Tobacco tax hike could spark robberies - industry

BY TRACY WATKINS

A substantial hike in cigarette prices could lead to a black market and a spike in robberies, one tobacco company says.

The claim comes as smokers are whacked with a $200 million-a-year rise in tobacco taxes as the Government ratchets up the pressure on them to quit.

Tobacco companies were caught by surprise yesterday by legislation pushing up the average cost of a packet of 25s by $1.10 overnight and by nearly $5 a packet - or 30 per cent - by 2012. A packet of 20 will then cost more than $14 and 25s more than $17.

Imperial Tobacco New Zealand said the price hike could fuel the growth of the illicit tobacco trade as well as a rise in tobacco robberies.

Illicit trade was the result of an influx of tobacco products that may not meet government regulations for health warnings, the company said.

It was a market anomaly that could not be regulated, Imperial Tobacco said.

Illicit trade had the effect of lowering the price paid for tobacco, resulting in less revenue for the government.

The company also said the tax-driven increase in price could see tobacco sellers needing to install more security measures as the cost of the product could result in "temptation to criminals".

The Government says the tax increase will save 300 lives by 2021 and force 40,000 of about 900,000 smokers to quit.

ACT MP Sir Roger Douglas, one of just four MPs who opposed the rise, called it an attack on the poor.

Tobacco prices are almost certain to go up again after the Budget on May 20, when an expected rise in GST will add an extra 32c to a packet of 25s.

Last night's tax increase is a major concession by National to the Maori Party - which has lobbied for stiff anti-smoking measures - and was announced by Maori Party co-leader and Associate Health Minister Tariana Turia without advance notice. It pre-empts the findings of a select committee inquiry into smoking rates among Maori and appears to have been rushed through early to avoid overshadowing tax cuts in the May Budget.

Mrs Turia told Parliament her mother had been a heavy smoker for 40 years - and she was there the day her mother was told she might have just six months to live after being diagnosed with cancer.

"My cousins and I were raised by our grandmother. Every single one of my cousins has died from smoking-related illness. I am the only one alive of those who were raised by my grandmother."

While smoking rates had dropped over the past few decades, the drop in tobacco consumption had stalled in recent years, Mrs Turia said.

"It's very simple. All smokers who buy tobacco will face the price rises. The more someone smokes, the more they pay, and the bigger the incentive for them to quit."

Smokers who have turned to "roll your own" cigarettes in recent years are being hit with a double whammy - the excise on tobacco has been raised by an extra 14 per cent to bring rates into line with manufactured cigarettes.

MPs sat through the evening under extraordinary urgency to pass the tax rise. But despite near-unanimous support, no Government ministers joined the early stages of the debate and the only Government statement was issued in Mrs Turia's name.

Responding to questions, Prime Minister John Key said the Government needed to discourage people from picking up the smoking habit.

The increase in excise will account for an extra $200 million a year in government revenue, with tobacco taxes raising about $1.3 billion annually.

But it says that is still around $500m less than the cost of treating smokers for smoking-related illnesses.

The move was welcomed by the health sector - the College of GPs said it was vital to dedicate extra tax income from the increase to smoking cessation programmes, especially targeting low-income earners, Maori and Pacific smokers, at-risk youth and chronically ill patients. However, the Government said the money would go into the general kitty.

Quitline, which helps people who want to give up smoking, said it was anticipating many more calls and Action on Smoking and Health (ASH) said it expected more people to kick the habit.

Progressive Party leader Jim Anderton also backed the bill but accused the Government of hypocrisy because it had rejected a Law Commission recommendation to increase the excise on alcohol.

The Salvation Army applauded the move but, like Mr Anderton, said it wished the Government had the courage to act as harshly against alcohol.

THEY'RE TRYING TO STUB OUT 'MY ONE LITTLE JOY'

Bar manager Chantelle Murray takes drags on her cigarette as she talks about Government moves to raise the price of her "one little joy".

Ms Murray, 23, began smoking two years ago and goes through up to four packets of cigarettes a week.

She says she took up smoking to help calm her nerves on stressful days serving customers on board the Cook Strait ferries, but now enjoys the social side of smoking. "It's my one little joy when I get stressed."

The move to increase taxes makes her angry. "It's kind of like you're off to the principal's office because you're doing something naughty. People are adults. They're going to do what they want to do, at the end of the day. "

Price rises will probably force her to curb her habit. "People are just going to end up trying to go in on a pack of smokes together.

"The minimum wage has gone up but it's not really balancing out if it's going up that much."

Her grandfather "smoked like a train and drank like a fish" and made it to 92.

The health warnings on packets "don't really bother me. We all die eventually. If we have a good run we have a good run."

ADDING UP THE COST

5000 - The number of deaths due to tobacco a year, including from second-hand smoke.

19.9 - The percentage of Kiwi adults that smoke. (Maori adults - 40.4)

$1.3 billion- The total yearly revenue that will be raised by tobacco excise and GST after the changes are fully in place (2012).

$1.9b - The annual health-related costs of smoking according to the Health Department.

$57m - What the Government pumps into tobacco control and stop smoking programmes each year.

40,000 - How many people the Health Ministry estimates will stop smoking because of the price rises.

300 - How many deaths are estimated to be prevented by the rises.

WHAT TOBACCO DOES TO YOU

Harms almost every organ and system in the body.

Is the cause of 80 per cent of lung cancer cases, and linked to many other cancers.

Is a major cause of heart attacks, heart disease, stroke and respiratory diseases.

Can cause blindness, impotence and infertility.

WHAT'S IN A CIGARETTE

Cigarette smoke contains more than 4000 chemicals including: Ammonia (toilet cleaner), hydrogen cyanide (rat poison), acetone (paint stripper), carbon monoxide (car exhaust fumes), DDT (insecticide). More than 60 of the chemicals can cause cancers.

THE DAMAGE TO YOUR WALLET

The price of a pack of 20s:

30 years ago - less than $4.50

20 years ago - $5.00

10 years ago - $8.00

Yesterday - up to $12.00

After 2012 - more than $14.00

Source: AC Nielsen/Health Ministry

- with MATT CALMAN, The Dominion Post, and NZPA