Source: Taxpayers Union
This week’s Waitangi festivities were marked with a string of Government funding announcements, totaling hundreds of millions for development projects intended to make life better for Māori.
Some of these projects will achieve their goals. Others will just line the pockets of the politically-connected. But in every instance, these grand Waitangi gifts and the accompanying media coverage serve a hidden purpose: they distract from existing government policies that actively harm Māori and make such handouts necessary in the first place.
The most appalling case is that of tobacco tax. Adjusted for income, New Zealand has the highest tobacco tax rate in the developed world, causing significant financial damage to smokers – who are predominantly poor, and disproportionately Māori. (At last count, the Māori smoking rate was 33.5% compared to 14.9% for the general adult population.)
Assuming Māori smokers consume tobacco at the same rate as the average smoker, we can calculate that tobacco tax last year took about $519 million from the budgets of Māori smokers and their families.
If that’s too much to comprehend, consider it this way: the Government has been taking more from Māori in tobacco tax than it gives in treaty settlements and targeted social spending.
The average amount spent on Treaty Settlements is $89.6 million per year, and Budget 2018 allowed for $316 million in Māori Development spending. In total, that’s still about $120 million less than Māori pay in tobacco excise.
Even this week’s boost to Māori development spending will be undermined, as tobacco tax revenue is forecast to grow even larger in the coming years. In short, politicians give to Māori with one hand, but take even more with other.
Whatever the intended effects of the tax, the practical result for Māori smokers too addicted to quit is horrid: smaller household budgets, less food on the table, and more miserable lives.
The policy does, of course, convenience the government: by quietly turning Māori smokers into cash cows, both National and Labour have been able to puff up their budgets and loudly announce vote-winning initiatives like those unveiled at Waitangi.
Public health advocates correctly argue that the best way to curb the financial hit from tobacco tax is to help people quit smoking. If the Ministers at Waitangi wanted to mitigate the harms of tobacco tax, they would de-regulate the supply of alternative nicotine products like vapes, heat-not-burn tobacco, and snus.
A new Taxpayers’ Union report examines the increasing body of evidence that some of these products have reduced risks compared to tobacco. Giving nicotine addicts safer ways to meet their habit could be far more effective than trying to get people to quit nicotine altogether.
Unfortunately, the Smoke-free Environments Act makes advertising the reduced risks of these alternative products effectively illegal.
Further, reduced-risk tobacco products face the same rate of excise as cigarettes. A better approach would be to weight excise on tobacco products according to their risk: if (for example) heated tobacco could be extensively proven to cause less harm than cigarettes, it should face less tax.
This would encourage people to switch from smokes to better options, reducing negative health effects and the improving the financial status of struggling families – especially Māori.
Sadly, in Wellington the ‘easy option’ is to simply continue heavy-handed tobacco excise hikes. The Government gets to pat itself on the back for punishing filthy smokers, while plotting the next big Waitangi spend-up.
Jordan Williams is Executive Director of the New Zealand Taxpayers’ Union. The Union’s latest report, Ka Tukuna Atu, Ka Tukuna Mai, is available at www.taxpayers.org.nz/ka_tukuna_atu.