The Government has begun 'consultation' on a plan to reduce 6000 cigarette outlets to just 600. Photo / NZ Herald, File
The Government has begun 'consultation' on a plan to reduce 6000 cigarette outlets to just 600. Photo / NZ Herald, File
Opinion by Sunny Kaushal
OPINION
Who benefits the most from cigarettes? According to academics and ministers it isn’t retailers, despite 6000 selling them and criminals robbing outlets for them. Surely then, it must be “big tobacco,” who academics, ministers and the WHO sees as a mutant cross between the boogieman, and the KGB.
Thedirty secret is this: The biggest winner from the sale of cigarettes is the Government. Last year, it raked in a whopping $2.145 billion in taxes, despite the finger-wagging, distracting media releases and Smokefree Aotearoa 2025. Government coffers grew $68 a second off smokers who are among the poorest in our country, adding up to $243,663 every hour and $5.76 million every day over 2021-22. All from the smokes. All for the Government.
As 64 per cent of daily smokers are among the poorest, it means 200,000 plus daily smokers contributed around $1.4 billion of the $2.145 billion collected in tobacco taxes last year. No one can doubt retiring Prime Minister Jacinda Ardern’s sincerity, but how on earth did huge taxes on desiccated plant leaves escape her attention as the Minister of Child Poverty Reduction? What about incoming Prime Minister Chris Hipkins? He must surely know the connection between huge taxes and ram raids. How did this tax goldmine go over the heads of social justice warriors and academics alike?
“Goldmine” sums up the two taxes on tobacco. There’s the tobacco excise but then GST is slapped on top of it. On New Year’s Day, the tobacco excise went up 7.3 per cent (plus GST) taking a kilogram of tobacco to $1930 and that’s just the two taxes. As we await Hipkins’ reply to our crime manifesto, personally given to him on October 19 last year, is it any wonder dairies and service stations get ram-raided when a kilogram of tobacco costs $700 more than a kilogram of silver?
Just four days after the tobacco tax shot up, and as Kiwis ducked rain at the beach, the government slipped out “consultation” on January 4 to reduce 6000 “smoked tobacco” outlets to just 600. Instead, an all-too-obvious “dairygeddon,” media and talkback were sidetracked onto the hot-button issue of “youth vaping.”
Don’t get us wrong. Smoking is on the way out. It’s down a third in just the past two years as ex-smokers have taken to vaping and smokeless tobacco as better, safer, and much cheaper. This is market forces at work. We don’t have any issues with changes to combat youth vaping either but we don’t like being sacrificed on an altar of academic theory.
When National’s Shane Reti looked into the law change late last year, we learned the 600 “smoked tobacco licences” were a political creation. That’s reinforced by “indicative” locations that seem to have been conjured up via a dart board in the office of Associate Health Minister Ayesha Verrall.
In the far south, there are to be eight shops between Lake Hawea and the West Coast on SH6. Unless sheep smoke, we’re at a loss.
Sunny Kaushal. Photo / Jason Oxenham, File
What about a shop randomly plonked at Mt Bruce in Wairarapa while Pātea, in Taranaki, goes cold turkey with none alongside the Chathams and Stewart Island? There are five shops north of Kaitāia, including Cape Reinga, while Māngere in Auckland gets one with none in Drury or Clevedon. How can Auckland end up with one-third of the shops than Otago and Southland, despite having four times the population?
Being a Police Minister, the new Prime Minister must know the biggest winners will be the gangs.
Next year, the gangs are being handed 5400 locations where smoked tobacco won’t be legally sold but are locations proved by decades of market forces. Tobacco is not only easier to grow than cannabis, the penalties aren’t nearly as severe. Anyone aged 18, including the supposedly smoke-free generation from 2027, can legally “manufacture” five kilograms “for personal use”. On current tobacco taxes, that’s almost $10,000 worth. Seeds are sold on TradeMe.
As for the losers, there are 5400 dairies and service stations despite being 94 per cent compliant sellers between 2019 and 2021. Ahead of 2024, when this crazy plan is due to start, they are still being ram-raided, assaulted, and worse. Other losers will be the stop-smoking people. I cannot see the gangs checking ages or encouraging cessation. As for the 600 licensed outlets proposed, armoured cars will be needed for deliveries and cash pick up thanks to Dr Verrall’s cigarette-selling Powerball that licensing creates.
The biggest losers remain smokers, who will become criminalised after paying through the nose in taxes to cross-subsidise cycleways, or whatever government spends the billions from tobacco on.
Let’s cut the spin. Who really pays the taxes, matters. Addressing the poverty that tobacco taxes cause, matters. Reducing the crime these taxes cause, matters. Above all, ending the Government’s tobacco tax addiction, matters.
- Sunny Kaushal is chair of the Dairy and Business Owners Group.
