Legal Recreational Drugs to Face Extra Tax in New Zealand

April 30, 2014 Taxation in New Zealand

taxes on drugs in New ZealandWELLINGTON – Legal psychoactive substances may soon be subject to new taxes in New Zealand.

Over the weekend the Associate Health Minister of New Zealand Peter Dunne indicated that the government may consider implementing an extra tax on the sale of legal recreational drugs, locally known as “legal highs”.

If the new taxes is implemented, all legally available recreational drugs will be taxed similarly to alcohol or tobacco, in order to discourage use, and to raise extra funds to help offset the raised healthcare costs stemming from the use of the drugs.

The potential tax change is not the first move that has been made to reduce the use of the drugs, as only one day prior to the Minister’s statement the government announcement that manufacturers will now need to provide clinical evidence that the products pose minimal health and mental risks before being allowed to be sold to the public.

Commenting on the feasibility of implementing higher taxes on legal highs, Peter Dunne indicated that it has not yet been decided on the exact nature of the tax, or when it will be implemented, but said that the tax may be given greater consideration after the current “carnage” over the recently implemented sale restrictions are cleared.

The proposal to add an extra tax on the substances has already received the support across the country, with some experts saying that sales restrictions on legal highs will only lead to greater black market activity, while an extra tax would have the same effect on reducing consumption as tax on cigarettes.

Photo by: Torben Hansen