May 25 (Bloomberg) -- New Zealand, which aims to be a smoke-free nation by 2025, will increase cigarette taxes by 10 percent in each of the next four years in a bid to reduce tobacco consumption, the Pacific nation’s finance minister said.
“Previous increases in the excise have reduced tobacco consumption as smokers have given up or cut back and fewer young people begin smoking,” Finance Minister Bill English told parliament in his budget speech yesterday.
The tax increases, beginning Jan. 1, 2013, will take the cost of New Zealand’s best-selling cigarette brand -- Pall Mall -- to at least NZ$22.87 ($17.20) for a pack of 20 in 2016 from the 2011 average price of NZ$14.20. Anti-smoking groups say the measure will cut smoking by making it less affordable, while tobacco companies predict it will boost sales of illegal and counterfeit cigarettes.
The government is forecasting taxes on domestic and imported tobacco products will generate 17 percent more revenue in 2016 at NZ$1.34 billion from A$1.14 billion in 2011, according to the budget.
About 650,000 New Zealanders, or 20 percent of people over the age of 15, smoke, according to the government’s parliamentary report on tobacco use. The number of people who smoke has declined from one in four 15 years ago, according to the report, as smoking in bars, restaurants, workplaces and national parks has been banned and taxes have increased.
“We are rapidly moving towards a smoke-free Aotearoa with today’s announcement of a substantial increase on the taxation of tobacco products,” Skye Kimura, tobacco control adviser for the Cancer Society, said yesterday in a statement titled “Thumbs up!” Aotearoa is the Maori name for New Zealand.
British American Tobacco Plc’s New Zealand unit, which has more than 70 percent of the country’s tobacco market, blames “ever higher tobacco taxes” for driving the black market for cigarettes.
“We see it as vitally important that governments establish workable tax regimes and economic policies that do not create conditions that encourage illicit trade,” British American Tobacco says on its website.
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