Smokers will pay at least $5 more for a packet of 20 cigarettes by 2016 after Government announced a series of tax increases on tobacco in today's Budget.
Associate Health Minister Tariana Turia said tobacco excise taxes would increase by 10 per cent a year in each of the next four years to give smokers a financial incentive to quit and put young people off smoking.
Once inflation increases were included, the price of the average packet of 20 cigarettes would climb dramatically from around $15 today to higher than $20 by 2016.
The price of an average packet of loose tobacco would climb to around $40 over the next four years.
The tax hikes followed a 40 percent increase in tobacco excises since April 2010. The first of the new tax hikes would take place on January 1.
"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 said.
"We know that for every 10 percent increase in the price, tobacco consumption falls by about 5 percent. Many smokers will quit and many more will reduce their tobacco consumption.''
Finance Minister Bill English said "it was now getting pretty expensive to buy a pack of cigarettes'' and he expected stock-piling to take place before each tax increase ticked over.
Government collected around $1.2 billion a year from tobacco taxes. This would climb to around $1.7 billion once the new levies were introduced.
The Government had a goal of making New Zealand smokefree by 2025.
Mrs Turia said this target was ambitious, and taxes alone would not stamp out smoking.
The Budget also allocated $20 million for a new fund, Pathway to Smoke-Free 2025, which would be used to create programmes to discourage smoking uptake.
Around 5000 New Zealanders die a year from smoking-related illnesses or exposure to second-hand smoke.
After the previous tax increases between April 2010 and January this year, record numbers of smokers sought help from smoking quit-lines and agencies.
- Isaac Davison of the New Zealand Herald
