them a less harmful alternative to combustible tobacco. As a regulated consumer product at both the provincial and federal levels, youth are prohibited from entering the stores, identification is required for those under 25, and the packaging contains a warning about nicotine addiction as well as restrictions on the words and graphics that can be used. Therefore, no confectionery, soft drinks, or characters are allowed on the products. In Quebec, vape products come from reliable sources and are confined to rules that often surpass those of other legal substances. Canada’s strong regulation, put in place to protect youth, will be undone by the vast illicit market that will emerge from a punitive tax regime.

Throughout the implementation of the federal excise tax, the Canadian Vaping Association has cautioned the federal government that heavy handed taxation would result in increased smoking, a vast illicit market and weakened protections for youth. With Quebec announcing its intentions to join the excise regime, the tax rate paid by Quebecers will nearly double. Some categories of vaping products will become more expensive than traditional cigarettes. Vaping taxation was introduced as a tool to meet health objectives, particularly to discourage youth usage. The introduction of provincial excise levies on a harm reduction product is counterproductive to Canada’s Tobacco Control Strategy which seeks to help Canadians who smoke to quit or reduce the harms of their addiction to nicotine.

In Health Canada’s recent review of the Tobacco and Vaping Products Act (TVPA), the agency states “More sustained public education and awareness efforts could be considered to better inform youth and non-users of tobacco products about the health hazards of vaping. Likewise, the majority of adults who currently smoke is not aware that vaping products are less harmful than using tobacco products. Work could be undertaken to communicate the relative risk of smoking, in comparison to vaping, to people who smoke.” Sin taxes on vaping give the impression that vaping is equally harmful to smoking and serves no public health benefit. This indirect messaging will discourage smokers from switching and reinforce misperceptions of vaping’s risk profile.

Additionally, without coordination across all provinces, the likely result of Quebec’s levy will be the closure of its local small vape businesses, with the demand for vape products being met by businesses in other provinces and the illicit market. “The imposition of punitive rates by individual provinces on top of a federal levy may hit a Laffer peak in local revenues. Such taxes will redirect purchases from in‐province sources to on‐line out‐of‐province suppliers and the illegal market,” said Professor Ian Irvine on the topic of Canadian excise tax.

The CVA has proposed many more practical and less harmful solutions to protect youth. Education, prevention, and enforcement are among the best tools to protect youth from inducements to nicotine. The illicit market for vape products has grown exponentially following recent regulatory changes. Enforcement of this market requires greater resources. As it stands, the prevalence of illicit products provides easy access to youth as individuals breaking the law do not check ID. Steep taxes on vaping will accelerate the growth of this market and undo years of regulation intended to protect youth.

Nova Scotia was the first province to introduce both vape product taxation and a flavour ban. Combined, these measures have devastated the vaping industry in Nova Scotia and cigarette sales have increased by 5.6%. The action of banning flavors has ensured the presence of the black market and increased interprovincial sales. Professor Irvine of Concordia explains that “e-cigarettes and combustible cigarettes are substitutes, so it is important that taxes on the lower risk product be kept low to encourage smokers to switch to the lower risk product.” It is imperative that the Government of Quebec consider the potential return to combustible tobacco and the increased enforcement needs following excise. “The taxation of tobacco and nicotine is a shared jurisdiction, and if provinces decide to match the federal levy the contraction in the industry would be very large. The best estimate would be additional tax revenue of $396m and a loss in vendor revenue of $609m,” he estimated. This would be devastating to Quebec’s small vape businesses and public health.

“We have seen the impacts of flavour bans and taxation around the world. Each time the result is the same, increased smoking, increased crime, and fewer jobs. The combined federal and provincial taxation form an indirect form of prohibition in the sense that the price of vape products becomes prohibitively expensive for the average person. Smoking remains the leading cause of death and illness, and Quebec must ensure that its policy is in line with public health objectives. There are modern options for adult smokers, and we owe them as much support as we dedicate to youth,” said Darryl Tempest, Government Relations Counsel to the CVA Board, “We are calling on the Federal Government to conduct a study on the impacts of Nova Scotia’s policies on youth vaping and adult cessation. We need this data to allow Canadians and regulators to understand the full impact of these policies. Studies of three U.S. states with similar policies found that flavour bans and taxation lead to increased smoking rates both within the adult and youth demographics.”

Contact – Darryl Tempest, Government Relations Counsel to the CVA Board, [email protected], 647-274-1867