Tobacco excise rise part of wider programme

  • Tariana Turia
Health Budget 2012

Tobacco excise taxes will increase by 10 per cent a year on 1 January in each of the next four years as part of a wider government programme to prevent young people from taking up smoking and encourage existing smokers to quit, Associate Health Minister Tariana Turia says.

This will be in addition to the annual inflation-indexed increases in tobacco excise, and follows a 40 per cent increase in excise since April 2010.

Budget 2012 also provides $20 million over the next four years for a new innovation fund, Pathway to Smoke-Free 2025, for programmes to discourage smoking uptake and help more New Zealanders give up.

“These measures will help improve the health of New Zealanders, reduce the long-term burden on the health system, and contribute to the Government’s goal of making New Zealand smoke-free by 2025,” Mrs Turia says.

The excise increases will increase the price of an average pack of 20 cigarettes to more than $20 by 2016.

“These tobacco tax increases will have a major impact, particularly as they come on top of three earlier tax increases since April 2010,” Mrs Turia says.

“We know that for every 10 per cent increase in the price, tobacco consumption falls by about 5 per cent. Many smokers will quit and many more will reduce their tobacco consumption.

“We also know that over 80 per cent of smokers wish they had never started smoking and that around 70 per cent have been actively trying to quit.”

Mrs Turia says the Government’s 2025 smoke-free target is ambitious.

“Existing policies have set us well on the way to achieving our goal, and will continue to be at the heart of our approach. However, on their own they will not get us to our target by 2025.”

The $20 million of funding over the next four years will help to create smoke-free environments by investing in the design, development and promotion of innovative efforts to reduce the harm and wider costs of smoking.

“Although tax increases are effective, the Government knows that tobacco tax alone will not achieve our objective,” Mrs Turia says. “We need to support those who are struggling to quit. Policies complementing the tax increases are therefore essential.

“The ill-health and premature loss of life caused by smoking – particularly among Māori – is an outrage and is entirely preventable. It hinders economic and human growth in our country and costs millions of dollars in healthcare.”

Budget 2012 delivers on the Government’s commitment to strengthen tobacco reform to invest in the health and wellbeing of future generations.

Notes

  • An estimated 5,000 New Zealanders die each year due to smoking or exposure to second-hand smoke.
  • Half of all long-term smokers die of a smoking-related illness, losing an average of 15 years of life.
  • About 650,000 New Zealanders, or one in every five people over the age of 15, continue to put their health and lives at significant risk by smoking. This figure includes approximately 155,000 current smokers who are Māori – about 45 per cent of the Māori population aged between 15 and 64.

Recent progress:

  • The recent ASH Year 10 survey showed smoking prevalence among 14- and 15-year-olds to be the lowest ever. In 2000, 15 per cent of year 10 students smoked daily. By 2010 this had fallen to 5.5 per cent. In 2011, 4.1 per cent of year 10 students were daily smokers. The decline since 2010 is the largest year-on-year decline since 2003/04.
  • Tobacco will be out of sight in retail outlets from 23 July 2012.
  • ABC target achievements: For the 2011 calendar year, the Better Help for Smokers to Quit Health Target saw 129,147 patients receiving brief advice to quit smoking from their local GP, nurse or other health professional. A further 114,298 patients received the same advice and support to quit during their hospital visits in 2011.
  • Cabinet recently endorsed plain packaging in principle. As a first step, consultation will take place later this year to gather evidence from and seek the views of all interested parties.

Impact of previous excise tax increases:

  • In 2010 April, a tobacco tax increase of 25.4 per cent was implemented on loose tobacco (to equalise the tax with manufactured cigarettes by weight) and 10 per cent on factory-made cigarettes. Excise on both rose a further 10 per cent on January 2011 and January 2012.
  • This has pushed the price of a pack of 20 cigarettes up by 40 per cent, giving smokers a strong financial incentive to quit. Results are already starting to show – after the first round of increases, roll-your-own tobacco sales were down 14 per cent in 2011 and sales of manufactured cigarettes fell 6 per cent.
  • A media report based on weekly data for supermarkets showed cigarette sales decreased by 13.9 per cent and loose tobacco sales decreased by 17.9 per cent after the April 2010 tax increase, compared to the six months before.
  • Based on annual tobacco company statutory returns, tobacco consumption (by volume) fell by 14 per cent from 2009 to 2011.
  • Quitline figures indicate over 8,000 people contacted it for support to quit smoking in January 2012 alone – immediately following the last instalment of the tobacco tax increases.