10pc a year not enough for Turia
Tobacco rises will push the price of a single cigarette to more than $1 - but that's not enough for Associate Health Minister Tariana Turia.
A series of 10 per cent increases on tobacco will make the price of a pack of 20 cigarettes rise from $16 now to $21 by January 1, 2016, assuming tobacco companies don't cut their margins.
The Government's tax take from a pack of 20 will jump from $8.84 to $13.26. The average smoker, puffing on 12 cigarettes a day, will need to find an extra $1130 per year.
But Mrs Turia, the driver of the increase, wanted a heftier rise to put a bigger dent in the pockets of the 650,000 Kiwis who smoke.
She said that, for every 10 per cent price hike, there was a 5 per cent drop in smoking. "Many smokers will quit and many more will reduce their tobacco consumption."
The changes will put an extra $528 million into Government coffers and reduce the number of smoking related deaths by between 300 and 350 a year, Treasury estimates.
However, because the rise will not be introduced overnight, there are fears that desperate smokers will stockpile packs. The rises kick in on January 1.
Imperial Tobacco spokesman Brendan Walker said the move would create "a lucrative black market". The market for illicit smokes is currently about 3 per cent of sales.
But the health sector applauded the rise – part of the Government's target of making New Zealand smokefree by 2025. It recently announced a move toward plain packaging and from July tobacco won't be on display in shops.
New Zealand Medical Association deputy chairman Mark Peterson said price increases had led to a reduction in smoking rates, and less "uptake of smoking among adolescents".
Heart Foundation Medical director Norman Sharpe said the Government's policy was "clear leadership" on the "tobacco epidemic", which was the country's "single biggest killer".
Quitline chief executive Paula Snowden said that, using previous tax hikes as an example, Quitline could expect 3836 extra people to contact the service for help. Of those, 650 could be expected to succeed in quitting.
As well as reducing the number of existing smokers, the price rise would discourage new smokers, she said. "The younger you are, the more price sensitive you are."
The Budget also provides $20m over four years to programmes to help people quit smoking.
UP, AND UP AND UP, IN A PUFF OF SMOKE
Dean Harvey, 35, IT worker, Pukerua Bay, above: A smoker for 19 years, he smokes 10-15 roll-your-owns a day, or two 30g pouches a week, putting his daily spend at $8.85. This will rise to $12.40 a day, or $86.80 a week.
"The thing that would really make you stop is to stop selling it. Gradually increasing the price over four years, you slowly learn to deal with it. I want to quit anyway."
No plans to stockpile.
Maurice Davis, 59, recycling business owner, Naenae: A smoker for 20 years, he smokes about 10 tailor-mades a day, putting his daily spend at about $7.50. This will rise to $10.50 a day.
"It's probably a good thing. I'm going to actually stop smoking anyway but I will probably end up eating more and put on weight.
"I won't be stockpiling but there will be quite a few that will, to put [them] on the black market."
BY THE NUMBERS: THE SMOKER
The average pack of 20 costs between $15 and $16 and will now rise to more than $20 by 2016.
A pack of 25, now over $18, will cost over $24.
On average, smokers puff on 12 cigarettes per day and by 2016 will need to find an extra $21.73 in their weekly budget – or about $1130 per year.
To spend no more, they will need to reduce the amount they smoke to nine a day.
$22 extra per week for the average smoker
$528 million in extra tax revenue over four years
$20m will also be diverted into a new quit fund
13 per cent estimated drop in consumption
650,000 estimated number of smokers
The Dominion Post