Tougher Tobacco Taxes Touted

In March 2011 the New Zealand Government committed to a goal of becoming smoke free by 2025 (most interpret as meaning less than 5 per cent of smoking rates). Recently the government imposed the last of four 10% annual increases. For people who smoke 5 packs per week this approximates to an extra $10 per week or for roll your own cigarettes almost $50 a packet. Zoe Martin Hawke of the Hapai Te Hauora based National Māori tobacco control service, says “we absolutely support the continuation of taxes on tobacco and there is no doubt that this increase has influenced many smokers to quit, however, our recent observation are that many families have now learnt to anticipate and adapt to the regular small increases of 10% “.

The last four years of 10% tobacco tax increases has shown that New Zealand smokers are price sensitive and according to one New Zealand study, for every annual 10% increase in tax there was a 1% reduction in in the number of people who smoke.

One of the criticisms around tobacco tax is the possibility for disproportionate stress that these taxes can have on low income families. There is evidence to suggest that many low income families will continue to purchase tobacco and will compensate by cutting back on essentials such as bread, milk or electricity. Frank Chaloupka an international expert in tobacco tax acknowledges that low income families will be disproportionately affected by tobacco tax increases; however, his research shows that the economic benefits that low income people gain by quitting far outweigh the negative economic struggles that low income families experience by not quitting. His research conducted in the U.S also shows that less regular tax increases with much larger increments is a more effective strategy when compared to yearly small increases. Having other support strategies in place such as stop smoking treatment services will also assist them on their quitting journey.

According to one study by Dr Murray Laugesen and Professor Randolph Grace, if we were to increase taxes by 10% every year to the year 2025, the New Zealand smoking rates would only be at 6.9%. This same study shows that if we were to increase taxes by 15% or 20% every year to 2025, the NZ smoking rate would be 5.1% or 3.7% respectively.

Coupled with other interventions aimed at reducing tobacco use, tobacco tax is still the most effective tool in lowering our smoking rates. At this stage there are no indications that tax increases will continue, or how high tobacco tax increases will be if they do carry on.

ENDS

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