Smokers may catch a break as NZ First opposes last of 10 'automatic' tax hikes

Friday, 29 November 2019

Last year, Māori spent $1 billion on tobacco - Dr Marewa Glover questioned in June why the Government kept raising taxes.

New Zealand First says it will oppose increasing the tax on tobacco.

Tobacco prices have been scheduled to go up by just over 11 per cent on January 1 as the last of a series of annual price rises originally planned in 2010 was implemented.

Annual tax rises were set then at 10 per cent plus the rate of inflation.

But NZ First leader Winston Peters said it could not support the final tax rise because studies showed that the automatic tobacco excise increases were having less effect on reducing smoking rates, particularly amongst Māori and Pasifika, and had reached the limits of their effectiveness.

January tax hike would push average cost of packet of 25 cigarettes above $40.

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'Customs interceptions of smuggled cigarettes at the border have increased by 352 per cent between 2015 and August 2019. Clearly the price point has reached such a level that organised crime groups see economic opportunity.'

The price of cigarettes was also putting dairy owners at risk from violent burglaries, Peters said.

Sir Michael Cullen's Tax Working Group had considered whether next tax rise should be the last.

'The excise increase disproportionately gouges the poor and New Zealand First cannot support the policy.'

The scheduled January tax rise would push the average cost of a packet of 25 smokes above $40.

NZ First leader Winston Peters says dairy robberies are a factor in opposing tobacco tax rise.

Budget documents in April showed the tax rise had been factored into the Government's fiscal forecasts and was expected to raise $295 million over the next four years.

However, the Government said at the time it was still considering whether the automatic tax increase should apply.

Customs Minister Jenny Salesa did not respond to a request for an update on the Government's plans earlier in November.

Further comment has been requested on whether the Government expects to still implement the tax rise despite NZ First's opposition.

The Tax Working Group chaired by Sir Michael Cullen had raised doubts about the tax hike in February, saying that if the January rise did go ahead, the Government should consider whether it should be the last.

'The group's preference is that, once the current schedule of tobacco excise increases end, the Government prioritise other measures to help people stop smoking before it considers further large increases in tobacco excises,' the working group said in its final report.

It also noted that one submitter had suggested that tobacco tax rises should take place on July 1, rather than January 1, as there were no services open to help people quit smoking on the New Year public holiday.

According to Health Promotion Agency Smokefree, about 13 per cent of adult New Zealanders smoke on a daily basis, down from 25 per cent in 1997.

Statistics NZ said the average cost of packet of 25 cigarettes in March was $37.48, up from $34.57 in December before the last tax rise took effect.