Tobacco tax on e-cigarettes may cost Canadian businesses $100 million

The federal government has announced a $100-million tax on electronic cigarettes, with the hope of forcing businesses to sell them to customers.

The tax is aimed at preventing the spread of the so-called vapour-based nicotine replacement therapy, or V2K, that has caused a huge number of illnesses in young people and is known to be linked to serious health problems.

The government is proposing a 15 per cent tax on sales of e-cigs, with a 10 per cent excise on purchases of up to $50,000, which will be phased in over three years.

Industry representatives and government officials have argued the tax will be too small, especially considering that about $100 billion is being spent on V2k treatments.

In recent years, the federal government in Ottawa has been pushing for more restrictions on V 2k products, including requiring them to be labelled with warnings about potential health risks and to be subject to labelling requirements.

But the proposed tax will apply only to vapor-based products, with sales of other nicotine replacement therapies such as gum, patches and cigars also exempted.

The proposal is expected to be unveiled on Monday by Public Health Minister Rona Ambrose.

In a statement on Monday, Ambrose said the tax would be “a first step in our plan to tackle the growing health and safety risks of the vapour based nicotine replacement treatments.”

“V2K is not the only way to quit smoking,” Ambrose said.

“We are also committed to helping to reduce smoking-related illnesses and deaths, which is why the government is investing in tobacco cessation initiatives and supporting research on new approaches to smoking cessation.”

The government’s move comes after Prime Minister Justin Trudeau announced last month that the Liberals would introduce a 10-cent per pack levy on all tobacco products, a move opposed by some members of his own party.

Trudeau has said he wants to “clean up the tobacco industry.”