New Zealand will scrap its generational ban on smoking to help pay for promised tax cuts, following an agreement by the country’s new three-party coalition government.
The ban, which was touted as a world-first, had promised to bar future generations of New Zealanders – those aged 14 and under in 2027 – from ever purchasing tobacco, as well as drastically cut the number of retailers able to sell such products.
New Zealand’s National Party sealed the agreement on Friday (Nov 24), after drawn-out negotiations over ministerial roles and policies including Indigenous rights, tax cuts and changes at the central bank.
The centre-right Nationals, led by incoming Prime Minister Christopher Luxon, return to power alongside the populist New Zealand First party and libertarian ACT New Zealand after six years of rule by governments led by the left-leaning Labour Party.
The new government will cut personal income taxes, following through on a campaign policy used to woo middle-income voters struggling with rising costs of living.
The coalition agreement also outlines other plans, including the repeal of a ban on the sale of cigarettes to future generations introduced by the previous Labour government.
Documents show the new government will repeal the Smokefree Environments and Regulated Products (Smoked Tobacco) Amendment Act 2022 to “remove the requirements for denicotinisation and the reduction in retail outlets”.
The National Party and New Zealand First have also agreed to do away with the laws before March 2024.
Incoming Finance Minister Nicola Willis told Newshub Nation that the Treasury assessed the effect of the generational ban and concluded that the “range of restrictions would significantly reduce revenue to the Crown”.
Reprioritisation was needed to ensure additional revenue to deliver on major election promises including tax cuts, she said.
ACT New Zealand leader David Seymour told Newshub Nation in a separate interview that ditching the ban would ensure an inflow of funds.
“The government can continue to tax it … we have to remember that the changes to the smoke-free legislation had a significant impact on the government books,” he said.
According to the New Zealand arm of British American Tobacco (BAT), tobacco products make their largest financial contribution to the country’s economy. This comes in the form of excise taxation, with the industry paying over NZ$2 billion (US$1.2 billion) in total taxes a year.