Tobacco excise taxes will increase by 10 per cent a year on 1 January in each of the next four years as part of a wider government programme to prevent young people from taking up smoking and encourage existing smokers to quit, Associate Health Minister Tariana Turia says.
This will be in addition to the annual inflation-indexed increases in tobacco excise, and follows a 40 per cent increase in excise since April 2010.
Budget 2012 also provides $20 million over the next four years for a new innovation fund, Pathway to Smoke-Free 2025, for programmes to discourage smoking uptake and help more New Zealanders give up.
“These measures will help improve the health of New Zealanders, reduce the long-term burden on the health system, and contribute to the Government’s goal of making New Zealand smoke-free by 2025,” Mrs Turia says.
The excise increases will increase the price of an average pack of 20 cigarettes to more than $20 by 2016.
“These tobacco tax increases will have a major impact, particularly as they come on top of three earlier tax increases since April 2010,” Mrs Turia says.
“We know that for every 10 per cent increase in the price, tobacco consumption falls by about 5 per cent. Many smokers will quit and many more will reduce their tobacco consumption.
“We also know that over 80 per cent of smokers wish they had never started smoking and that around 70 per cent have been actively trying to quit.”
Mrs Turia says the Government’s 2025 smoke-free target is ambitious.
“Existing policies have set us well on the way to achieving our goal, and will continue to be at the heart of our approach. However, on their own they will not get us to our target by 2025.”
The $20 million of funding over the next four years will help to create smoke-free environments by investing in the design, development and promotion of innovative efforts to reduce the harm and wider costs of smoking.
“Although tax increases are effective, the Government knows that tobacco tax alone will not achieve our objective,” Mrs Turia says. “We need to support those who are struggling to quit. Policies complementing the tax increases are therefore essential.
“The ill-health and premature loss of life caused by smoking – particularly among Māori – is an outrage and is entirely preventable. It hinders economic and human growth in our country and costs millions of dollars in healthcare.”
Budget 2012 delivers on the Government’s commitment to strengthen tobacco reform to invest in the health and wellbeing of future generations.
Impact of previous excise tax increases: