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Tobacco tax increases won't work: Treasury

NZ NewswireNZ Newswire 14/07/2016
© Press Association

Treasury told the government before the May budget that even if it raised tobacco tax by 15 per cent a year, that on its own wouldn't achieve a smokefree New Zealand by 2025.

The budget didn't go that far, confirming the existing 10 per cent annual increases would continue for another four years.

Pre-budget documents released on Thursday show that in February Treasury advised the government that if it didn't extend the 10 per cent increases "it is almost certain the smokefree goal will be missed".

It suggested an additional increase could be made, but didn't believe that would work either.

"Even a budget night increase of 10 per cent followed by four annual increases of 15 per cent would be insufficient to achieve the smokefree goal, other policies would need to be pursued in tandem," it said.

Treasury recommended continuing the the 10 per cent increases.

"While increases of this magnitude would not, on their own, achieve the smokefree goal, we believe they balance the need to drive further reductions in smoking with the recognition that ultimately some smokers will not cut back," it said.

"Some low-income smokers will not cut back, and may respond by substituting consumption away from other goods and towards tobacco."

Since the budget, the government has decided to go ahead with plain packaging of cigarettes and legislation to enforce that is going through parliament.

The smokefree goal is to reduce smoking to fewer than five per cent of the population by 2025.

At present about 15 per cent of adult New Zealanders smoke. The figure for Maori is 35 per cent and for Pacific people it's 22 per cent.

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