Poor being hurt by Government's tobacco taxes

Mon, 29 Apr, 2019

The poorest New Zealanders are being hurt by the Government’s refusal to stop increasing tax on tobacco, says ACT Leader David Seymour.

In the March 2019 quarter, inflation rose six times faster for beneficiary households than the general population, mostly due to tobacco tax increases that took effect on 1 January, according to Stats NZ.

“Tobacco taxes are failing to reduce smoking levels. Despite virtually doubling the level of tax, smoking rates have fallen by only a few percentage points.

“An EY report commissioned by the Government shows fewer than half of smokers have responded to tax increases by buying fewer tobacco products.

One cigarette cost about $1.50 in the March 2019 quarter, up from 54 cents a decade ago.

“1 in 10 lower income households are going without the basics in order to buy tobacco.

“The average smoker pays about $3800 in tobacco tax each year. That is money families could be spending on food and clothing. Tobacco taxes are taking food out of the mouths of some of the poorest children.

Tobacco makes up about 4.1 per cent of all spending for beneficiaries, compared with 2.5 per cent for all households.

“The Government says it is concerned about the cost of living, yet it continues these punitive tax increases.

“At the same time, onerous new restrictions on vaping have been announced, meaning fewer people will quit. The Government should be making it easier for people to switch to vaping.

“Smokers already contribute far more in taxes than the costs to the rest of the community caused by their smoking. Further taxes simply punish people and represent a $2.2 billion tax revenue grab.

“The Government needs to quickly reverse this failing, regressive tax.”