Tobacco companies resist excise tax increase and refuse to pass on increased costs

The excise tax on tobacco products increased on January 1 2018, but the increase hasn't been passed on to all retail products. New Zealand's largest Māori Public Health organisation, Hāpai Te Hauora, is concerned that this will limit the effectiveness of the tax increase to reduce smoking rates, and that tobacco companies should be forced to increase the prices of their products by the total percentage of the tax increase and the consumer price index (CPI).

"Big Tobacco are just trying to game the system to keep their products as affordable as possible which means keeping their customers hooked on smoking, and a steady stream of income off the back of smokers' misery," says Lance Norman, CEO for Hāpai Te Hauora. "You can see how desperate these companies are, they're making hardly any money from these products by taking this approach but they want to squeeze every last cent out of their customers in the face of efforts to force them out of our communities."

The tobacco excise tax increased by approximately 12% on 1 January 2018. The tobacco price increases varied from brand to brand, but overall appear to have increased by between 7.43% to 13.3% and RYO brands by around 8.1% to 10.3%.

"We've seen a concerted campaign against tax increases from lobby groups, and we now see that the tobacco companies themselves are doing their best to thwart the best efforts of our Government to create a smokefree Aotearoa," says Norman. "This is unacceptable and we hope to start a discussion around how the tobacco industry can be forced to respond to the tax increases in a consistent manner across all their products. We know from experience that you have to fight these guys at every step to do the right thing, and this is just another example of that."

In 2011 the New Zealand Government adopted a Smokefree 2025 goal. This goal is supported by supply reduction policies including the excise tax increases, and funding towards smoking cessation programmes and support for e-cigarettes as a harm reduction tool.

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