Health Coalition Aotearoa’s Professor Janet Hoek explains why the excise tax on legal cigarettes is not to blame for the illicit tobacco trade – and reducing it is
not the solution.
In arguably her most explicit reference yet to tobacco industry spin, Associate Health Minister Casey Costello has blamed the tobacco excise tax for
contributing to rising seizures of illegal cigarettes at the border.
Costello told Newstalk ZB that one reason 8.3 million smuggled cigarettes were
seized by Customs in the first four months of this year was: “We’ve had an issue
with the excise increases breaching that [sic] threshold. We’re at the point
where there’s this big price differential.”
These comments are straight out of the tobacco industry’s playbook. Let’s
examine why they lack logic and evidence.
First, tobacco taxes save lives. More expensive cigarettes encourage people to quit, deter relapse among people who have quit and discourage young people
from taking up smoking.
Lowering excise taxes will not eliminate illicit markets, which develop and thrive
when there is weak enforcement, established criminal networks, and high profits to be made.
Even if legal cigarettes were to become cheaper, illicit suppliers could respond by
lowering the prices they charge, thanks to the already inexpensive cost of
production.
Australian researchers have estimated that lowering excise taxes on tobacco
would embroil governments in prices wars they could never hope to win.
Lowering excise tax would create a classic double jeopardy. On one side, it would disincentivise quitting through making smoking uptake cheaper. On the other, it would decrease government revenue, needed to fund the enormous health costs
of diseases caused by smoking.
Costello has also promoted legalising additional nicotine products, such as oral nicotine pouches, not currently able to be sold in Aotearoa.
Although tobacco companies have pushed the government to introduce more diverse nicotine products to the market, the Ministry of Health and an expert group convened to advise Costello on policy, both strongly opposed this approach, unless these products could be proven to be effective and safe.
So, if lowering excise taxes and introducing unproven new products is not the
answer, what approach should we be taking?
We need to reduce smoking prevalence as quickly as possible: the fewer people
who smoke, the less profitable it becomes to source and supply illegal tobacco.
Under Costello’s watch, declines in smoking prevalence have stagnated. While that’s good news for tobacco companies, it has a chilling human toll.
Thousands of people will continue to die prematurely from diseases caused by smoking.
Smoking will kill two out of three people who smoke long term. Yet we continue
to allow tobacco to be sold as an ordinary consumer product. That approach
needs to change.
Solutions to both legal and illegal tobacco sales
First, we need to introduce a comprehensive licensing scheme, not just of retailers, but of every party involved in the tobacco supply chain.
A more integrated monitoring and enforcement system would enable better surveillance and quicker action when illicit tobacco is detected at any point.
Second, we need to revisit measures that would greatly reduce the addictiveness
of tobacco. A large majority of people who smoke want to quit but can’t because
they find smoking so addictive. That’s why many of them support a measure to reduce the nicotine content in cigarettes so they can, finally, quit. Moving people to alternative nicotine products doesn’t address what so many want: to become free of addiction and regain control over their lives.
In short, we need action to reduce the supply and consumption of illegal tobacco, but cutting the excise tax and introducing unproven new products is not the answer. Continuing – and strengthening – every effort already under way to reduce tobacco consumption is.
Professor Janet Hoek is a public health professor at the University of Otago,
Wellington, and co-director of ASPIRE Aotearoa, a research centre focused on
equitably reducing nicotine use. She is a member of Health Coalition Aotearoa’s
expert advisory group on smoking.
