BUDGET 2014: Duty-free cigarette allowance slashed to raise $50m in tax

The amount of cigarettes you can buy duty free just got cut to a quarter of its previous size.

Traditionally budget moves on tobacco are announced on the day itself, accompanied by grim sanctimony on one side and wails of woe on the other, but this year Associate Health Minister Tariana Turia announced the whack on the baccy a week earlier.

The number of duty free cigarettes anyone can buy will be cut from 200 to 50, from November this year.

Mrs Turia has driven large increases on sales taxes on cigarettes in her time as minister. The tax has has risen by more than 10% a year since 2010.

However, she says it is an anomaly that this makes duty free cigarettes even more attractive.

“I considered recommending that the duty-free allowance be removed entirely, and although that would be consistent with the Government’s goal of making New Zealand effectively smoke-free from 2025, it would not be practical,” she says.

But cutting the allowance should bring in an extra $50 million a year in tax revenue, she says.

The government is also cutting tobacco products out of the “gift concession” which allows gifts worth less than $110 sent from overseas to be free of duty and GST when they arrive in New Zealand

In a policy driven by National's coalition partner The Maori Party, the government has a goal of making New Zealand completely smoke free by 2025.

What do you think? Is the government making a sensible public health and tax move? Or is it the kind of wowser, nanny-state move you'd expect from a Labour-Greens government? Vote in our BUSINESS PULSE poll.

 

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