The Government should continue to hike taxes on tobacco and raise them to at least 20 per cent a year, health professionals and advocacy groups have told Parliament.

Tobacco taxes rose by 10 per cent on January 1, the last of four consecutive annual increases.

Parliament's finance and expenditure committee heard today that further tax hikes should be introduced over the next few years to curb smoking rates in New Zealand, which are around 17 per cent.

Professor Nick Wilson, from the University of Otago's public health department, said increasing the cost of tobacco was "one of the most powerful things that can be done" to improve the health of the population.


"You are on extremely strong scientific grounds for any recommendations for increases for tobacco taxes," he said.

Price increases also helped close the gap between Maori and non-Maori health outcomes, he said.

And the savings to the health system of smoking cessation were higher than the costs of ex-smokers living longer and using the health system in their old age.

"It is a no-brainer health intervention if you are gaining healthy years of life and saving health costs," Professor Wilson said.

Act Party leader David Seymour asked why tax hikes between 2013 and 2016 had only led to a small decrease in smoking rates.

"We've more or less doubled the tax on tobacco and yet the [smoking cessation] numbers, you're looking at single digit percentage points."

Professor Wilson said the tobacco industry had responded to 10 per cent increases by "price shifting", or encouraging smokers to change to lower-cost brands. If taxes were higher, these distortions were less likely.

Anti-smoking groups National Urban Maori Authority and Action on Smoking and Health (Ash) recommended a 20 per cent tax increase on tobacco.


T&T Consulting director Sue Taylor said Parliament should consider going even further, with an immediate 50 per cent tax hike followed by 20 per cent increases in following years.

"The rationale I've proposed is because I'm out there on the ground. I actually see the continued smoking despite the fact that we have programmes in place."

Ms Taylor, who worked mostly with Maori and Pacific communities, said many people expected further price rises.

"They're just waiting to see what is is. A lot of them are saying, 'That's the only thing that will encourage me to give up smoking'."

A 50 per cent tax hike was questioned by some members of the committee, who asked whether addicts in poor households would forgo key items such as groceries.

The four tax hikes between 2013 and 2016 increased the average cost of a 20-pack of cigarettes from $15 to $20.

Submitters to the committee also cautiously encouraged the use of electronic cigarettes in New Zealand, to help switch addicted smokers to a lower-nicotine alternative.

Professor Wilson said e-cigarettes were a complex area, with new studies emerging every week.

He said they could be an incentive for smokers to quit, but they could also normalise smoking and encourage young people to take up the habit.

E-cigarettes could be offered through pharmacies "in a highly controlled way", Professor Wilson said, and prescriptions could be scaled back or extended depending on their effectiveness.