New Zealand: Tobacco Excise to Rise 10 Percent Per Annum

Source from:  Scoop 05/26/2016

Budget 2016 will increase the tax on tobacco by 10 per cent on 1 January each year for the next four years, Associate Health Minister Peseta Sam Lotu-Iiga and Māori Party Co-leader Marama Fox say.

"Raising the price of tobacco is the single most powerful tool to reduce smoking. All smokers will face the price rises. The more they smoke, the more they pay. The more they pay, the greater the incentive to quit," Mr Lotu-Iiga says.

"Previous excise increases reduced per capita tobacco consumption by around a quarter and prompted thousands of smokers to quit, and we're not stopping there. Raising the tobacco excise saves lives."

"It's estimated between 4,500 and 5,000 people die from smoking related illnesses each year – more than 12 people every day. Increasing tax helps to reduce the incredibly serious harm caused by smoking."

Some 15 per cent of adult New Zealanders – or 550,000 people – smoke daily. That increases to 35 per cent for Māori and 22.4 per cent for Pacific peoples.

"I'm proud to further advance the work of my predecessor Dame Tariana Turia who, as Associate Health Minister, oversaw four annual 10 per cent rises in tobacco excise. She worked tirelessly to put a stop to whānau dying needlessly from smoking-related diseases," Mrs Fox says.

"While we've helped many to stop smoking, there is still a way to go and that's what today's measures are about. We're also supporting programmes that help whānau to quit smoking and stay smoke-free."

The excise increase is part of a comprehensive suite of measures intended to help make New Zealand a smoke free nation by 2025.

The price of a standard pack of 20 cigarettes will likely increase from around $20 now to around $30 in 2020. The changes are expected to generate an extra $425 million in tax revenue over the next four years.

"I will introduce a Bill immediately after the Budget to amend the Customs and Excise Act to allow the increases. We have to keep the pressure on smokers to quit, for everyone's sake," Mr Lotu-Iiga says.

Imperial Tobacco New Zealand Limited says that the excise increases announced in today's Budget ignore the reality of tobacco consumption in New Zealand.

Corporate Affairs Manager for ITNZ, Louse Evans McDonald, says that the move to increase prices will simply see smokers shift to alternative supplies.

"Today's announcement fails to address the fact that New Zealand has some of the most lax laws on home grown tobacco anywhere in the world. Increasing the price of commercially manufactured tobacco will serve only to shift smokers into considering growing their own.

"The result of that shift in supply is for the Government to collect less in excise.

Ms Evans McDonald says that the development of a significant market in illicit tobacco will become a serious threat subsequent to these major price increases.

"We've seen in other countries with high tobacco excise levels the attraction to criminal gangs of trading in illegally imported tobacco. Australia now sees about one in every seven cigarettes smoked being illegal.

"International criminal gangs take advantage of excise differentials. We are seriously concerned that the excise increase in New Zealand will see our country become a target for those gangs.

"We call on the Government to take heed of our warning. They must now act to ensure that the illicit market – both traded home grown tobacco and illegally imported cigarettes – does not become entrenched in New Zealand." Enditem