Time to end duty-free tobacco sales in NZ

Duty-free sales of tobacco products undermine Aotearoa New Zealand’s goals to reduce smoking and prevented the country from earning up to $96 million in tax revenue between 2015 and 2024, a new University of Otago, Wellington - Ōtākou Whakaihu Waka, Pōneke and the University of Bath (UK) study reveals.

Professor Janet Hoek

Aotearoa is one of many countries to apply an excise tax to tobacco products in a bid to reduce their use. However, people travelling internationally may still buy tobacco duty-free, thus avoiding having to pay excise tax or GST.

The study, just published in the international journal Tobacco Control, estimates that excise tax and GST foregone on duty-free sales amounted to between $60-$96 million between 2015 and 2024.

Senior author Professor Janet Hoek, of the Department of Public Health, says this revenue could have been used to support key parts of the health system.

“Every week, we learn of new challenges to our health system,” Professor Hoek says.

“It is illogical to subsidise tobacco sales when the revenue could do so much to help people in need.

“The excise tax foregone could have supported new cancer drugs, provided elective surgery funding or increased mental health support available to communities.”

Duty-free sales effectively provide a government-sanctioned price discount on tobacco products by making it cheaper for people to buy tobacco products, which expose them to serious health risks and subvert the government’s goal of reducing smoking prevalence to minimal levels, she says.

“Reducing smoking prevalence would improve wellbeing in multiple ways; it would enhance people’s physical and financial health, improve productivity, reduce pressures on the health system and decrease the heavy burden nicotine addiction imposes.”

Professor Hoek says the research findings suggest the Government should end duty-free sales of tobacco products as soon as possible.