Annual tax whack puts smokes up 10pc

Tobacco product prices went up 10 per cent after the latest tax hike on January 1. So how much more do smokers have to fork out now?

A 20-pack of cigarettes now costs about $25.45 on average, while a 30-gram pouch of tobacco costs about $55.30, a British American Tobacco New Zealand (BAT NZ) spokeswoman said.

‘‘In 2010, a 20s cigarette pack cost about $11 and a pouch of 30g roll-your-own tobacco was about $23,’’ she said. ‘‘Tobacco prices have more than doubled over the past seven years.’’

Prior to the tax bump, the cheapest 20-pack at the end of 2017 cost $18.90 at one popular online ‘‘discount’’ store, with premium brands costing at least $25.

An average 20-pack in 2017 cost about $23.40, which was about 75 per cent tax. As the average 20-pack in 2017 costs $25.45 on average, the amount of tax has risen to about 78 per cent.

Annual increases

In April 2010, the Government introduced a tax increase of 25.4 per cent on roll-your-own tobacco (to equalise the tax on manufactured cigarettes) and 10 per cent on cigarettes.

Since 2011, excise tax on both cigarettes and roll-your-own tobacco has risen an additional 10 per cent on January 1 each year (on top of annual inflation).

These annual tax increases are expected to raise the average price of a 20-pack to about $30 by 2020.

Using a 20-pack which has a recommended consumer price of $25.50, taxes amount to $19.86 (excise, plus GST). That means 78 per cent of the consumer price goes to the Government.

For a pouch of roll-your-own tobacco, using a 30g pack as an example, which has a recommended consumer price of $53.50, taxes amount to $42.31. That means 79 per cent of the consumer price goes to the Government.

Effect on smokers Christchurch woman Sanchia Burke, 29, has been a smoker since she was 18. She is motivated to quit but the tax hike is not one of her reasons.

‘‘I have thought about stopping but not because of the tax increase,’’ she said. ‘‘I would want to stop more for health reasons.’’

But Burke was concerned about how the tax hike would impact on some Kiwis. ‘‘It will just put some people even deeper into poverty’’.

BAT NZ estimates smokers in New Zealand spend more than $2.5 billion on cigarettes and tobacco each year.

The Taxpayers’ Union published a report on December 31, which said the average smoker in 2017 was nearly $3000 a year worse off than in 2010.

‘‘Tobacco tax hikes cause enormous harm, devastating the incomes of the vast majority of smokers who haven’t quit,’’ executive director Jordan Williams said. Prices overseas

According to 2016 World Health Organisation data, tobacco prices in New Zealand are among the highest in the world.

In 2016, a standard pack of 20 cigarettes was US$15.36 (NZ$21.47) in New Zealand, US$10.94 in Britain and US$2.97 in Thailand.