Budget 2022: $10m to crack down on tobacco smuggling spike

More than $10 million in funding from Budget 2022 will be used to stem a recent spike in "sophisticated" tobacco smuggling operations.

Across four years, a total of $10.4m will enhance specialist investigations and enforcement within New Zealand Customs, supported with intelligence and electronic forensic capability.

Minister of Customs Meka Whaitiri said recent smuggling efforts were often well-orchestrated and controlled by organised criminal entities.

"Customs has seen a significant increase in the smuggling of tobacco products into New Zealand over recent years," she said.

"We also know that as measures in the Smokefree Aotearoa 2025 Action Plan continue to have an impact on smoking rates, there will likely be increased demand for illegal tobacco products.

"Funding provided through Budget 2022 means Customs will be able to set up a specialist team to strengthen investigations into tobacco smuggling to ensure more of the illicit trade is targeted and disrupted, and those doing it are caught and stopped."

The funding added to the legislative change under the Customs and Excise (Tobacco Products) Amendment Bill 2022, which changed the way excise and excise-equivalent duty was calculated on water-pipe tobacco products.

Whaitiri said the change to calculating duty on the weight of tobacco content in water-pipe tobacco product - also known as flavoured, hookah, shisha, molasses and fruit tobacco - would stop millions of dollars in possible tax evasion.

A further change in the legislation made it a prohibited product, which meant water-pipe tobacco would require an import permit.

"Both the increased focus on tobacco smuggling and changes to water-pipe tobacco products are in step with the Government's Smokefree Aotearoa 2025 Action Plan to help people kick this harmful habit," Whaitiri said.

In January, Hua Yi (Cindy) Zhu was sentenced to three years' imprisonment for her role in one of the largest cigarette smuggling and tax evasion cases ever in New Zealand.

Nearly $5.5 million of her joint assets have also been forfeited after Customs — acting on an anonymous tip-off — discovered large shipments of cigarettes being unlawfully imported into the country under the guise of a furniture company run by a husband and wife.

Ultimately, the Auckland couple's four-year scheme saw more than 19 million smokes shipped from China and $18.7m in excise tax avoided.