Tobacco Tax Hike Passes With Some Objections

by Desk Editor on Tuesday, October 16, 2012 — 6:00 PM

Most MPs backed a law legislating for four cumulative 10 percent annual rises in tobacco tax, though some had doubts about the way it was being done.

The Customs and Excise (Tobacco Products-Budget Measures) Amendment Bill (divided into seven bills), completed its third reading this afternoon.

All parties backed the bills that brought in the tax passed on a voice vote, but those removing tobacco prices rise from calculations to measure benefit CPI increases were opposed by New Zealand First, the Greens and Mana with 98 to 23 in favour.

Associate Health Minister Tariana Turia said lifting the excise duty would reduce smoking rates especially amongst younger people who were sensitive to price signals.

Turia said by 2016 the average price of a packet of cigarettes would rise to more than $20 and would make smoking unaffordable for many.

She defended taking tobacco prices out of the CPI indexing calculation for benefit increases saying it would not make sense to help fund smokers when trying to increase the cost of tobacco to them

Marion Street said the Labour party wholeheartedly supported the excise tax hikes and would support the bill.

However Labour believed the extra money being raised should be used to help reduce smoking. Street said this and the fact the bill was dealt with by Finance Committee and not the Health Committee made Labour suspicious it was more about raising revenue than improving health.

Street was equally suspicious that taking tobacco price increases out of CPU benefit indexing was more about reducing costs to the Government.

MPs returned to the interupted third reading of the Commerce Commission (International Co-operation, and Fees) Bill (divided into four bills). This is intended to facilitate co-operation between the Commission and the Australian Competition and Consumer Commission.

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