Ontario budget 2023: Cigarette, alcohol, cannabis tax money to fall, but gambling could rise

As Ontario residents continue to deal with soaring inflation in recent months, it along with other factors mean there is a forecast drop in spending on indulgences such as alcohol, cigarettes and cannabis.

However, one area where it appears Ontario residents might be willing to spend a bit more is gambling.

According to the 2023 Ontario budget documents tabled at Queen’s Park on Thursday, provincial government officials said they expect to receive $144.2 billion in taxes to fund its 2023-2024 $204.7 billion budget.

The bulk of the taxes the Ontario government collects comes from income, sales and corporate taxes, but there are a number of other ways revenue comes in.

Government officials bank on money coming in through a number of so-called “sin taxes.” However, according to their projections, revenue is set to fall in a number of areas.

ONTARIO BUDGET 2023: No help for struggling Ontarians, nothing for COVID in record-spending budget

For the fourth year in a row, money from taxing cigarettes is expected to fall. Officials said it’s expected the province will collect $840 million in taxes off cigarettes. That’s a noticeable drop from $1.1 billion in 2020-2021, which was attributed to the declining consumption of cigarettes and increased usage of vaping products.

Ontario Cannabis Store (OCS), the provincial government’s outlet for selling marijuana and cannabis-related products, is expected to see a noticeable drop in revenue this coming year. Documents showed OCS is forecast to receive $194 million, down from $225 million in 2022-2023. This drop in money comes after price margins were cut in an effort to make the products more competitive. There is good news on the cannabis revenue front as the province expects to receive an extra $13 million from the federal tax collected on all products sold.

When it comes to taxes on beer, wine and spirits, despite seeing a $2 million bump last year (up to $626 million from $624 million in 2021-2022), it’s expected there will be $9 million less in 2023-2024. However, even with that forecast drop, the LCBO is expected to $11 more ($2.45 billion) this coming year.

As for where Ontario residents might be spending more, look to Ontario Lottery and Gaming projections. In 2023-2024, it’s expected the agency will receive $2.75 billion in revenue from gambling — an increase of $190 million compared to last year. That jump in money is expected to come through increased usage of online gaming in the province.

Land transfer tax money expected to fall as gas tax revenue set to increase

For the third year in a row, the Ontario government expects to see a decline in the amount of land transfer tax revenue it collects despite a real estate boom. For 2023-2024, it’s expected there will be just $3.53 billion — a drop of $621 million compared to the previous year and $2.3 billion compared to 2021-2022.

Meanwhile, provincial officials are banking on an extra $191 million in gasoline tax revenue and $49 million in fuel tax revenue to flow into Ontario’s coffers in 2023-2024 (total projected revenue is $2.22 billion and $635 million, respectively).

This comes after the Ford government introduced a 5.7 cent gas tax cut until the end of 2023. Officials said they confirmed the temporary gas tax cut will end on Dec. 31, 2023.

They said increased demand and the loss of the gas tax cut as of Jan. 1 (until the end of the fiscal year on Mar. 31, 2024) are behind the increase.