Abstract
Introduction: Duty-free sales of tobacco reduce the impact of excise tax increases, a measure many governments have introduced to reduce tobacco consumption and smoking prevalence. We investigated the excise tax revenue foregone in Aotearoa (New Zealand), a country once regarded as having progressive tobacco control policies.
Methods: Using data tobacco companies are required to supply to the NZ Ministry of Health, we estimated the revenue from excise tax and the Goods and Services sales tax (GST) forgone by sales of duty-free tobacco since 2014, when duty-free allowances were reduced.
Results: The number of cigarettes and volume of roll-your-own (RYO) tobacco released for sale decreased following changes to the duty-free allowance and declined sharply in 2020 and 2021, when the international border was closed as a Covid-19 pandemic measure. Since 2022, forgone excise revenue has risen steadily and, in 2024, had nearly reached pre-pandemic levels. In total, foregone revenue amounted to between NZ$60 million and NZ$96 million between 2015 and 2024.
Conclusion: Duty-free sales of tobacco products represent a government-sanctioned price discount that undermines Aotearoa’s Smokefree 2025 goal and its obligations as a Party to the Framework Convention on Tobacco Control.
Methods: Using data tobacco companies are required to supply to the NZ Ministry of Health, we estimated the revenue from excise tax and the Goods and Services sales tax (GST) forgone by sales of duty-free tobacco since 2014, when duty-free allowances were reduced.
Results: The number of cigarettes and volume of roll-your-own (RYO) tobacco released for sale decreased following changes to the duty-free allowance and declined sharply in 2020 and 2021, when the international border was closed as a Covid-19 pandemic measure. Since 2022, forgone excise revenue has risen steadily and, in 2024, had nearly reached pre-pandemic levels. In total, foregone revenue amounted to between NZ$60 million and NZ$96 million between 2015 and 2024.
Conclusion: Duty-free sales of tobacco products represent a government-sanctioned price discount that undermines Aotearoa’s Smokefree 2025 goal and its obligations as a Party to the Framework Convention on Tobacco Control.
| Original language | English |
|---|---|
| Journal | Tobacco Control |
| Publication status | Acceptance date - 22 Dec 2025 |
Bibliographical note
While we do not consider it a competing interest, we note that PG and JH are members of the ASPIRE Aotearoa Research Centre, which undertakes research to inform the Government’s Smokefree 2025 goal. JH and PG have received funding from independent health agencies, including the NZ Cancer Society, NZ Health Research Council, and the Royal Society of NZ Marsden Fund. JH has received travel support and hospitality to present her findings; JH has also received small gifts (e.g., book vouchers) for presenting her findings in various fora.JRB owns 10 shares in Imperial Brands for research purposes. The shares were a gift from a public health campaigner and are not held for financial gain or benefit. All dividends received are donated to health-related charities and proceeds from any future share sale or takeover will be similarly donated.
Funding
The Health Research Council of New Zealand (PI Hoek, programme grant 24/622) and Cancer Society of New Zealand (no contract number to report) funded this research. JRB receives funding from Bloomberg Philanthropies, as part of the Bloomberg Initiative to Reduce Tobacco Use (www.bloomberg.org).
Keywords
- Tobacco
- Taxation
- Duty-Free
