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NZ increases tobacco excise tax

Government Increases tobacco excise tax  Last updated 00:00 29/04/2010

Parliament has given overwhelming support to a tobacco tax increase that will raise the price of a pack of 20 cigarettes by about a dollar to around NZ$11, (HK$ 73) effective from midnight, with two more hikes in the pipeline.

After a debate under urgency tonight the bill was passed into law on a vote of 118-4 with all parties except ACT giving it full backing. ACT split its vote with one MP supporting the bill – John Boscawen – and the other four opposing it.

It has put in place three excise duty increases of 10 percent – one at midnight, the next on January 1 2011  and the third on January 1 2012.

Loose tobacco used by pipe smokers and to make roll your own cigarettes is being socked with a 14 percent increase immediately to bring it into line with cigarettes, and then the 10 percent rises that affect all tobacco products.

Because the increases are cumulative, prices will rise by about 33 percent over the next two years.

When the final increase takes place (Jan 2012) a packet of 20 cigarettes will cost around NZ$14 (HK$ 93) and a 30 gram pouch of loose tobacco about NZ$30.

The Government, which gets about $1 billion a year in tobacco excise, can expect to gather an estimated $200 million more.

Associate Health Minister Tariana Turia, a strong anti-smoking campaigner, introduced the bill and said the debate on it was going to be about life and death.

“We know that putting up the price is a powerful tool to reduce smoking,” she said.

“It forces people to cut back, but more importantly it provides a strong incentive for smokers to quit and helps dissuade young people from over starting to smoke.”

The Quit Group said it was preparing to see the number of people contacting Quitline for help to quit smoking to double or even triple.

“The last time we saw a significant taxation increase for tobacco was back in May 2000. Overnight we saw our call volumes almost triple from 6000 to 16,000 calls per month,” Quit Group chief executive Paula Snowden said.

“We fully expect to see an increase in quit attempts, which is great, and our advisors are there to help people using the tax increases as a prompt for thinking about those other, more sustainable reasons for overcoming their addiction.”

While it took on average six serious attempts to break the habit for good, those who contacted Quitline were five times more likely to succeed, she said.

Mrs Turia said 21 percent of New Zealanders over 15 were smokers and tobacco caused 5000 deaths a year.

“For too many years we’ve turned a blind eye to this…the price of cigarettes has plateaued and the reduction in the number of smokers has stalled,” she said.

“Helping smokers quit is a priority of this government and one of our health targets.”

Labour supported the move, with associate health spokesman Iain Lees-Galloway saying the party had consistently argued for measures that encouraged people to quit smoking.

“Sadly, legislation to increase the price of tobacco does not address issues such as point of sale advertising,” he said.

“Tariana Turia says she personally supports removing point of sale tobacco advertising, so why isn’t it happening?”

ACT MP Sir Roger Douglas said the Government was already getting about $1 billion a year in tobacco excise, and the increase would disproportionately impact on poor people.

“You have to weigh up the benefits that might or might not flow from this with individual freedom,” he said.

“The ‘I know what’s best for you’ mentality is getting out of hand…our flight from individual responsibility never ends.”

Sir Roger said that if the Government believed that raising the price of tobacco really worked, it should increase it by much more.

“Why not put it up 600 percent, then you would fix it,” he said.

Action on Smoking and Health (ASH) said it expected some smokers would quit in response to the tax increase.

“However a bigger increase would have resulted in great numbers of smokers quitting,” said ASH director Ben Youdan.

Last year the tobacco industry discounted prices heavily by around $1 per packet, so even with this increase we are treading water in terms of tobacco affordability, he said.

The Salvation Army said it applauded the move, but wished the Government had the courage to act as harshly against alcohol.

“We hope a government willing to recognise the harm tobacco causes will have the courage to more heavily tax alcohol, which has even wider community costs and detriments,” Salvation Army spokesperson Major Campbell Roberts said.

The Drug Foundation said the decision on tobacco put the prime minister’s rejection of an excise increase for alcohol in stark contrast.

“International and local experience consistently shows the effectiveness of excise tax increases on changing smokers’ behaviour – it helps current smokers cut down and deters potential new smokers from starting,” foundation executive director Ross Bell said.

The Royal New Zealand College of General Practitioners welcomed the excise tax, saying it would improve the health of many people.

Despite progress in tobacco control, more than one in five New Zealanders still smoke tobacco regularly and smoking prevalence was much higher for Pacific peoples (28 percent) and Maori (44 percent), the college said.

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