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.
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.
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 prepandemic levels. In total, the foregone revenue between 2015 and 2024 amounted to between NZ$60 million and NZ$96 million.
Duty-free sales of tobacco products represent a government-sanctioned price discount that has undermined Aotearoa’s Smokefree 2025 goal and its obligations as a Party to the Framework Convention on Tobacco Control.