Regressive tobacco tax

A 2002 study estimated that tobacco spending made up 14 percent of low income non-housing budget. Rates of smoking are highest amongst the most deprived. Tobacco taxes are therefore regressive. That means they create a disproportionate burden on the poor.

On the back of this hike, a few people will give up smoking . According to the NZ Medical Journal for a 10% price increase, the demand would fall in the long term by 0.7% to 5.2%.

But the vast majority will not. They will cut spending elsewhere or get deeper in debt. The deeper in debt they get the more worried and depressed they will get and the more they will want to smoke. Vicious circle stuff.

Next time you hear a politician - except for the 4 ACT MPs who voted against the hike - spinning a sob story about under-taxing the rich and over-taxing the poor remember this particular plundering of the already impoverished.