Canada’s Proposed Budget Includes Increased Tobacco Taxes

Canada is rarely thought of as a place to buy premium cigars affordably, and there is a good chance that the United States’ northern neighbor will become even less so in the near future.

As Canadian lawmakers work through the budget process for the coming year, an increase to the tax levied on tobacco products, including cigars, has come into the discussion as one of a number of sectors facing increased excise duty rates.

Currently, cigars are taxed at a rate of $27.30379 per 1,000 cigars plus the greater of $0.09814 per cigar and 88 per cent of the sale price or duty-paid value, a rate that went into effect on April 1, 2021. Under the current proposal for 2022, the rate would go up to $31.65673 per 1,000 cigars plus the greater of $0.11379 per cigar and 88 per cent of the sale price or duty-paid value.

Other tobacco products would also see an increase, as the excise duty rate on cigarettes would go up by $4 per carton, and manufactured tobacco would go up by $1.25 per 50 grams. The budget proposal also calls for a new tax to be implemented on vaping products.

The government is seeking to close a budget deficit that has been exacerbated by the COVID-19 pandemic. In addition to the increase in tobacco taxes, the budget proposal calls for increases in the taxes on luxury vehicles, streaming services that originate outside of the country such as Netflix and Amazon Prime Video, and apps for smartphones and computers.