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Taxpayers Urge New Zealand To End Tobacco Tax Grab

by Mary Swire, Tax-News.com, Hong Kong

02 January 2018


New Zealand's Taxpayers' Union has bemoaned the Government's plans to increase the excise duty on tobacco by 10 percent each year until 2020, arguing that the burden disproportionately falls on lower income taxpayers and the Government is failing to provide enough funding to programs to help taxpayers cut down or quit smoking.

The Union has released a new report that argues that the Government's tobacco tax hikes are ineffective as a tool to reduce smoking rates. It argues the policy instead causes direct financial harm to smokers and their families and increases crime faced by retailers.

The body said: "The goal of excise tax – to reduce smoking rates and prevent smoking-related illness – is a noble one. But it's not enough to judge a policy by its intentions. Our new report evaluates tobacco excise tax based on its actual results, both intended and unintended."

The report points out that despite tobacco prices increasing by over 60 percent since 2012, only one in ten adult smokers have quit. Amongst Maori and Pasifika, there has been no statistically significant reduction in smoking rates over the last decade, it points out.

According to the report, a pack-a-day smoker is nearly NZD3,000 (USD2,130) per year worse off in real terms than they were in 2010. It highlights that the excise duty burden has become so severe that, for a median wage earner who smokes a pack a day, the burden is equal to their annual income tax burden – about NZD7,000 a year.

The report argues that crime leveled against retailers will increase, as will black market sales of cigarettes. As well as calling on the Government to rethink its tobacco policy, it urges the Government to legalize the sale of nicotine e-cigarettes, noting these are still technically illegal to sell.

TAGS: tax | excise duty | New Zealand | retail | Tax

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