Massive jump in tobacco excise: $17 for a packet of fags

Wednesday 28th April 2010

Smokers will be paying even more dearly for their habit as the government rushes legislation through Parliament under extraordinary urgency to allow three increases in tobacco excises over the next two years.

The first 10% increase in excise goes into effect immediately, while a second and third increase, each adding a further 10% to the excise component of a packet of cigarettes, will occur in January 2011 and January 2012.

A packet of 20 cigarettes will cost $17 in 2012, based on today's prices and the new excise levies, compared with $13.30 today.

The announcement is the first tax decision from the 2010 Budget, due for delivery on May 20, and was signalled by Finance Minister Bill English last week.

Loose tobacco is hit harder, with a 24% immediate increase in the excise tax, followed by the same 10% increases in 2011 and 2012 as for cigarettes.

The new law was introduced by Associate Health Minister and Maori Party co-leader Tariana Turia, allowing the government the cover of enacting a coalition partner's wishes on a decision that is sure to raise cries of "nanny state" from some traditional supporters and the Act party.

“Ultimately this is about saving lives,” says Mrs Turia. "Putting up the price is a powerful tool to reduce smoking" by forcing smokers to quit and discouraging non-smokers from starting.

Businesswire.co.nz

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