Source: Health Coalition Aotearoa
Tinkering with excise tax is foolhardy and would jeopardise public health, say leading tobacco researchers, concerned at Associate Health Minister Casey Costello’s move to review the levy.
Costello told Newstalk ZB she has put forward a paper to Cabinet proposing a review of tobacco excise tax, raising concerns she will push to reduce that tariff.
“Research tells us that, for people quitting smoking, price remains a key reason why they want to become smokefree,” says Professor Chris Bullen, tobacco researcher at the University of Auckland and co-chair of Health Coalition Aotearoa’s Smokefree Expert Advisory Group.
“For young people, the high cost of smoking is a strong deterrent to experimentation and helps us maintain low smoking prevalence among adolescents.”
Costello told Newstalk ZB that the problem with illegal tobacco trade in Australia was to do with reduced access to legal tobacco.
“They [Australia] taxed well higher than we are [sic], and anything that was less harmful, they made prescription only,” Costello said.
“So we end up with a double-whammy, which is why they have seen the massive loss in excise [tax] that they had, and the criminal market that they’ve got.”
Against industry pressure, the Australian Government proceeded with annual tobacco excise increases of five percent between 2023 and 2025, arguing that maintaining high tobacco prices remained an important public health measure. See aph.gov.au.
Reducing tobacco tax in New Zealand would play into the hands of the tobacco industry, say the HCA researchers, plus it is a battle no government can win.
Illegal tobacco products are cheap to produce and extremely profitable, says Professor Janet Hoek, co-director of the ASPIRE Aotearoa Research Centre at the University of Otago, Wellington, and spokesperson for Health Coalition Aotearoa’s Smokefree Expert Advisory Group.
“Illicit traders can easily outmatch any excise tax reductions and ensure illicit tobacco remains cheaper than legally sold tobacco,” Hoek says.
“Does the Government really want to preside over an unholy bidding war that could place millions of dollars in excise tax revenue at risk?” Hoek asks.
Cutting tobacco tax just plays into the hands of the tobacco industry, she says.
“Instead, we need better resourcing for Customs, Police and the Ministry of Health taskforce to undertake more sophisticated border surveillance and better detect and penalise illegal sales.
“A comprehensive retailer licensing system, along with strong enforcement and significant penalties, should be urgent priorities for any government concerned about controlling the illicit tobacco trade,” says Hoek.
“But, more fundamentally, if the number of people who smoke can be dramatically reduced through evidence-based support to quit, reducing the number of retail outlets, and regulating the addictiveness of tobacco, then demand for illicit tobacco will also decline.”
Australia ‘completely different’
The situation in Australia is completely different, says tobacco researcher and head of public health at Flinders University Dr Richard Edwards.
“Australia has a major illicit tobacco problem because of a combination of factors including the involvement of organised criminals and the existence of numerous local tobacconist shops that have been willing or coerced into selling illicit tobacco,” Edwards says.
“Most of all, the growth of the illicit market has been due to the failure of governments to take robust enforcement action in a timely fashion.
“New Zealand has the opportunity to do that now.”