Imperial Tobacco comments on new excise tax law

Released 28/04/2010 10:33pm (2 years ago)
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Imperial Tobacco New Zealand said tonight it is the role of Parliament and the Government to set the amount of excise tax in relation to tobacco products.

It is the view of Imperial Tobacco that excessive tax can be counter-productive to the country’s health initiatives. It is important to set excise at the right level, and while there may be an initial drop in smoking prevalence, it is off-set by smokers re-adjusting to price increases by down-trading to a cheaper brand.

Experience overseas also demonstrates that high cigarette prices fuel the growth of illicit tobacco trade but do not significantly reduce smoking prevalence.

Previous significant excise increases in New Zealand above the Consumer Price Index in 1995, 1998 and 2000 did not result in any significant decrease in the numbers of people smoking.

Illicit trade is the result of an influx of tobacco products that may not meet government regulations for health warnings and is a market anomaly that cannot be regulated. It increases the exposure of youth to cheap cigarettes without health warnings and has the effect of lowering the price paid for tobacco, resulting in less revenue for the government.

Importantly, price does not have a significant effect on underage smokers, many of whom obtain their cigarettes from friends or family rather than purchasing them.

Imperial Tobacco also recognises that increased prices for tobacco products adds additional security risks to retailers as the value of tobacco products is higher and therefore more of a temptation to criminals.

ENDS

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