Tobacco tax to rise again

Is rising tobacco tax fair?

Helping to quit is not the only cost of tobacco use though – health costs are high, as are related issues of poverty.

The details from Stuff:

From January 1, 2018 the tobacco tax is 83 cents per cigarette, with GST levied on top of that. A smoker who smokes 20 cigarettes per day is paying $133 in tobacco tax each week, including GST.

How much tax is being collected?

The Government collects $1.7b per year in tobacco tax itself, and $1.9b when the GST on the tobacco tax is included. According to Treasury, this amount is forecast to grow to $2.2b by 2021.

Only $62m, or 3 per cent of this money, is spent encouraging or actively helping smokers to quit.

But increasing tax has encouraged many people to quit.

Tobacco tax has played a part in reducing the proportion of adults (aged 15+) who smoke from 20.1 per cent to 15.7 per cent over the last 10 years.

However 600,000 people still smoke.

A pack a day smoker earning $45,000 a year would pay 15 per cent of their income, or close to $7000 per year in income tax and a further 15 per cent (nearly $7000) of their income in tobacco tax each year.

Given that poor people are more likely to smoke that must have a huge impact on their quality of life – and the quality of life of their families.

The tax is being paid by those for whom the policy is failing. Māori, Pasifika and those on low incomes are over-represented in this group.

Of course reducing smoking is a very important health goal, but addicted smokers are surviving on significantly less money per week after paying the tobacco tax. A pack-a-day smoker has $133 per week less to spend on heating, good food and clothes for children.

There are other adverse effects of rising tobacco prices – dairy robberies are increasing and often involve violence. Other crime to finance tobacco purchases is another.

The author of the Stuff opinion piece is Kathy Spencer, a (non-smoking) former Deputy Director-General in the Ministry of Health (responsible for Sector Policy) and a former Manager of Personal and Indirect Tax in the Treasury. She suggests:

Smokers need more active help to quit and there are now many ways to do this: more active support from health professionals, programmes like Quitline, nicotine replacement, e-cigarettes and so on.

The new government has the opportunity to introduce a fairer approach:

  • Double the amount spent on actively supporting smokers to quit, especially Māori, Pasifika and low-income groups.
  • Freeze the excise rate at the current level.

Success will mean that the Government will lose the $2b in revenue that it has been getting from addicted smokers.

It’s time to start thinking about collecting this revenue in other ways, from people who are in a better position to contribute.

I don’t think that increasing taxes of non-smokers to finance attempts to get smokers to quit would be very popular.

64 Comments

  1. In spending just a small percentage of tobacco related revenue to help smokers quit, the Government agencies seem to completely ignore the most natural and cost effective methods – hypnotherapy.

    • Correction – ‘one of the most natural and cost effective methods’

      • Gezza

         /  December 31, 2017

        It only works on people who are highly suggestible, & not all that many are.

        • My experience is quite different. Hypnotherapy will work for those who are open to trying it and are not being pushed to quit against their will.

          • Corky

             /  December 31, 2017

            Worked for my cuzzie. He walked into the hypnotists office. Was out in half an hour, and has never touched another fag. He still thinks it’s bullshit- and he just got lucky. However, you must desire to quit, otherwise the subconscious suggestion to stop smoking will be a war with your desire to continue smoking. That will lead to failure, and possible mental problems( eg guilt complex).

            The rule of thumb is whenever willpower and imagination go to war…imagination always wins.

          • Gezza

             /  December 31, 2017

            It’s worth a try but it only works for people who believe the hypnotherapist can take them over.

            • A reputable hypnotherapist will never try to ‘take them over’. Hypnotherapy is guidance and encouragement, not control.

            • Corky

               /  December 31, 2017

              I think Gezza doesn’t quite understand the intricacies of hypnotherapy
              To start with there are different types of hypnosis. There’s ordinary, medical, self hypnosis, regressive and the deadliest of all occult hypnosis( combat). With the latter, you don’t have a choice. You go under because the brain is zapped to lay bare the subconscious.

              The Christian Scientists had a duzzie. They would ‘treat people’ late at night when they knew they were asleep. The method required two chairs; one for the operator, one for the patient ( the patient was absent). The operator would proceed in a normal fashion to hypnotise the patient who wasn’t there. They spoke to the empty chair. Lol?? Well, if Russian experiments are anything to go by we may want to hold off judgement.

            • Gezza

               /  December 31, 2017

              I’ve actually hypnotised somebody. I just went & found out how to do it after it didn’t work on me.

            • Gezza

               /  December 31, 2017

              There are a number of quite simple steps, but the key to it, before you even start, & even with a skeptic, is convincing them that you can hypnotise them. For that, they just have to be open to the idea that you might possibly be able to direct their subconscious mind. It would probably never work if you tried to suggest them to do something completely against their beliefs or values.

              In the case of suggestible smokers, they already want to quit, they hope you can make them, so just by following the correct technique to “put them under” (no one’s ever really “under”) you can persuade some that they can make themselves stop. There are different ways to persuade them, but they just have to really hope they can, & then be convinced they can.

            • That is basically correct but ‘under’ is not an expression most hypnotherapists would use. I would describe being in a hypnotic state as being in a state of enhanced focus where positive suggestions are able to be directed at the unconscious mind.

            • Gezza

               /  December 31, 2017

              I think Gezza doesn’t quite understand the intricacies of hypnotherapy
              To start with there are different types of hypnosis. There’s ordinary, medical, self hypnosis, regressive and the deadliest of all occult hypnosis( combat). With the latter, you don’t have a choice. You go under because the brain is zapped to lay bare the subconscious.

              I think Corky’s read stuff, that he’s never done it, & that he doesn’t actually know how to do it, & I do.

            • Gezza

               /  December 31, 2017

              That is basically correct but ‘under’ is not an expression most hypnotherapists would use. I would describe being in a hypnotic state as being in a state of enhanced focus where positive suggestions are able to be directed at the unconscious mind.

              Yes, I know Garry. “Under” isn’t something a professional would use. Don’t worry I’m not going to describe the process. The reason it didn’t work on me is that I am familiar with the deep relaxation state & I just kept continually analysing what the hypnotherapist was saying, how he was saying it, & what my responses were – it’s just how I am – so I never got into a suggestible state. I was actually disappointed.

              If it worked for Corky’s cuzzie, great. If it works for anybody that’s good, altho I believe the long-term success rate’s not actually all that good.

              Some psychiatrists & psychologists use hypnotherapy to modify people’s thonking & behaviour, but they don’t use it on everybody simply because not everyone’s susceptible to it.

            • Gezza

               /  December 31, 2017

              😳 can we just pretend that thonking means *thinking incorrectly*?
              That’d be great, thanks. 👍🏼

    • David

       /  December 31, 2017

      You what? Vaping is the most effective solution.

      • Vaping is not effective, it simply swaps one bad and costly habit for another. As well as that it looks ridiculous.

        • Kitty Catkin

           /  December 31, 2017

          What on earth is the duzzie that Corky mentions ?

          • Gezza

             /  December 31, 2017

            Hang on, I’ll look it up.

            • Kitty Catkin

               /  December 31, 2017

              Where ???

              Maybe it’s a dunny with a wasps’ nest in it 😀

          • Corky

             /  December 31, 2017

            Relax..enjoy the festive season, Kitty. Otherwise you will wind up like Gezza, talking to himself and trying to sound relevant on a subject he knows nothing about. However, he is good at casting bait. Maybe a past life as a fisherman?

            • Kitty Catkin

               /  December 31, 2017

              Well, what IS a duzzie ? Was it a typo for buzzy , as it rhymes with this ?

            • Corky

               /  December 31, 2017

              Pronounce it phonetically..I mean write it for me phonetically..

            • Gezza

               /  December 31, 2017

              No definition for Duzzie. It’s a Corkyword.

              The Urban Dictionary does have this for
              #duzzie

              TOP DEFINITION
              doozy
              something outstanding
              Yo, don’t sweat it.
              You’ll be fine.

              Yo doozy, baby.
              #doozey #douzey #duzey #doozie #duzzie #outstanding #excellent #marvelous #magnificent #superb #sensational #fantastic #awesome #wonderful #fabulous
              by kimkimmy September 09, 2009

              but that’s only applicable if it’s spelt with a hashtag.

            • Corky

               /  December 31, 2017

              ”No definition for Duzzie. It’s a Corkyword.”

              Correct.I wanted a better inflection on the word ‘doozy’ after someone once asked me what a ‘doszee’ was.

            • Conspiratoor

               /  December 31, 2017

              Incorrect G, did you not learn anything at Sunday school. Duzzie is the supreme being …of all creation, the one and only person God looks up to, and obeys

            • Gezza

               /  December 31, 2017

              @ c. No, that’s Cuzzy.

            • Gezza

               /  December 31, 2017

              Correct.I wanted a better inflection on the word ‘doozy’ after someone once asked me what a ‘doszee’ was.

              😕 I would’ve just said it’s a small bird with a long tail & very short legs that lives in the Amazon forest. And moved on to find someone with an education to talk to.

        • David

           /  December 31, 2017

          “Vaping is not effective, it simply swaps one bad and costly habit for another. As well as that it looks ridiculous.”

          It is only costly because of insane taxes. It is a solution, the simply fact is vaping doesn’t kill you, isn’t that the issue?!

          What the hell does it matter what it looks like?

  2. David

     /  December 31, 2017

    I used Champix which was 100% funded by the taxpayers and it took 4 weeks to totally quit a 25 a day habit at age 47 and one I started at the age of 13. I am now off to the gym for a workout.
    Having said that the level of taxes now is cruel and hitting the poorest in society especially hard, its high enough already.

    • Many people can not tolerate the side effects of Champix. That 100% funding comes from the small amount spent from the tobacco revenue.

      • David

         /  December 31, 2017

        the dreams were a bit odd, as long as you eat first it helps

        • Kitty Catkin

           /  December 31, 2017

          It will only hit smokers. If they can’t afford it, the solution is obvious. Nobody is forced to smoke.

  3. Corky

     /  December 31, 2017

    Smokes are the working mans perk. If Labour wants kudos,and reelection, they should cut the tax on cigarettes. That’s the morally correct thing to do.

  4. David

     /  December 31, 2017

    “Helping to quit is not the only cost of tobacco use though – health costs are high, as are related issues of poverty.”

    The health costs of smokers are massively outweighed by the taxes put upon them and the fact they die earlier. Fiscally, they are a complete winner for the Government.

    No one in the Government cares about the poverty issues, they just like taxing the poor. How much more ‘child poverty’ will this tax create eh?

    • Gezza

       /  December 31, 2017

      I don’t think they like taxing the poor: they like taxing everybody they can, like most governments – they just can’t afford to cut taxes AND pay for their promises, & smokers are an easy target. So are drivers.

      • Kitty Catkin

         /  December 31, 2017

        Smokers are antisocial menaces.

        The tax won’t make people poor, their smoking will.

        • David

           /  December 31, 2017

          “Smokers are antisocial menaces.”

          Bullshit.

          • Kitty Catkin

             /  December 31, 2017

            They cost money for their health problems-they are ill more often than non-smokers so have more time off. Some let their children go hungry and be fed by other people. They smell disgusting.

            A smoker who takes 10 minutes a day at work to sneak off and smoke is having an entire 40 hour week off a year.

            Smokers’ babies have health problems when they are born and afterwards because the mother smokes and gives them asthma and other illnesses-paid for by everyone else.

            Smokers rob dairies and commit violent crimes.

            They throw their cigarette ends into the street for someone else to clean up….

            • David

               /  December 31, 2017

              “They cost money for their health problems-they are ill more often than non-smokers so have more time off.”

              Garbage. Smokers are net contributors in cash terms. They die earlier, so save the government millions in pensions and very expensive end of life care. The net position on this is in hundreds of millions every year.

              “Some let their children go hungry and be fed by other people. ”

              Some people are scum, what is your point?

              “They smell disgusting.”

              You smell disgusting!

              “A smoker who takes 10 minutes a day at work to sneak off and smoke is having an entire 40 hour week off a year.”

              Someone who takes 20 mins to sneak off and get a double cream mocco latte is having TWO entire 40 hour weeks off a year.

              “Smokers’ babies have health problems when they are born and afterwards because the mother smokes and gives them asthma and other illnesses-paid for by everyone else.”

              Good luck getting good proof of this that doesn’t include the simple fact that most mothers like this are poor, ill-educated and not very good mothers. The smoking has little to do with it.

              “Smokers rob dairies and commit violent crimes.”

              Again, complete and utter bullshit. People who raise taxes on cigarettes that then creates a profitable blackmarket do this, YOU are guilty of this crime.

              “They throw their cigarette ends into the street for someone else to clean up….”

              For your crime above, you should be sentenced to 2 years of picking up other people’s cigarette butts.

              Fun fact; I do not, and never have, smoked.

  5. Zedd

     /  December 31, 2017

    Just another DRUG to be taken over by the Black-market.. when will they learn that ‘prohibitive laws/taxes’ do NOT work !? 🙂

  6. Mefrostate

     /  December 31, 2017

    I’m quite comfortable with the idea that cigarette excise taxes should be ringfenced and directed toward the social costs of smoking.

    But those speaking out against the level of cigarette excise taxes need to tell us what level they think they should be set at. The evidence is quite clear that excise taxes on tobacco (and especially sudden shocks) have been successful at reducing rates of smoking.

    Here’s an example of this finding, from a meta review: http://tobaccocontrol.bmj.com/content/early/2010/11/29/tc.2010.039982?papetoc=

    • David

       /  December 31, 2017

      “But those speaking out against the level of cigarette excise taxes need to tell us what level they think they should be set at.”

      How about at a level that does not create a lucrative black market for gangs to profit from? Just look at what is happening in Australia as a guide.

      http://www.news.com.au/finance/economy/australian-economy/illegal-tobacco-industry-flourishing-in-australia-as-government-hikes-taxes/news-story/c1d28c0a1919d0fbcc499579a2386b28

      • Mefrostate

         /  December 31, 2017

        Sounds good, I’d use the same argument for legalising, regulating, taxing & providing addiction services to most other drugs.

        So how big a problem are tobacco black markets in NZ? And what level should excise taxes be?

    • Patu

       /  December 31, 2017

      Same shit, different day… The government continues to rape a minority, who can’t help themselves, whilst pretending it is in the public interest to do so. If all the smokers gave up tomorrow, the govt would have to find another minority to gather over $100000
      000 dollars of tax from.

      • Mefrostate

         /  December 31, 2017

        I’m glad you’re concerned about this minority. I’m sure glad we have lobbyists & politicians funded by the tobacco industry who will speak up on behalf of the poor smoking minority. I’m sure they have those people’s best interests at heart.

        My cheap rhetorical scorn aside, I do think you make a good argument for ringfencing tobacco tax revenue: to limit government’s incentives to milk the cash cow of addicted smokers.

    • phantom snowflake

       /  December 31, 2017

      Nobody is going to argue about significant price increases reducing rates of smoking. Yet this is a blunt instrument which leaves many casualties. I’m thinking in particular of people with major mental health issues and who experience ongoing high levels of agitation or other distress. For some there is nothing more comforting and calming than sucking on a cigarette when in an ‘extreme’ state. Smoking can be pretty much a psychological survival strategy; perhaps this is something that can only truly be understood when viewed from the ‘inside’. My comment may be dissatisfying because it does not contain answers, but I believe all voices deserve to be heard.

      • Mefrostate

         /  December 31, 2017

        No your comment is quite satisfying, and I fully acknowledge that cigarettes can be quite enjoyable for smokers.

        But when addictive behaviour is involved it becomes a complicated area for public policy to handle. Completely removing excises on tobacco would also leave many casualties, which is why I think criticism of cigarette taxes need to be more satisfying than “all taxes & regulation are bad” or “this tax increase is bad, excise taxes don’t work”. They need to come with convincing arguments about the right policy.

        • phantom snowflake

           /  January 1, 2018

          and I fully acknowledge that cigarettes can be quite enjoyable for smokers.” No, I wasn’t talking about enjoyment, rather relief from huge distress, which is quite a different. issue. I’m not conceding that smoking cessation is a lost cause in the group I have mentioned but I believe a degree of innovation and thinking outside the box is required, strategies tailor-made for this group rather than the generic strategies that have been employed in recent times.

          • phantom snowflake

             /  January 1, 2018

            I shall digress. I consider the decisions of our District Health Boards to enforce their smokefree policies in Inpatient Psychiatric Units to be ill advised, reckless and inhumane. To add stopping smoking (in itself a crisis) to an existing psychiatric crisis is likely, among other things to worsen psychosis and suicidality, increase the frequency of assaults, and lead to higher doses of medication being used to counter agitation. (I haven’t bothered to look at statistics regarding assaults/critical incidents as I am aware of some credible accounts of systematic underreporting in certain units.)

  7. Kevin

     /  January 1, 2018

    Most drug users are responsible drug users and that includes smokers. Only about 1% of smokers in the US smoke more than a pack a day and 68% of smokers smoke less than a pack a day. 31% smoke a pack a day.

    http://news.gallup.com/poll/157466/smokers-light-less-ever.aspx

    This means by prohibitively taxing cigarettes you’re punishing the majority who are responsible smokers. Plus prohibition has been shown to at most curb use amongst responsible users while doing nothing to curb use amongst heavy users. In fact it makes things much worse by driving those users to the blackmarket and a much more dangerous product.

  8. Alan Wilkinson

     /  January 1, 2018

    The tax is paid by those for whom the policy has failed is a damning indictment of it from a moral perspective. A cost/benefit analysis needs to report the harmful impacts as well as the beneficial ones. There seems to be minimal effort to do so – rather a pattern of ignoring or dismissing them.

    The most obvious test is to plot the life expectancy by decile vs tobacco tax increases and examine the correlations. That may have been done but I haven’t found it.

    • Kevin

       /  January 1, 2018

      When you consider that no amount of tax increases will deter heavy smokers it becomes obvious how fruitless a policy it is. It might deter moderate smokers but that’s about it.

      What we do know works is regulating nicotine levels in cigarettes to be low enough to make cigarettes non-addictive, ie low enough so that you would have to be smoking continuously
      all the time in order to get hooked.

  9. patupaiarehe

     /  January 2, 2018

    • patupaiarehe

       /  January 2, 2018

      That didn’t quite format right, but you get the picture. I’ll be ‘doing a Corky’ next election, and not voting. What’s the point?