Increasing tobacco taxes is considered one of the most effective tobacco prevention measures because price increases reduce the use of tobacco products, especially among young people. Recurrent tax increases are also one of the measures recommended in the WHO Tobacco Control Convention.
However, the New Zealand government has followed this recommendation since 2010 and is increasing tobacco taxes by ten percent each year until 2016. This is part of the action plan to become a smoke-free nation by 2025.
Researchers at the University of Otago have now examined how the tax increases have affected price levels so far. The researchers collected price data from over 450 retailers across the country. The prices of four of BAT's products were examined; three brands of pre-rolled cigarettes and one brand of rolling tobacco. The three brands of pre-rolled cigarettes were a premium, a standard and a budget brand. The prices were examined before and after the 10% tax increase in 2014.
The results showed that BAT did not spread the effect of the tax increase evenly across the range. The price of the budget brand was only increased by 3%, while the price of other brands was increased by more than the tax.
“This means that some smokers are not affected by the tobacco tax increase in the way the government intended,” says Louise Marsh, the researcher who led the study.
– The growing price gap between budget brands and other brands may encourage smokers to switch to cheaper brands rather than quit smoking.
The researchers suggest that the government should change its approach to raising tobacco taxes to reduce the ability of tobacco companies to impair the tobacco prevention effect of tax increases.
