Tobacco tax hikes are now a gift to gangs

The Taxpayers’ Union says new figures on illicit tobacco show the Government’s sky-high tobacco excise is now backfiring.

Taxpayers’ Union Executive Director Jordan Williams says:

“Illicit tobacco has reportedly jumped from 27.2 percent to 33.5 percent of consumption in just one year. Wellington has taxed tobacco so hard it has effectively created a business model for gangs.”

“Treasury’s own figures show the wheels are falling off. Tobacco excise revenue fell by $2 million to $1.47 billion, even as excise rates kept rising. That is the Laffer Curve in action - higher taxes have resulted in less revenue.”

“When one in every three cigarettes is illegal, Ministers can’t keep pretending this is just a law enforcement issue. The Government has made legal tobacco so expensive that smugglers and gangs can massively undercut legitimate retailers.”

“You can’t police your way out of a problem caused by your own tax policy. Customs and Police should crack down hard on illegal sellers, but they’ll be chasing their tails while Wellington keeps feeding the black market.”

“The Government must cut tobacco excise, shrink the profit margin for criminals, and bring sales back into the legal market. Right now, the Government’s anti-smoking policy is doubling as a gang enrichment scheme.”