Updated data sheets on tobacco taxes and cigarette consumption in Canada

This post provides links to updated data sheets on tobacco tax revenues, industry earnings, cigarette sales and smoking rates. Some highlights are provided below.  

Appreciation goes to those working in the government agencies which have collected this information and made it available.

• Taxes on cigarettes in Canadian jurisdictions
• Tax revenues from tobacco sales, 1990 to 2022
• Manufacturers’ and federal tax revenues from cigarette sales.
• Tobacco tax revenues per smoker, Canada 2011 to 2022
• Provincial cigarette and fine-cut sales per smoker

 

1) The average Canadian cigarette smoker provided governments with $1,862 in tobacco-specific taxes in 2022

Almost all (90%) of the federal tobacco tax is collected on manufactured cigarettes, with taxes on cigars and loose tobacco totalling about 340 million. Provincial governments do not provide detail on revenues from different types of tobacco. 

These revenues represents an average of $1,685 in tobacco taxes collected from each of Canada’s 3.8 million cigarette smokers – with the federal government reporting $779 in tobacco tax revenue per smoker and provincial governments reporting between $616 and $1,311 per smoker during the year. 

Almost two-thirds (63%) of Canada’s smokers live in Quebec and Ontario, where where tobacco taxes are lowest.

Related data sheets: 

• Taxes on cigarettes in Canadian jurisdictions
• Tobacco tax revenues per smoker, Canada 2011 to 2022

2) Total tobacco tax revenues in Canada fell by 10% year over  year.

Overall, tobacco tax revenues across Canada fell by 10% in 2022-2023 compared with the previous fiscal year. 

Federal revenues from tobacco excise taxes fell by $217 million, from $3.18 billion to $2.96 billion (-7%). All of the provinces experienced a decline in tobacco tax revenues, from a provincial total of $3.93 billion in 2021-22 to $3.4 billion in 2022-2023. The drop was greatest in British Columbia (-25%), Newfoundland (-23%), Alberta (-17%), New Brunswick (-16%) and Nova Scotia (-15%) and Manitoba (-14%). It was smallest in Prince Edward Island (-0.2%), Ontario (-7%), Saskatchewan (-9%) and Quebec.

Total provincial tobacco tax receipts have dropped by one-quarter (24%) over the past two years, and by almost one-third (31%) once inflation has been taken into account.

Related data sheets: 

• Tax revenues from tobacco sales, 1990 to 2022

3) Industry revenues from cigarette sales are falling -- but are keeping up with inflation better than federal tobacco tax revenues.

Tobacco manufacturers are required to report to Health Canada the number cigarettes they sell, and also to report on their wholesale revenues (including federal taxes) from these sales. This data is periodically released by Health Canada in an aggregate form for each calendar year.

From this data a comparison with the revenues to manufacturers and the federal government from cigarette sales during the calendar year can be made. Before 2014, government and industry generated equivalent gross revenues from cigarette sales and taxes. Since 2014, industry revenue has been significantly higher than federal tax revenues from cigarette sales.

Related data sheets: 

• Manufacturers’ and federal tax revenues from cigarette sales.

4) Tobacco companies report selling 13.4 cigarettes per day per smoker.

Across Canada, the the number of cigarettes (and fine-cut equivalents) reported sold per smoker ranges from fewer than 10 per day in Newfoundland to 15 per day in Quebec, with a national average of 13.4 per day (4,838 per year). 

The number of cigarettes sold per smoker has fallen slightly since 2018. Possible reasons for this are explained in the next section. 

Related data sheets:

• Provincial cigarette and fine-cut sales per smoker

5) Smoking surveys and sales statistics tell different stories about reductions in tobacco use.

Between 2021 and 2022, estimates of the number of smokers in Canada fell by 1% (from 3.830 million to 3.804 million) and the number of cigarettes reported sold fell by 12% (from 20.9 billion to 18.4 billion). 

This is not the first time in the past decade that there has been a large difference in the year-over-year estimates of smoking (from Statistics Canada's Canadian Community Health Survey) and reported cigarette salse (from industry reports to Health Canada). A similar difference was found in 2020, when smoking rates fell much more deeply than did cigarette sales (-11% vs -3%). 

Such discrepancies could result from a number of factors, including:

▪ changing patterns of nicotine use (e.g. smokers shifting to or away from e-cigarettes)
▪ normal variance in the estimates of smoking behaviours 

▪ changes to survey methods which lower or increase prevalence estimates (as happened in 2020) 

▪ increases or decreases in unreported illicit cigarette sales  
▪ incomplete reporting by manufacturers

In 2022, tobacco companies commented on an unexpectedly large reduction in reported sales in 2022, particularly in the western provinces. In a submission to the Ontario Court, Imperial Tobacco reported: "A review of the cash flow actuals vs. forecast for the period from February 28, 2022 until August 29, 2022 shows a decline of $212 M in collections (equivalent to -8.3%). This is driven by a lower sales volume than expected for this period. Although the volume decline is affecting all the regions, it is significantly more severe in the Western provinces. ITCAN’s belief is that this steep decline is affecting not only ITCAN’s business but the entire legitimate cigarettes category. ITCAN’s observation is that a significant and unexpected increase in demand for illicit products is the main cause of the decline."

Sales data reported to Health Canada confirm that legal tobacco sales fell by a greater percentage in British Columbia in 2022 than the reduction in the number of smokers would account for.

Related data sheets:

• Provincial cigarette and fine-cut sales per smoker

Statistics Canada sheds light on income disparity in vaping. (There isn't much)

In recent weeks, Statistics Canada updated its public data tables to include information on the difference in health behaviours in 2022 as related to income and education.  

Significantly, this is the first government data release which provides income and education-related information on the use of electronic nicotine products. 

The Canadian Community Health Survey, from which these tables are constructed, did not include questions on vaping until the 2022 survey year. Of the 9 questions asked about electronic cigarettes and vaping, information on two has been released: whether people have tried using an e-cigarette and whether they have used one in the 30 days prior to responding to the survey.

These survey results show that the income gradient associated with smoking is not as dramatic with e-cigarettes. Smoking is twice as frequent among the poorest Canadians as the richest, but there is only one (statistically significant) percentage point difference for vaping.

With respect to education, Canadians with post-secondary certificates are much less likely to smoke than are those without (9.6% vs. 18.4% for those with only high school and 21.9% for those who never graduated from high school). 

The pattern is does not hold for vaping: those with post-secondary certificates are more likely to use e-cigarettes than are those who do not have high school. Statistics Canada does not provide an immediate way to compare income and education-related estimates by age or by sex, although provincial breakdowns are provided.

Age- and sex-disaggregated data is available on a different table provided by the agency, although this does not provide information on other socio-demographic factors.  As shown below, the age profile of cigarette and e-cigarette use is very different. 

There are roughly twice as many cigarette smokers as e-cigarette users in Canada (3.8 million vs. 1.9 million), but not so for younger Canadians. Smoking among teenagers is too small to be picked up by this survey - but vaping is not. Among Canadians under 35, for every 10 smokers there are 14 vapers. Among Canadians over 35, for every 10 smokers there are 2 vapers.

For the coming year, the CCHS will ask 8 questions about e-cigarette use and will also ask a sub-sample about their use of nicotine pouches. (Rapid Response Tobacco Alternative Products)   This will the first time the use of pouches will be surveyed by the federal government. 

Statistics Canada Tables cited above

• Table 13-10-0097-01 Health characteristics, annual estimates, by household income quintile and highest level of education
• Table 13-10-0096-01 Health characteristics, annual estimates

How European governments are regulating nicotine pouches

Last week's post looked at the options available to Canada's federal health minister to address the recent marketing of Zonnic nicotine pouches. (TLDR?: They should be sold as prescription medications until Canada's tobacco laws include these new products).

This post reports on a variety of recent actions taken to regulate nicotine pouches in European countries. Of these, the experience in Finland may have the greatest relevance for Canada. There, as here, pouches were only available as licensed  medicines. Recognizing that this therapeutic designation was not consistent with how the pouches were being sold or used it decided to regulate them as part of the tobacco and vaping product market.

Oral tobacco products, like traditional chewing tobacco or snus, are banned in all but one EU countries by a European Union directive. Nicotine pouches, however, do not meet the definition of tobacco products under EU law, and so this prohibition does not apply to them. 

The EU is in the process of revising its rules for tobacco, and there are rumours that a ban on non-tobacco nicotine pouches are under consideration. In the meantime, in the absence of a region-wide directive, countries are left on their own to decide how to control this market.  

Within the European region, oral tobacco use (snus) is established and commonplace in the Scandinavian countries. Tobacco-based snus is legal in Sweden because it received an exemption from the EU ban on oral tobacco when it joined the EU and is legal in Norway, which is not a member of the European Union. Although sales of oral tobacco are banned in Finland and Denmark, they are easily imported into these countries and usage is increasing. 

Non-tobacco nicotine pouches were first marketed in 2014 in Sweden. As shown in the table provided by Tobacco Tactics, sales of these products have increased substantially in the past few years, especially in the United States and Western Europe.

Sales of nicotine pouches in million units, by region, 2019-2022.

(Source Euromonitor International)

From Tobacco Tactics' review of Nicotine Pouches

The regulatory response in European countries to nicotine pouches

Belgium

Belgium is the first European country to ban nicotine pouches. The ban came into force at the retail level in October 2023, seven months after it was proclaimed in a Royal Decree (Arrêté royal relatif à l'interdiction de mise sur le marché de certains produits similaires, March 2023). 

The stated objective of the order was "to prevent known and potential harmful health effects from the use of these new products, to discourage their use by young people and to avoid possible negative consequences on efforts to combat the smoking."

British American Tobacco launched a legal challenge to the regulation.

Czechia 

In May 2023, Czechia passed a decree imposing requirements on the manufacture of nicotine pouches. These included required elements for labelling,  restrictions on the additives that could be put in them, minimum packaging of 20 pouches, maximum nicotine of 12 mg per pouch, restrictions on promotional packaging. English and French-language versions of the regulation and background information can be accessed on the EU TRIS site. 

Denmark  

In Denmark, tobacco-free nicotine pouches became regulated under the Tobacco Act as a tobacco surrogate/substitute in 2020. The rules which apply to them include health warnings, restrictions on sales to young people and other labelling and packaging restrictions.

Estonia

Estonia included smokeless tobacco products during its 2020 revisions to its Tobacco Act.  These extend some of the restrictions on combustible products to nicotine pouches, and provide for a specific health warning. ("This tobacco product damages your health and is addictive").

Finland 

The Finnish government is currently transferring the regulation of nicotine pouches from medicinal products to tobacco products in an attempt to control the illicit market. Legislation to accomplish this is expected to be presented to the Finnish legislature within a few weeks.

In preparation for this change, the Finnish ministry of health prepared both an explanatory Draft Text with the changes, as well as an Impact Assessment . These were provided to the European Commission TRIS portal as a routine part of the EU's management of technical barriers to trade. 

The de-medicalization of pouches is being managed in two steps. A stop-gap measure was put in place in June 2023 with an order under the Finnish Chemicals Act and increased enforcement activity. The longer-term approach involves amendments to their tobacco law -- scheduled for introduction in February. These would regulate nicotine pouches largely as tobacco and vaping liquids currently are and would establish a maximum nicotine limit of 20 mg and restrictions on flavourings. (The exact flavours to be restricted would be established by regulation).

Germany

The report noted that German state authorities currently regulate nicotine pouches as a novel food, rendering the sale of pouches illegal in some states, but not illegal to use by those who privately import them. Germany's national tobacco law (Tabakerzeugnisgesetz) does not include specific rules for nicotine pouches.

In 2022, the German Federal Institute for Risk Assessment (Bundesinstitut für Risikobewertung) provided its Health risk assessment of nicotine pouches. Although the agency concluded that pouches were less harmful than cigarette smoking, it noted that they can expose users to tobacco-specific nitrosamines (TSNAs).  

Their assessment found that nicotine pouches could delivery much more nicotine than smoking a cigarette:  "at least half of the nicotine in the pouch can be absorbed. Relevant nicotine blood levels were achieved, i.e. levels were within a range that is comparable with conventional cigarettes. Use of high-dose products led to significantly higher nicotine levels than cigarette consumption."

Hungary

Outside of Scandinavia, Hungary is a country with higher involvement with nicotine pouches. British American Tobacco opened a large nicotine pouch manufacturing plan in Hungary in 2020. Over the past year, however, the government has raised concerns about the  unregulated market and this summer proposed restrictions on nicotine levels (17 mg per pouch) and other limitations on "nicotine containing smoking substitutes" similar to those in place for tobacco products.   

Iceland

Iceland revised its law in 2022 to address nicotine pouches. Restrictions include a ban on advertising, an age limit of 18 years, and prohibitions on using in places where children and young people are present. Although the law permits a ban on flavourings, none are yet in place. Maximum nicotine levels are 20 mg per pouch.

Latvia 

Latvia's legislature, the Saeima, is finalizing its review of amendments to its tobacco law. Among the proposed changes are restrictions on tobacco substitutes, a category which includes nicotine pouches. As described in an impact assessment submitted to the EU, these measures include "specific composition requirements for tobacco substitute products to be placed on the Latvian market, including the maximum admissible nicotine concentration of 4 mg per g, restrictions on additives, including a restriction on the added flavourings, with the exception of flavours which produce the odour or taste of tobacco. The draft law also foresees a prohibition of sales to minors, including sales by means of distance communication, including distance contracts, restrictions on advertising and sponsorship, including restrictions on visible placement of tobacco products in retail stores. The draft law also requires placement of a mandatory health warnings on tobacco substitute products. "

Lithuania

Lithuania is reported to be responding to an increase in illegal sales of nicotine pouches by developing a law to regulate their sale.

Netherlands

In November 2021, the Netherlands health minister informed the legislature that he would propose legislation to address nicotine pouches and other new nicotine products, but would use food regulations temporarily to block the sale of pouches. The following spring, a declaration that nicotine pouches containing more th an 0.035 mg of nicotine were unsafe and therefore not legal for sale was formally published. This maximum nicotine level was calculated by the government's public health agencies by applying the food standard Acute Reference Dose for nicotine as set by the European Food Safety Authority. 

In September 2023, the Netherlands legislature was provided with draft amendments to the tobacco law which would expand the law to include non-tobacco nicotine products (and impose similar restrictions to these products as were applied to tobacco products) and which would ban nicotine pouches.

Following an election in November 2023, there was a change of government in the Netherlands. The new government has not formally been set, and so the impact of this change on tobacco policy is unknown.

Norway

Norway is not a member of the European Union, and oral tobacco (snus) is commonly used by adults and young people. 

In Norway, Zyn contains a small
amount of tobacco 

Norwegian law, similar to Canada's, bans the marketing of nicotine pouches, other than those specifically authorized as a medical device. To skirt this regulation, nicotine pouches in Norway are sold with small amounts of tobacco in them. As tobacco products, they must be sold in plain packaging. 

For example, the PMI product Zyn is sold in Norway with some tobacco included. ("The all-white appearance of the snus is made possible thanks to a composition of plant fiber and a small proportion of light tobacco. The mixture and the portion provide a soft fit and a long-lasting taste experience." translation from www.snuslageret.no/zyn/)

Sweden

In 2022, Sweden responded to a court ruling  which required it to remove e-cigarettes from medicinal regulation. It created a specific law for tobacco-free nicotine products (Act 2022:1257). The law will be fully in force in 2024. The regulations include health warnings, labelling requirements, reporting obligations, and premarket notification. Sweden's permissive approach to oral nicotine products is reflected in its expressions of concern about other EU countries banning them.

United Kingdom

The United Kingdom is no longer a member of the EU, but has to date maintained EU-consistent tobacco laws. 

In the UK and Scotland, nicotine pouches are not regulated under the same laws that cover tobacco and vaping products, but under consumer product safety rules. As a result, restrictions on advertising, labelling and minimum age do not apply. Despite concerns raised about the marketing of these products, and a call for government action, the UK government did not include reference to this in its recent announcements regarding tobacco law reforms.