Cigarette companies called out for being sneaky around taxes

There are allegations cigarette manufacturers are gaming the tax system to keep people hooked.

A Maori public health organisation says cigarette companies are being a bit sneaky with how they add taxes.

Each year on January the first, the excise tax on tobacco rises 10 percent.

Companies are expected to pass the cost of this on to the consumer, reports Newstalk ZB.

Maori public health organisation, Hapai Te Hauora, say the way the tax is paid allows cigarette companies to only add a little more to cheaper cigarettes, and proportionally more on expensive ones.

Chief executive Lance Norman said this keeps budget cigarettes as cheap, and accessible, as possible.

He said they examined prices before and after the new year when taxes rose 10 percent and have found that manufacturers are adding less than 10 percent to cheaper cigarettes, and more than 10 percent to more expensive ones.

"The people that it impacts on the most is generally Maori, Pacific and other low socio-economic communities, so we find that quite disgraceful."

He said the tax is paid by weight, so as long as it balances out to 10 percent overall, it's legal.

Mr Norman said this is to keep budget cigarettes within reach for people feeling the price pinch.

"I think they are gaming the system, they are not breaking any laws but they are gaming the intent of what the law was meant to be."