• June 15, 2024

Smokers over-taxed

 Smokers over-taxed

Is it ethical for the New Zealand government to collect nearly $2 billion in extra tax from addicted smokers while spending only three percent of the money on helping them to quit? Should an addicted ‘pack-a-day’ smoker have to pay an extra NZ$7,000 in tax each year?

These questions were posed in an opinion piece in The Dominion Post by Kathy Spencer, a former deputy director-general in the Ministry of Health and a former manager of personal and indirect tax in the Treasury who has worked also as a senior advisor to a Minister of Health and a Minister of Revenue.

Spencer said that with a new government about to review the tax system, it was time for a fresh look at how to reduce smoking in New Zealand.

For a very long time, the tax on tobacco had been the government’s primary weapon against smoking. It was claimed to be the most effective method, but Māori, Pasifika and low-income groups had been slower to give up smoking than had other New Zealanders; so the people within these groups were paying a disproportionate share of this tax, which was going up relentlessly.

Spencer said a common belief was that the tobacco tax was there to cover the public health costs associated with smoking, including passive smoking.

First off, the idea that smokers should be expected to meet these costs was highly questionable since people who were overweight or had bad diets were not expected to pay extra towards their health costs. New Zealand’s public health system simply didn’t work that way, and nor should it.

However, even if were accepted that smokers should pay for health costs, it started to become clear 10 years ago that they were over-paying. A 2007 study commissioned by tobacco control groups concluded: ‘It appears likely that smokers contribute considerably more in taxes than the net “economic costs” to the rest of the community caused by their smoking’.

Spencer said that in 2012, the Treasury also acknowledged that the tax revenue was probably higher than the direct health system costs of smoking. And it noted that smokers received less superannuation and aged care, reducing costs in these areas.

‘Taking these savings into account means that smokers have been paying their own way, and more, for years,’ Spencer said.

Spencer’s piece, which includes suggestions for tackling the tobacco-tax issue, is at: https://www.stuff.co.nz/dominion-post/comment/100188998/tax-burden-unfair-on-smokers.