The Government is clearly ‘picking its battles’ and not ready to fight for both a Capital Gains Tax and ‘health promoting taxes’, believes addiction expert Professor Doug Sellman.

Last month’s final report of the Tax Working Group (TWG) received a number of submissions calling for it to strengthen or extend its interim report recommendations on ‘corrective’ or ‘health promotion’ taxes including “widespread public interest in adopting a sugar tax”.

But the group put reform of the ‘corrective taxes’ into the too hard basket with recommendations on changes to existing alcohol and tobacco taxes – and consideration of sugar and gambling taxes – placed in the ‘matters requiring further work’ section of the final report (see TWG recommendations below).

Professor Doug Sellman, director of the National Addiction Centre, said health taxes were clearly not a priority for the group and this was really disappointing.

Dr Nicki Jackson, executive director of Alcohol Healthwatch, said the TWG’s ‘business as usual’ approach to alcohol tax represented a lost opportunity to take urgent action by increasing the cost of alcohol which in turn would reduce the cost of alcohol’s harm.

Rob Beaglehole, sugary drinks spokesperson for the New Zealand Dental Association, said the Association obviously supported a tax on sugary drinks but it was also cognisant that the Government had said it wouldn’t introduce any new taxes in this term.

Mihi  Blair, the tobacco control manager for Māori public health agency Te Hapai Hauora, said unlike the TWG, it did support tobacco excise tax continuing to rise as a proven means of reducing smoker numbers. But she said it did support the group’s call to prioritise other measures to help people stop smoking as last year’s EY research report showed that the high tobacco prices were creating deprivation for low-income families – particularly Māori and Pacific. Blair said it wanted to see a more targeted and transparent use of the about $2 billion gathered in tobacco tax to holistically support communities to reduce the daily stresses that are stopping some of the most financially deprived households from quitting smoking despite the increasing price of tobacco.

Picking battles

Spellman speculated that the Government was “picking its battles” and strategically decided that increasing alcohol taxes and introducing a sugar tax  – alongside an unpopular capital gains tax – would provide “too much ammunition” for opponents to its tax reform proposals.

“It is a big thing to bring in a sugar tax and increase alcohol tax. There’s good evidence that these forms of taxes are effective. They are so influential in signalling to the population that there’s something wrong with eating so much sugar and drinking so much alcohol.”

Beaglehole said if the Government is not introducing a tax on sugary drinks then the Association was calling on the Government “to at least implement other polices that will reduce sugar consumption across the population”.

The association has long supported a sugar tax as one if its seven actions for reducing the harm from sugary drinks but Beaglehole said the number one measure that the association was currently seeking was for all schools to adopt a water-only (and unflavoured milk) policy. “The reason that the association is targeting sugary drinks is that they are the number one source of sugar for New Zealanders aged from babies to 30-year-olds. Sugary drinks were also the number one risk factor for tooth decay, obesity and type 2 diabetes.”  The association was also keen to see the introduction of a ‘teaspoon’ icon on sugary drinks to indicate the amount of sugar they contained and the Health Promotion Agency (HPA) to hold a national campaign to highlight the high level of sugar in drinks.

But he added the Association was hopeful that the Government would introduce ‘corrective taxes’ or ‘health levies’ on sugary drinks if re-elected. “These taxes – they reduce pain and suffering and they also reduce the (health cost) burden on the taxpayer.”

Jackson echoed this saying increasing the price of alcohol through taxation would result in significant cost savings to police, justice, ACC and health. “This is good for all of us”.

“The tax review was all about fairness. But how is it fair that every New Zealander picks up the multi-billion-dollar tab for alcohol harm? Our DHBs are currently crying out for financial help. These costs are preventable” said Dr Jackson.

She said that UMR polling in February showed that 80% of New Zealanders believed action needed to be taken to reduce alcohol-related harm. And almost two in every three New Zealanders supported increasing the price of alcohol as long as the extra money could be used for mental health and addiction services.

The Tax Working Group Future of Tax final report says the group:

  • supports the development of a framework for deciding when to apply corrective taxes (suggestions were made for alternative names including ‘health-promoting taxes’ or ‘behavioural enhancing taxes’ but the group preferred corrective taxes).
  • recommends that the Government review the rate structure of alcohol excise with the intention of rationalising and simplifying it.
  • recommends that the Government prioritise other measures to help people stop smoking before considering further large increases in the tobacco excise rate beyond the increases currently scheduled.
  • recommends that the Government develop a clearer articulation of its goals regarding sugar consumption and gambling activity.


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