Continuing annual 10 per cent tobacco tax increases until 2031 could save Kiwis an estimated $3.87 billion, due to the prevention of smoking related diseases, a study has shown.

The model, developed by University of Otago researchers, shows continuing the tax could see reductions of between 2 per cent and 3 per cent in health inequalities between Māori and non-Māori.

The research, by Professor Tony Blakely and colleagues is published this week in the international journal PLOS Medicine.

But Professor Blakely said the health gains and cost savings were not predicted to peak for several decades.


"This is because smoking is more common among younger age groups and the tobacco tax effect is greater among young people, given their limited disposable income.

"These young people would not reap the maximum benefits from reduced rates of tobacco-related diseases for many decades to come, due to the long delay between taking up smoking and the incidence of tobacco-related disease in individuals," he said.

For the study, researchers estimated quality-adjusted life-years (QALYs are a measure of disease burden that includes both quantity and quality of life) gained, and total health system costs, over the remaining life of New Zealand's 2011 population exposed to annual 10 per cent tobacco tax increases for 20 years.

"This health gain of 260,000 QALYs is 17 per cent of all health gain that we estimated would occur if all smokers in 2011 quit that year," Professor Blakely said.

The annual quality and quantity of life gains were higher for Māori than for non-Māori, because of higher smoking levels and likely greater price sensitivity among Māori.

Professor Blakely said the model suggested ongoing tobacco tax increases delivered sizeable health gains and health sector cost savings, and were likely to reduce health inequalities.

But he suggested more rapid cost saving and health benefits would be achieved with an additional focus on a reduction in smoking among middle-age and older people.