The latest estimates put the market share for illegal tobacco sales between 25% and 65%, illicit tobacco and e-cigarette commissioner Amber Shuhyta told a Senate estimates hearing on Tuesday night.
Rising tobacco taxes have driven the average price of a pack of over-the-counter cigarettes towards $50 and incentivised criminal gangs to set up shop.
In stark contrast, a pack of black market cigarettes bypassing legal import channels can be easily found for about AU$15 (NZ$17.17).
The result is a steep decline in taxation revenue and sales for legitimate retailers.
The same has been happening in NZ. If you tax something too much, then illegal sales replace legal sales.
David Farrar runs Curia Market Research, a specialist opinion polling and research agency, and the popular Kiwiblog where this article was sourced. He previously worked in the Parliament for eight years, serving two National Party Prime Ministers and three Opposition Leaders
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