Winston Peters: ‘Butt out’ tobacco tax

Opinion 29/11/2019

By Winston Peters, Deputy Prime Minister, New Zealand First Party Leader.

You might not like smoking or agree with it, but to continually hike taxes on tobacco hurts working people and disproportionately gouges the poor. The policy has also led to unintended consequences.

This week our party has invoked the ‘Agree to Disagree’ provisions of the Coalition Agreement because we cannot support the 11.46 percent automatic tobacco excise increase that will come into effect 1 January 2020.

In New Zealand the price of a packet of cigarettes is made up of over 80 percent taxes and it has one of the world’s highest retail prices for tobacco products.

We can’t just keep tapping this taxation gold mine every couple of years.

At some point the policy will reach the limit of its effectiveness. And we say that is has already happened.

Studies show the price hikes are having less effect on reducing smoking rates, most particularly amongst the target groups of Maori and Pasifika.

There has only been a 1.3 percent decrease in smoking prevalence for Maori, 1.8 percent for Pacific smokers and an overall decrease among smokers of only 0.7 between 2016/17 and 2017/18.

And there are unintended consequences of the tobacco tax increases.

Customs interceptions of smuggled cigarettes at the border have increased by 352 percent between 2015 and August 2019.

Interceptions in 2018 were 53 percent higher than the preceding year.

A typical pack in New Zealand retails for about NZ$31 compared to NZ $1.62 in Vietnam, $5.29 in China and NZ$6.07 in South Korea

The price point has reached such a level that organised crime groups see economic opportunity.

This places unnecessary pressure on our customs service when it should be focusing resources on preventing the importation of illicit drugs.

Another unintended outcome is the threat to the safety of the New Zealand’s dairy and service stations owners and from burglary.

Incidents of tobacco motivated burglary are well documented.

By raising the price yet again there will be more robberies of dairies and service stations.

New Zealand First believes the 11.46 percent increase in the tobacco:

  • Disproportionately gouges the poor
  • Will be little effective in reducing smoking rates
  • Encourages a black market of smuggles cigarettes
  • Increases the rate of burglary of dairies and service stations 

New Zealand First cannot support the policy.

Winston Peters is Deputy Prime Minister and leader of the New Zealand First Party.