Canada proposes federal tobacco industry levy to recover tobacco control costs

According to this regulation[1], the tobacco industry will have to reimburse the annual costs related to the federal tobacco control strategy, which amount to 66 million Canadian dollars each year. A measure welcomed by all public health stakeholders who have been calling for the imposition of a cost recovery fee on the tobacco industry for several years in Canada.

The proposed regulations, which were tabled on August 1, are subject to public consultation, which will close on October 10, 2024. The Canadian government has indicated that the cost recovery levy will be implemented in two phases. The first phase will seek to recover from tobacco manufacturers the costs (approximately CAD 50 million) associated with the tobacco component of the strategy, and the second phase will seek to recover the costs associated with the vaping product component.

A measure based on the same principle as that of the polluter pays

This regulation follows the royal assent received by the Bill C-59, (Economic Statement Implementation Act), last June. This bill makes amendments to the current Tobacco and Vaping Products Act (TVA), in particular by allowing tobacco manufacturers to be required to reimburse the costs of implementing the TVA, on the same principle as the polluter pays principle. This annual fee would include a variable annual amount based on the share of the domestic market occupied by each manufacturer's tobacco products.

The government intends to minimize costs to taxpayers and reimburse its expenses for the implementation of tobacco control measures such as compliance and enforcement activities related to tobacco products and the implementation of additional rules and guidelines, including the development and implementation of regulations. The Canadian government has allocated $331.6 million over five years, starting in 2018–19, and $66.2 million each year since for Canada's Tobacco Control Strategy.

According to the Canadian Cancer Society, tobacco manufacturers have increased their prices by an average of $31.80 per carton (200 cigarettes) between 2014 and 2023, which translates into additional revenues of approximately $2 billion per year.

A measure already in place for other sectors in Canada

Canada already charges fees and royalties to reimburse some of the costs associated with regulating pesticides and medical cannabis products.

In the United States, a similar fee was introduced in 2009 to reimburse the US Food and Drug Administration (FDA) for the annual costs of tobacco control measures, which now amount to US$712 million.

Canada has nearly 4 million smokers (121,300 of the population aged 12 and over), resulting in the premature deaths of 46,000 people each year.

©Generation Without Tobacco

AE

[1] Consultation paper: Proposed framework for the recovery of tobacco-related costs, Government of Canada, published August 1, 2024, accessed August 13, 2024