Tobacco tax revenue plunges as Kiwis kick the habit
Thursday, 4 March 2021
Tobacco tax revenue has fallen by almost half as Kiwis kick the smoking habit.
On Thursday, Treasury released the Crown accounts for the seven months to January 31, 2021.
The accounts show revenue from customs and excise duty fell almost $700 million compared to the same period the previous year.
The fall was mainly due to a 47.8 per cent decline in tobacco duty driven by reduced demand for tobacco products.
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While not unexpected, the slump was steeper than anticipated, with the Government collecting $400m or 28.9 per cent less than was forecast in December’s Half-Year Economic and Fiscal Update.
New Zealand Taxpayers’ Union spokesman Louis Houlbrooke said smokers were disproportionately low-income and the Government should allow the downward trend in tax takings to continue.
“Instead, new regulations currently being considered by the Director-General of Health threaten to keep New Zealanders on the durries.”
Under a proposed law change, sales of vaping products to under-18s would be banned, flavours restricted and vapers barred from lighting up in smoke-free areas.
The Government has ruled out a complete ban because it sees vaping as one way to help smokers quit more harmful cigarettes.
In 2019, 21.2 per cent of adults had tried an electronic cigarette, up from 18.5 per cent in 2018 and 16.2 per cent in 2016, according to the Ministry of Health.
Stats NZ said the growing trend in vaping coincided with rising prices for tobacco products and declining rates of smoking.
Its figures show the price of cigarettes and tobacco has risen 221 per cent in the last 10 years.
Over the same period, inflation as measured by the Consumer Price Index (including tobacco) has risen by 20 per cent.
Although one in eight adults (close to half a million people) were regular cigarette smokers in New Zealand, the figure has trended down over the last 40 years from one in three adults.