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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.

 

More by Rob Hosking

Comments and questions
7

Uhhhmmm so she's cutting the duty free allowance to raise more taxes?
Doesn't this just make it a revenue collection exercise if she's expecting the same amount of cigarettes to be purchased?

Another tax increase by stealth or the back door:;take your pick, funny that the workers party never objects to these increases yet there supporters are historically most likely the users of Tobacco.

Studies have also shown the amount being taken in by such taxes is well in excess of the costs of smoking. That ratio will now increase further.

Under MMP all you need now is for another Turia type to hold power who has an anti alcohol approach.Then the drinkers will be on the receiving end of this absurdity.

While I am against smoking myself I think the government has little appreciation that smoking keeps the majority of the population sane. There is also one hell of a lot of business interaction around a smoke.

Depends what business you are in I would suggest. Hardly any professional people smoke nowadays. You go out for a flat white instead - hence the large number of coffee outlets on The Terrace for example.

What an extraordinary amount of hypocrisy ( as well as bullying) has gone into this whole tobacco thing.

We know very well that this is a very lucrative form of taxation for the government.

If the government earmarked all this loot-gathering and sent it through to the desperate hospitals - instead of the now accumulatively hundreds of millions of dollars it's throwing at quite fraudulent iwi claims (this is now fact) we might regard its intent as honest...

Moreover, individuals like Tariana Turia may need to be reminded that carrying excess weight is as much a risk to health (courtesy of the taxpayer) as smoking.

Yes, it is the only very real pleasure left to some...and trying to ban individual smoking cigarettes in the open air is simply fascist.

( Incidentally, a common grammar mistake now is to talk about the amount of things rather than the number. E.g. "the amount of" people...the amount of cigarettes... Is commonly cited, wrong... Instead of the number.)

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What a pathetic move to slash duty free allowances on tobacco. What mean spirited wowser thought of that !Just because a smoker brings in 200 cigarettes doesnt mean they r going to smoke them all in one go does it ? Surely it cant harm the govt . What about drinkers shouldnt they have their allowance slashed too
or is that the majority of national mps drink .

What's with the 50, when cigarettes come in packs of 20? Tariana Turia, not too good at maths or what?