New Zealand - increase in tobacco excise forced through Parliament by the Government..

May 2, 2010 - The New Zealand Parliament passed a law Wednesday, April 28th to raise the excise tax on cigarettes and tobacco over each of the next three years, which at the end of that period, is expected to increase revenue by NZ$205 million (149,076,006 USD) annually.

In a surprise move, the government forced Parliament to sit late into the night in an "extraordinary urgency" session, which allows the government to have three readings of a bill in one session, to pass the Excise and Excise-Equivalent Duties Table (Tobacco Products) Amendment Bill.

Excise on Tobacco: Proposed Changes

The law change increases the excise tax on cigarettes immediately by 10% and will increase it by a further 10% in each of the following two years, while there will be a 24% rise in the excise tax on loose tobacco immediately with further increases of 10% in 2011 and 2012, Associate Minister of Health Tariana Turia told Parliament.

The Treasury estimated that once the price changes were fully in place it would generate up to an additional NZ$205 million (149,076,006 USD) in revenue annually, bringing the total revenue from excise tax and goods and services tax on tobacco products to NZ$1.3 billion a year.

At present, about 21 percent of New Zealanders over 15 years of age are smokers. Tobacco use results in between 4,500 and 5,000 deaths a year, and is the single largest cause or preventable death and chronic illness in this country. The lifespan of those smokers who die early from smoking is, on average, reduced by 15 years. Smoking prevalence and consumption is higher among Maori, young people and people with lower socio-economic status.

Tobacco Tax Increase Places Retailers at Risk">Tobacco Tax Increase Places Retailers at Risk, Press Release: Association of Community Retailers, Scoop.co.nz, 4/29/2010.

Reference: New Zealand Parliament Passes Excise Tax Hike On Tobacco by Simon Louisson (simon.louisson@dowjones.com), Dow Jones Newswires, 4/28/2009.

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