health & science

Don’t quit! We need your excise dollars

A single company - British American Tobacco Holdings (New Zealand) - paid $1.1 billion in excise duty last year, or just shy of 3 percent of our total tax take. 

BAT NZ, the nation's biggest tobacco company by market share, paid the excise on sales of $1.46b in 2017, up from $1.42b the previous year. 

BAT brands include Rothmans, Dunhill, Benson & Hedges, Winfield, Holiday, Pall Mall, Freedom and Club, along with roll-your-own brands such as Park Drive.

In 2016, the Government reaped a total of $1.7b in duty on tobacco sales from the three big companies in the market - BAT NZ, Imperial Tobacco, and Philip Morris. That's more than 4 percent of our total tax take.

An estimated 605,000 adults burn their way through 2 billion cigarettes a year in New Zealand, worth $2.5b. 

It isn't easy to work out exactly how much money is spent on tobacco-related illness, but a report in the British Medical Journal suggested worldwide it was 5.7 percent of total annual health expenditure.

Extrapolate that out to New Zealand, and that comes to $950m a year - less than the amount paid in excise by BAT and significantly less than total tobacco company duties.

Meanwhile, paying over $1b into NZ coffers in 2017 didn't mean BAT lost out financially. The New Zealand subsidiary landed a gross profit of $61m and a net profit of $15.m (down from $22m in 2016). BAT NZ paid its parent an ordinary final dividend of $22m, plus a special dividend of $227m, using retained proceeds of its sale of brands two years ago.

BAT NZ is currently in a legal dispute with smaller rival Philip Morris NZ, which has alleged BAT NZ is breaching competition law by locking retailers into contracts designed to preserve its dominance in the $2.5b market. A spokeswoman said BAT NZ "categorically deny the allegations made by Philip Morris New Zealand. We are confident that we are not engaging in anti-competitive conduct and will defend our position when the case is heard".

Plain packaging came into effect in March this year, while advertising disappeared with the Smoke-free Environments Act 1990 and the Smoke-free Environments Regulations 2007.

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