Tobacco Taxes to Rise by 40 Percent in New Zealand

May 27, 2016 Taxation in New Zealand

Sin TaxWELLINGTON – New Zealand is aiming to eradicate smoking in the country by implementing a series of annual tax hikes.

In its budget plan released on May 26th the government of New Zealand announced that it will reinstate a new round of annual tax hikes on cigarettes and tobacco products.

From January 1st 2017 the rate of taxation on the sale of tobacco products will rise by 10 percentage points, with equal hikes set to take place on January 1st each year until 2020.

The extra tax collections will yield an extra NZD 425 million in tax revenues each year.

The new tax hikes are a continuation of a series of 10 percent increases which were enacted each year between 2012 and 2016.

It is currently estimated that approximately 15 percent of people in New Zealand are smokers, although the rate could be as high as 35 percent and 22 percent among Maori and Pacific people, respectively.

The New Zealand government currently has a goal of driving the national smoking rate to below 5 percent by the year 2025.

Photo By: Curran Kelleher