Cigarettes, booze, in the gun

File Photo / Supplied

The hospitality industry is waiting on Thursday's Budget "with trepidation" because of the possibility of an increase in the tax on alcohol.

It says a series of increases has pushed the cost of a handle of beer in a pub to $10 and more.

The Government has stepped up its user-pays drive in its pre-Budget announcements, saying it will cut student allowances and early childhood education funding and raise prescription charges.

Economists predict this approach will extend to taxes on cigarettes and alcohol, which create social and health costs for the Government.

National's coalition partner, the Maori Party, has taken a hard line on "sinners' taxes", and co-leader Tariana Turia wants the Government to increase the excise tax on tobacco in the Budget.

Ms Turia has been similarly outspoken about alcohol and gambling problems, which disproportionately affected Maori.

Hospitality industry representatives told the Weekend Herald that if a new alcohol tax was imposed, it would pile more pressure on bars and restaurants which were already dealing with big increases in prices from suppliers.

Hospitality Association president Adam Cunningham said: "We're always anxious at Budgets ... and we're awaiting this one with trepidation because we've had a hard two or three years. But hopefully there'll be no ugly surprises."

The Herald reported in January that pubs and bars were passing on the rising costs of alcohol, and many Auckland venues were charging more than $10 for a handle of beer.

Mr Cunningham hoped the two main breweries, DB and Lion Nathan, would absorb the costs, particularly because the tax was applied to alcohol content, not volume.

National Addiction Centre head Doug Sellman said he would welcome an alcohol tax rise, but it should be accompanied by restrictions on alcohol marketing.

The Maori Party's pressure on the tobacco tax is part of its drive to have New Zealand smoke-free by 2025.

The cost of a packet of 20 cigarettes has risen from about $11 in 2010 to between $14 and $16 today. The Government gets $9 from a $14 pack.

The cost to the public health system of treating smoking-related illness is about $350 million a year, but the Ministry of Health says that once the drop in productivity and other factors are included the annual cost to society is more than $1 billion

Action on Smoking and Health spokesman Michael Colhoun said there was a link between the drop in the number of smokers in the past 10 years and the excise tax increases.

Ministry figures showed that since 2010, cigarette sales had fallen 6.2 per cent, and "roll-your-own" tobacco sales were down 14.7 per cent.

A Health Ministry discussion paper last month said if price was the only change to anti-smoking measures, a pack of cigarettes would have to cost $100 before smoking was stamped out.