Illicit tobacco surge shows excise has gone too far

The Taxpayers’ Union is urging the Government to both cut tobacco excise taxes and beef up enforcement following warnings from Retail NZ that the illicit tobacco trade is booming, with New Zealand already seeing around a third of the tobacco market supplied illegally."

Taxpayers’ Union Executive Director Jordan Williams said:

“Demand for illicit tobacco has been driven by tax hikes that have pushed prices to extreme levels and created a lucrative illicit trade for gangs and organised crime. It's bad for everyone. Bad for smoking rates - people are turning to 'cheap' illegal cigarettes - it's bad for retailers, and it's bad for Treasury and taxpayers."

“If Ministers don’t change course, we risk heading down Australia’s path where an estimated 70 percent of tobacco is illegal.”

“Across the Tasman, those high prices haven’t just created a black market, they’ve fuelled gang involvement, turf wars, and even firebombings as criminals fight over the profits.”

“It is very difficult to police your way out of a problem caused by your own tax policy. Tax currently amounts to roughly 80 percent of the cost of a pack of cigarettes; as long as the Government maintains a massive tax-driven price gap, organised crime will keep stepping in to supply cheaper illicit alternatives.”

"Nevertheless, the keystone cops approach is clearly making the problem worse. Taxpayers will support efforts to beef up enforcement."

“Lowering excise would help take the profit margin away from gangs and restoring control of the market and oversight of the legitimate products being sold.”

“The Government has pushed excise rates so high that reducing excise rates would likely increase the tax take and undermine the incentives for crime."