A Tax Model of the Vaping Sector with Estimates for Canada

43 Pages Posted: 2 Aug 2023

See all articles by Ian Irvine

Ian Irvine

Concordia University Montreal

Samuel Hampsher-Monk

BOTEC Analysis

Date Written: August 1, 2023


This paper develops a computable disaggregated tax model of Canada's vaping sector that confronts the particular challenges associated with a market where very large tax changes are imposed or contemplated and where data are incomplete. A theoretical contribution is to determine appropriate elasticities in the face of disagreement on values from the econometric literature. Applying the model to Canada's federal excise tax imposed in 2022, we estimate a marginal tax haul of approximately 15\% of market expenditures. The total tax take is 30\%. We compute total and marginal deadweight losses and question whether current tax levels are appropriate for reduced-risk products.

Keywords: Vaping, e-cigarettes, taxation, Canada

JEL Classification: H22, I18

Suggested Citation

Irvine, Ian and Hampsher-Monk, Samuel, A Tax Model of the Vaping Sector with Estimates for Canada (August 1, 2023). Available at SSRN: https://ssrn.com/abstract=4528317 or http://dx.doi.org/10.2139/ssrn.4528317

Ian Irvine (Contact Author)

Concordia University Montreal ( email )

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Samuel Hampsher-Monk

BOTEC Analysis ( email )

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