Province signs Coordinated Vaping Products Taxation Agreement

Minister of Finance Jill Burridge and Minister of Health and Wellness Mark McLane issued the following statement:

“The Government of Prince Edward Island is taking action to discourage vaping by signing a Coordinated Vaping Products Taxation Agreement with the Government of Canada.

In May 2022, legislation was introduced to signal the province’s intention to join the federal coordinated vaping taxation framework to address an increase in vaping and help reduce vaping-associated lung illnesses.

Prince Edward Island’s provincial duty will match the rates set by the Government of Canada. The federal tax rate announced for the coming year will be $1.12 per two millilitres, or a fraction thereof, for the first 10 millilitres of vaping substance in a product and $1.12 per 10 millilitres for volumes beyond that. Therefore, on PEI it will be a combined tax rate of $2.24 per two millilitres for the first 10 millilitres of vaping substance in a product and $2.24 per 10 millilitres for volumes beyond that. 

The agreement will be implemented January 1, 2025, and will apply to vaping substances. The tax will not be tied to whether the substance contains nicotine and will not apply to vaping devices or substances already subject to the cannabis excise duty regime.

The framework is designed in part to reduce vaping among youth and is comparable with what has been done in other jurisdictions to address this issue.

Signing this agreement will help reduce vaping-related illnesses and ensure the collected revenue comes back to Islanders.”

Media contacts:
Hillary Proctor
Department of Finance 
hproctor@gov.pe.ca

Morgan Martin
Department of Health and Wellness
mxmartin@gov.pe.ca 

Backgrounder: 

• The Government of Canada announced plans to create a federal taxation framework on vaping products in 2021 and provided details on the framework in their 2022 Budget.
• The Government of Prince Edward Island passed the Vaping Products Taxation Agreement Act on May 6, 2022, signaling its intention to enter into a vaping products taxation agreement with the Federal Government.
• Ten of the 13 provinces and territories have now joined the federal framework or announced the intention to do so, including Prince Edward Island.
• The Canada Revenue Agency will administer the excise duty on vaping products.
• In 2024–25, the Government of Prince Edward Island estimates the province will receive approximately $530,000 under the new coordinated taxation framework for the January-March 2025 quarter.
• The Government of Prince Edward Island estimates the province will receive approximately $2.4 million in federal transfers in respect of vaping excise duties in fiscal year 2025-2026 once the coordinated framework is fully implemented.