Home Politics Oceania New Zealand’s 2020 Budget Did Not Raise Tobacco Taxes

New Zealand’s 2020 Budget Did Not Raise Tobacco Taxes

For the first time after four years, New Zealand’s Government did not announce any further tobacco tax increases as part of this year’s budget.

Diane Caruana

July 6, 2020

“It’s good news the Minister of Finance didn’t use this Budget to hike tobacco tax, as has been the case for the past four years,” said Nancy Loucas, Director of Aotearoa Vapers Community Advocacy (AVCA). Loucas believes that while tobacco tax is used as a way of gaining revenue, it has a negative impact on vulnerable groups and does little to motivate the public to quit smoking.

“AVCA does not support tobacco tax hikes. Too often they’ve been used as a revenue gathering exercise and always hit the vulnerable the hardest.”

“AVCA does not support tobacco tax hikes. Too often they’ve been used as a revenue gathering exercise and always hit the vulnerable the hardest. They’re terribly regressive and I would argue have had little impact on the likes of Maori with 31% still smoking. Sure, we’ve seen New Zealand’s overall smoking rates fall to a record 12.5% low, but that’s largely due to education and the arrival of vaping,” she said.

The AVCA believes that education and the availability of safer alternatives is the way forward in decreasing smoking rates, added Loucas. “We support the Government investing in campaigns via its own Health Promotion Agency to encourage smokers to switch to vaping. However, we don’t support the Government effectively taxing our poorest households more. Thank goodness that has stopped.”

“The Government is right to stop harming smokers. It would’ve made nominal difference to our smoking rates, inflicting more pain on our poorest households. Instead, it now needs to deliver progressive vaping regulation to ensure more Kiwi smokers make the switch to something that’s considerably less harmful to both their health and back-pockets,” she said.

Big tobacco uses taxes as an excuse to raise tobacco prices

The last annual tobacco tax increase was of 11.5%, and went into effect on January 1st this year, taking an average pack of 25 cigarettes to over $41. Meanwhile, a recent analysis has indicated that Kiwi tobacco companies have been using annual tax increases to cover significant voluntary price hikes.

Professor Richard Edwards, an Otago University academic and co-director of the ASPIRE 2025 project, is pointing out that excessive and hidden voluntary price hikes are a common practice of tobacco companies across the globe. “The industry tends to portray itself as fighting tax increases so as to help out smokers, when really it is clear they often use such increases to bring in price increases that they blame on the government.”

The analysis indicated that these voluntary price increases by tobacco companies in New Zealand have been hiding in plain sight. While regular tax increases have increased the price of an average cigarette pack by approximately $1.70 per year, tobacco companies have simply added an extra $1 to go into their own pockets.