Taxing Vaping Products

E-cigarette taxes: A global snapshot

Earlier this month, we reported on taxes on cigarettes in Canada, and also on heat-not-burn tobacco sticks.* This post reviews Canadian tax measures on e-cigarettes (vaping products), and compares with those in other jurisdictions.

Vaping taxes in Canada:

Currently, the federal government does not impose taxes on e-cigarettes, other than the GST at the rate imposed on all consumer goods.

Three Canadian provinces have indicated that they intend to set tax rates for vaping products which are higher than for other goods. One of these taxes is already in place:

Vaping taxes in the United States:

23 U.S states apply taxes to electronic cigarette devices or the nicotine liquids that are used with them, as do a small number of municipalities. A number of approaches have been adopted. Some impose a tax on the value of the product (ad valorem tax), ranging from 15% (Illinois) to 95% (Minnesota and Washington DC). Others impose a tax on the amount of vaping liquid sold (specific tax), ranging from $0.05 per ml to $1.20 per ml (Chicago). Some jurisdictions blend both tax approaches. A table showing tax rates is available here. 

Vaping taxes in other countries:

More than two dozen countries impose taxes on e-cigarettes, although in some cases the tax rate is set low or even at zero. A list of countries, and the rates charged, is available here. 

Some innovative approaches are among these examples. Two countries (Croatia and Kazakhstan) apply a zero rate tax. This does not produce any revenues, but it does provide government with information on the market size and growth. South Korea applies four types of taxes on e-cigarette products, including a tax directed to support health promotion activities and to address the costs of disposing the waste from the products.


The rationale for e-cigarette taxes:

A year has passed since the World Bank published its review on E-cigarettes: Use and Taxation, in which it reviewed the evidence and noted the “challenging” environment for e-cigarette tax policy. Since this review, additional research has also become available:

Resources and additional reading:


* The information on heat-not-burn taxes has been corrected. British Columbia has delayed changing its tax on these products as a result of COVID-19. The legislation authorizing those changes was not passed by the legislature at the time the tax was due to come into effect (April 1). 

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Physicians for a Smoke-Free Canada
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