Health Ministry Debates Massive Hike on Tobacco Tax

April 25, 2012 New Zealand Taxation

Cigarette Tax Hike ProposedThe Ministry of Health is mulling the feasibility of further increasing taxes on tobacco products, which will raise the shelf price of cigarettes by more than 5 times.

On April 23rd the Ministry of Health presented a working paper regarding taxation of cigarettes, in which the Ministry suggested that the government could increase the taxes on tobacco products to hike the price of cigarettes to NZD 60 by the end of next year, and instate a further 10 percent increase each year. If implemented, the move would see an average pack of cigarettes cost upwards of NZD 100 by the end of 2020.

According to the Ministry, such a large hike in taxes would make a significant positive contribution to the government’s own goal of eliminating the occurrence of smoking in the country by 2025.

The Prime Minister John Key has already spoken out against the suggestion, saying that the move could lead to people purchasing tobacco on the black market, circumventing the taxes altogether. The Prime Minister’s words were backed by the director of the anti-tobacco group ASH Ben Youdan, who said, “…if you are pushing prices up to $100 a pack I think it’s pretty inevitable that people would see it as an opportunity to undermine that and see it as an opportunity to sell tobacco illegally.”

Photo by CeeKay’s Pix