Experts Call for Strategic Tobacco Tax Hikes

Smokefree Coalition, Media release
Embargoed until 12:01 am, 3 September 2007

A long-term tax strategy is needed to double the price of tobacco products within 10 years. That is the recommendation of tobacco control experts presenting papers at the “Death and Taxes: Future directions for tobacco taxation” seminar in Auckland today. Their work was commissioned by the Smokefree Coalition and ASH NZ.

The team of public health experts from the Wellington School of Medicine & Health Sciences, University of Otago, say high tobacco tax rates significantly deter smoking and would result in considerable improvements in public health.

They say an essential part of the tax increase strategy is the revenue being used to fund quitting programmes and reduce smoking initiation; particularly those aimed at low income, Māori and Pacific populations, where smoking rates are highest.

“If the tobacco tax money was used to address the problem of smoking, smokers would be more likely to accept higher prices,” says Dr George Thomson.

Health Economics Lecturer Des O’Dea says, “Smokers would also be much more likely to quit, and young people would be much less able to afford to start, if the cost of cigarettes and tobacco were higher.”

They say while smokers in some low-income families will continue to smoke and may have difficulty finding extra money for cigarettes, a substantial number will quit, leading to financial savings as well as the obvious health gains.

The seminar is being hosted by the New Zealand Medical Association (NZMA). NZMA Chairman Peter Foley says the Government needs to get serious about reducing the 14 deaths each day caused by tobacco use, and agrees tobacco tax revenue should be put back into tobacco control.

“Tobacco products have become relatively cheaper over the past seven years. We haven’t had a one-off increase in tobacco taxation since 2000. Meanwhile, real wages have gone up, making cigarettes more affordable.

“There were quick and dramatic drops in cigarette sales after the price increases of 1991, 1998 and 2000, and a price increase in 2008 would cause a similar drop in smokers’ numbers.”

ENDS

Further information follows below.

The four health experts making up the team are:

George Thomson, Senior Research Fellow, Department of Public Health, University of Otago, Wellington.

Des O’Dea, Lecturer in Health Economics, Department of Public Health, University of Otago, Wellington.
Principal author of Report on Tobacco Taxation in New Zealand. Volumes I and II.

Heather Gifford, Post Doctoral Fellow, Massey University

Richard Edwards, Senior Lecturer in Epidemiology, Department of Public Health, University of Otago, Wellington.

Note: Most of the members of the team work at the Wellington School of Medicine, University of Otago. However the work was carried out independently of that institution, and the School bears no responsibility for the contents of the reports.

A PDF summary of the team’s findings is available online at:

www.sfc.org.nz/pdfs/taxareportsummary07.pdf.

Two reports commissioned by the Smokefree Coalition and ASHNZ will be presented:

- Tobacco Taxation in New Zealand: Principal author Des O’Dea

- Dedicated Tobacco Taxes – Experiences and Arguments: Principal author George Thomson.

A cross-party panel of MPs has also been invited to participate in a forum on this issue. They will be presenting their parties’ views on tobacco taxation and answering questions.

1991, 1998 and 2000 sales drops resulting from tax increases

Manufactured cigarette sales before and after the Budgets of 1991, 1998 and 2000 (using data from supermarket checkouts). From Tobacco Tax – The New Zealand Experience.

Click to enlarge

The above graph clearly shows the large drop in the sales of cigarettes after tobacco tax increases in New Zealand in 1991, 1998 and 2000.

ENDS

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