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What does Ontario’s fall economic statement mean for convenience and gas?

Convenience Industry Council of Canada calls it a missed opportunity to address contraband tobacco, vaping tax.
Ontario Parliament buildings

The Convenience Industry Council says that Ontario’s 2023 Ontario Economic Outlook and Fiscal Review is a set of ‘missed opportunities’ when it comes to supporting local businesses in the province.

Minister of Finance Peter Bethlenfalvy told the legislature when he tabled the fall economic statement that it continues the government’s responsible, targeted approach, providing the flexibility needed to help address ongoing economic uncertainty and build critical infrastructure in growing communities while laying a strong fiscal foundation for future generations.

There were also several initiatives that announced that have a direct impact on operators of c-stores and gas operators. One was the extension of the current gas and fuel tax rate cuts through to June 30, 2024. The government claims that this proposed change, along with the gas and fuel tax rate cuts already in place, would save households $260 on average since the cuts were first implemented in July 2022.

The other was the province's intention of entering into a coordinated vaping product taxation agreement with the federal government. In the economic statement, the Ontario government says that “the federal government has invited all provinces and territories to participate in that tax. Ontario is responding to this invitation to enable the federal government to levy an additional excise duty on vaping products intended for sale in Ontario at the same rate as the existing federal excise duty. Ontario would receive the revenue from the additional excise duty. Joining the agreement with the federal government aligns with existing policies in most other provinces and territories.”

Information on the implementation of the coordinated agreement will become available over the next several months.

In a statement, Anne Kothawala, president & CEO of the Convenience Industry Council of Canada (CICC),  says that the government missed opportunities to support local businesses and to fully address the impact contraband tobacco products are having on its members and the communities they operate in.

“Our retailers have been very vocal about the impacts that the sale of illegal, contraband tobacco have both on our stores and on communities across the province,” she says. “A recent report conducted by EY found that legal tobacco sales account for only 30% of total tobacco consumption in Ontario, and correspondingly, contraband tobacco consumption may be as high as 70%. Addressing contraband tobacco isn't just about promoting the Government’s tobacco control strategy, collecting taxes or supporting law-abiding businesses—it is about penalizing the organized crime groups which law enforcement officials have stated are fueling this trade, which is eight times more profitable than trafficking cocaine or fentanyl.”

Kothawals also expressed her disappointment in the coordinated vaping taxation proposal.

“The missed opportunity to act on contraband is compounded by the introduction of a new tax on vape products,” she continues. “Doubling the taxes on vape products disincentivizes adult tobacco users from making the switch to a less harmful alternative while increasing the demand for cheaper, illegal alternatives sold online, often without age verification. Given forty-eight cents ($0.48) of every dollar a convenience store makes goes to taxes, any new taxes on products sold in our stores threatens the viability of our businesses in Ontario.

“We encourage Ontario to show leadership and work with the federal government and their provincial counterparts to find solutions to address the growing inter-provincial contraband tobacco market and avoid the emergence of a new black market for vape products.”

That said, Ontario c-store operators remain optimistic about the future.

"We continue to work actively with the Government of Ontario to introduce beer and wine in stores, which have consistently been top-selling products in jurisdictions where they are available in the convenience channel," says Kothawala. "This opportunity for growth and innovation cannot come soon enough, both for our businesses and Ontarians."

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