Tobacco tax takes are too good to give up
Woolston’s Night ‘n Day on Ferry Rd has been done over again. Last week, the dairy was raided for at least the 12th time since 2016. And once again, those behind this aggravated robbery sized up the cigarette cabinet, along with the cash from the till. It’s a timely reminder of just how attractive this egregiously over-taxed product is now to the underworld, which can duly peddle it on the black market for a fast and dirty buck.
And it’s one of the key reasons why NZ First has understandably baulked at the prospect of yet another swingeing tobacco tax excise raid down on smokers.
The billowing mountain of tax shovelled on cigarettes continues to fuel these tobacco-targeted aggravated robberies, alongside the boom in smuggling illicit cigarettes into the country.
A recent KPMG study, admittedly commissioned by the tobacco industry, concluded that the proportion of cigarettes smoked in New Zealand that are now sourced from the black market has reached 10 per cent. Customs interceptions at the border of contraband tobacco have rocketed by more than 350 per cent in the past four years.
Winston Peters is on solid ground in arguing that these hefty excise hikes are not only fuelling a huge spike in smuggling and compromising the safety of dairy owners, but ‘‘disproportionately gouging the poor’’. It is a nasty, grasping and regressive tax grab.
The upcoming annual excise increase of just over 11 per cent is the fourth such hike since 2016, which will send the price of a pack of 25 smokes north of $40.
Since 2010, the full arsenal of excise increases has tripled the cost of a single cigarette to $1.50, of which roughly 83 per cent is excise alone, fattening the state coffers handsomely.
In fact, lower-income Kiwis, who are disproportionately represented in our smoking rates, are actually paying more tobacco tax than income tax.
Budget documents in April indicated the January tax hike had already been factored into the Government’s four-year fiscal forecasts, with Treasury licking its chops at the prospect of netting an additional $74 million annually from that excise rise alone. It will increase the annual tobacco tax revenue take to well over $2 billion, a financial windfall that far outstrips the financial burden smokers impose on the public health system.
Otago University research has estimated the annual financial impact on the health system for smoking-related admissions and surgeries at $300-400 million a year.
Truth be told, the government is chronically hooked on slugging smokers and can’t afford to let go of it.
Or is this Government quietly calculating that it can swap out the tobacco tax take for a legalised cannibas tax take if enough voters can be cajoled into voting in favour of that dopey referendum?
Meanwhile, Dame Tariana Turia, a key Smokefree 2025 crusader, is unrepentant about fleecing smokers, demanding even more punitive excise raids, beyond 2020. The initial excise hikes did drive down smoking rates, but it’s run out of puff.
Shamefully, Ma¯ ori, Pacific and youth smoking rates actually increased in the past year.
The overall smoking rate of 14.2 per cent only dipped 0.7 per cent year on year. At this rate, Smokefree 2025 remains pure pixieland.
Associate Health Minister Jenny Salesa has plenty on her plate at present. For a year we’ve been waiting for her to introduce legislation to rein in the gratuitous excesses of the vaping boom – and the wait goes on.
Cracking the whip against the proliferation of vaping among under-18s, most of whom have never smoked, must be the top imperative.
But as a former smoker who switched to vapes, I resolutely believe in vaping’s transformative impact as a legitimate smoking cessation tool. And that must be upheld in the legislative reforms.
As the Chairman of ASH, Emeritus Professor Robert Beaglehole, states ‘‘there is broad scientific consensus that non-combustible tobacco products, such as vaping, are 95 per cent less harmful than smoking’’.
But as to tobacco taxes, despite NZ First’s huffing and puffing, the January excise hike will proceed, unless Parliament urgently votes to abort it.
The overall smoking rate of 14.2 per cent only dipped 0.7 per cent year on year. At this rate, Smokefree 2025 remains pure pixieland.
It won’t – the filthy lucre is too good.