Canadian tobacco tax revenues in 2024.

On Tuesday December 17th the federal government tabled the Public Accounts the fiscal year 2023-2024 and posted the documents on its website. 

Buried in the second volume (on page 387 and 474) were details on revenues from Excise taxes, including on tobacco and vaping products. Similar information is provided (with differing levels of precision) in the Public Accounts published by each Canadian province and territory.

An updated fact-sheet showing tobacco tax revenues can be downloaded here, as can an updated table of tobacco tax rates in Canada and estimates of the average amount of tobacco taxes paid per smoker in different Canadian jurisdictions.   Data from these and other sources are described below. 

Tobacco tax revenues continue to fall for all but one governments - especially when inflation is taken into consideration.

Between April 1, 2023 and March 31, 2024 the federal government collected $2.6 billion in excise taxes on tobacco products, and $486 million from taxes on vaping products. (Revenues from GST on these products are not separately reported). 

Added to the $3.24 billion in tobacco taxes collected by provincial and territorial governments, the total government revenue from tobacco excise taxes between April 1 2023 and March 31 2024 was $5.845 billion. This is 9% lower than the previous year and 30% lower than in 2018 when combined federal-provincial-territorial tax revenues exceeded $8.3 billion. 

The drop in revenue is greater when inflation is taken into consideration. The real value of tobacco taxes to Canadian governments last year was even lower than in 1990-91, during the contraband crisis.

Only one province - Quebec - saw an increase in tobacco tax revenues last year. 

Quebec was the only province with higher tobacco tax revenues in 2023-24 than the previous year (its revenues increased by 12%). In February 2023 it imposed a $8 per carton tax increase and followed up with a $2 increase in each of March 2024 and January 2025.

The impact of the first of these increases is reflected in the 2023-24 public accounts. In 2023-24, Quebec collected $95 million more in tobacco taxes than the previous year - a 12% year-over-year increase.

All other provinces experienced declines from 18% to 6%:  Alberta and New Brunswick (18%); Manitoba (16%), Newfoundland (15%), Nova Scotia (14%), Prince Edward Island and Saskatchewan (12%), British Columbia (10%), Ontario (6%). 

Tobacco taxes are down because of a drop in tobacco sales

Although Health Canada has not provided data on tobacco sales for the years after 2021, it does release the information informally. 

Health Canada reports that the number of cigarettes reported sold by manufacturers in 2023 was 16.2 billion, 12% lower than in 2022 and  37% lower than in 2018, when 25.8 billion cigarettes were reported sold. 

Sales of other tobacco products have similarly decreased. (Vaping products are not considered tobacco products by Health Canada and sales information on these has not yet been released). 

 

The drop in sales and taxes can only be partly attributed to falling smoking rates.

Statistics Canada monitors smoking rates in Canada through the Canadian Community Health Survey. It reports that in 2023 there were 3.6 million Canadian smokers, down 6% from the 3.8 million reported in 2022 previous year and down 30% from the 2018 estimate of 4.9 million smokers.

In 2023, Statistics Canada transitioned from reporting for ages 12+ to reporting for ages 18+. For 2022 they provided estimates for both age groups and the change in age range reduced the estimated number of smokers by only 7,300.

The falling number of daily and occasional smokers only partly explains the reduction in sales and tax revenues. Both increased illicit trade and the substitution of some cigarettes by vaping products likely contribute to this trend. 

There were 6% fewer cigarettes (including roll-your own) sold per smoker in 2023 than in 2022, and 13% fewer than in 2018. 

Tax revenues collected per smoker are falling 

Canadian smokers pay an average of $2 per day to the federal government, and between $1.64 and $3.70 per day to Canadian provinces. Tax revenues on a per-smoker basis are falling at a steeper rate in some provinces than in others.