Home Politics Oceania New Zealand’s Tobacco Tax Revenue Plunges as More Smokers Quit

New Zealand’s Tobacco Tax Revenue Plunges as More Smokers Quit

Earlier this year, New Zealand’s Treasury released the Crown accounts for the seven months to January 31, 2021, indicating a drop in tobacco tax revenue of almost $700 million compared to the same period last year.

Diane Caruana

July 8, 2021

An article on Stuff revealed that this drop in tax revenue is being mainly attributed to a 47.8% decline in tobacco duty driven by reduced demand for tobacco products. “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.”

Smokers are disproportionately low-income and therefore the Government should allow this downward trend in tobacco tax takings to continue.

Spokesperson for the New Zealand Taxpayers’ Union, Louis Houlbrooke, said that smokers are disproportionately low-income and therefore the Government should allow this 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.”

For the first time in four years, in 2020 New Zealand’s Government did not announce any tobacco tax increases as part of the year’s budget. “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) last Summer. 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.

Tax hikes 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 added.

The AVCA believes that education and the availability of safer alternatives is the way forward in decreasing smoking rates. “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.”