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Francesca Rudkin: Black market ciggies are in the news again · Early Edition with Ryan Bridge

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  Speaker 1: Cheap, illicit black market cigis are in the news again.
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  Speaker 1: A new report claims more than one third of tobacco
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  Speaker 1: consumed last year was brought on the black market. It
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  Speaker 1: estimates the government lost eight hundred and seventeen million dollars
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  Speaker 1: in exiles and gest revenue last year. It is worth
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  Speaker 1: noting that report was commissioned by tobacco companies, who are
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  Speaker 1: obviously very keen to knock this behavior on the head immediately, though,
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  Speaker 1: it raises questions about the excise tax placed on cigarettes
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  Speaker 1: and whether we should raise it, keep it steady, or
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  Speaker 1: drop it. XOS tax and GST in New Zealand means
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  Speaker 1: a packet of cigarettes is around forty dollars, but you
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  Speaker 1: can pick up a pack on the black market for
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  Speaker 1: around thirteen dollars. It is a difficult policy choice because,
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  Speaker 1: on the one hand, high cigarette taxes have helped reduce
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  Speaker 1: smoking rates over time. On the other hand, you can't
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  Speaker 1: deny that rising prices have increased the incentive for black
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  Speaker 1: market tobacco smuggling and illicit sales. There is a reasonable
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  Speaker 1: argument for reducing or freezing ex taxes if policymakers believe
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  Speaker 1: the illegal market is growing faster than the legal market
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  Speaker 1: is shrinking and Australia, of course provides the water. After
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  Speaker 1: years of large tax increases, the Australian Bureau of Statistics
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  Speaker 1: estimated that illicit products made up of eighty percent of
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  Speaker 1: nicotine consumption at twenty twenty five. Organized crime groups have
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  Speaker 1: become heavily involved, led into violence and extortion and fire bombings. However,
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  Speaker 1: cutting taxes also has drawbacks. Cheaper cigarettes may encourage more smoking,
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  Speaker 1: undermining progress towards public health goals, and I would also
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  Speaker 1: argue it's unlikely the excise tax would be reduced enough
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  Speaker 1: to truly compete with a black market. Thirteen dollar pack
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  Speaker 1: of cities. New Zealand has not only reached has not
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  Speaker 1: yet reached Australia's level of criminal involvement. The government has
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  Speaker 1: stated that while elicit tobacco is increasing, New Zealand is
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  Speaker 1: not yet facing the same issues as Australia. Authorities have
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  Speaker 1: responded with joint operations, including Customs, police and health agencies,
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  Speaker 1: and last night, Customs Minister Casey Castalo defended border controls
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  Speaker 1: on Newstalk zb Drive, stating that Customs has had huge
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  Speaker 1: success in seizing ilicit tobacco and to be fair they
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  Speaker 1: have demonstrated significant enforcement capability. In one recent case, officers
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  Speaker 1: intercepted nine hundred and twenty seven thousand smuggled cigarettes concealed
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  Speaker 1: in shipments falsely declared as clothing, leading to arrests and
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  Speaker 1: the potential tax avoidance of one point four million. Other
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  Speaker 1: operations have seized more than one point five million cigarettes
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  Speaker 1: and over a ton of loose tobacco. What we need
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  Speaker 1: to see, though, is better organization between police and health
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  Speaker 1: agencies once the product is in New Zealand and on sale.
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  Speaker 1: In the year ending March, Ministry of Health did not
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  Speaker 1: undertake any enforcement action against retailers under the smoke free legislation,
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  Speaker 1: and yet dodgy retailers don't seem to be very hard
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  Speaker 1: to find, so from here they need to make it
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  Speaker 1: clear whose jurisdiction it is to focus on breaking up
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  Speaker 1: the domestics fly supply of these illegal cigarettes, with serious
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  Speaker 1: fines and consequences on the table. Overall, though, the strongest
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  Speaker 1: response may be a middle path avoid large future excise
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  Speaker 1: increases wile increasing more resources and enforcement. This approach preserves
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  Speaker 1: the health benefits of high tobacco prices while reducing the
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  Speaker 1: risk of creating an Australian style black market dominated by
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  Speaker 1: organized crime. For more from Early Edition with Ryan Bridge,
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  Speaker 1: listen live to News Talk Set B from five am weekdays,
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  Speaker 1: or follow the podcast on iHeartRadio