SUNDAY, JULY 22, 2018
Government losing up to $182m as illicit tobacco issue lights up
There is up to NZ$182 million that the New Zealand Government could recoup from illicit tobacco. Research conducted by
KPMG’s UK firm highlighted in their Illicit Tobacco in New Zealand 2017 Full Year Report has revealed that illegal
tobacco – as a percentage of total tobacco consumption was around 9% in 2017. KPMG in the UK estimates that if this
illicit tobacco had been sold legally, it would have generated about NZ$182 million in tobacco excise for the
Imperial Tobacco New Zealand’s General Manager, Sam Abbott said that closer monitoring and enforcement both at the
border and in retail is required to stop illegal products entering the market.
“We believe the aggressive 8 years of consecutive tobacco excise increases have contributed to this alarming figure. The
attractiveness of the illicit market will continue to grow over the next two years, as further legislated annual 10%
increases on tobacco excise drive the legitimate market retail prices higher,” said Mr Abbott.
In Australia, prior to the implementation of standardised tobacco packaging, illegal tobacco also measured by KPMG UK
was about 11.5% and is currently about 15%. However, the Australian Border Force, the Australian Taxation Office and
other law enforcement agencies have recently started to make significant inroads into cracking down and disrupting the
organised crime groups involved.
“We are open to discussion with all government agencies on further enforcement activity and the current tobacco excise
evaluation by the Ministry of Health. This is a problem that can no longer be ignored with the potential of a revenue
boost to Government. We commend the Government Budget announcement to tackle illicit drugs and encourage the Government
to include illicit tobacco into their strategy so that it can be detected and dealt with at the border.”
The KPMG LLP report was commissioned by Imperial Tobacco New Zealand and is available in full HERE
Media contact: Louise Evans McDonald, Corporate Affairs Manager, Imperial Tobacco NZ Limited, Ph 027 4962448 email:
KPMG Illicit Tobacco in New Zealand Full Year 2017 report highlights:
9.2% of total consumption (or 191,327 kg) was estimated to be illicit.This is triple the 2015 estimate of 2-3% stated in
the Ministry of Health’s consultation document “New Zealand and the Protocol to Eliminate Illicit Trade in Tobacco
If this 191,327 kg of tobacco had been consumed legally, it would have represented an estimated excise value of up to
NZ$182 million, at the current excise rate.
Contraband consumption accounted for the majority at around 79% (151,134 kg) of total illicit consumption.
Flows of Australian, South Korean and Chinese labelled packs account for the majority of non-domestic product flowing
into New Zealand.
Unbranded tobacco (home grown tobacco above the current allowable limit of 15 kg) was estimated at around 21% (40,000
kg) of total illicit consumption.The legal home grown market is estimated to be a further 49,930 kg.
Counterfeit tobacco represented a small proportion of total illicit consumption at around 0.2% (0.4 thousand kg).
Note to editors:
KPMG in the UK undertakes economic analysis, commissioned by the tobacco industry, in a variety of jurisdictions. The
OECD considers the methodology of KPMG the “most authoritative assessment of the level of counterfeit and contraband
cigarettes” in the EU. The ‘Illicit Tobacco in New Zealand’ report was prepared by KPMG LLP in the UK and is an
independent piece of work which gives a reliable insight into the level of illegal tobacco consumption. It was
commissioned by Imperial Tobacco New Zealand Limited. KPMG recognises the wider public policy context within which
governments decide regulatory and fiscal changes for the tobacco industry, and that the analysis in this report only
considers one aspect. KPMG expresses herein no view, nor makes any recommendation, in relation to future policy for the
industry in this regard.
 New Zealand and the Protocol to Eliminate Illicit Trade in Tobacco Products 2015 Consultation, (Page 4 “Problem
 The Customs & Excise Act 2018 amended the personal allowance exemption for manufactured home grown tobacco from 15kg to 5kg (Customs & Excise Act 2018 s67(5))