David Farrar: The $300 million tobacco tax cut lie

Labour keep claiming that the Government gave the tobacco industry a $300 million tax cut. This was based on reducing the excise on heated tobacco by 50% to see if the price difference would move people form smoking tobacco to heating it. The difference is huge in health terms – it is the combusting of tar in cigarettes that kills you. Heated tobacco is like vaping – not healthy, but better than smoking.

So the $300 million lost revenue would only have occurred if there had been a huge drop in the number of people smoking – which would be a good thing.

Now I’ve seen an OIA which asks how much tax was paid on heated tobacco products, and the answer is $2.3 million in 2024/25. This means the 50% reduction in excise on those products was also $2.3 million.

That is 0.77% of $300 million. So if Labour keep repeating the $300 million lie, you should be aware the actual data is less than 1% of that.

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