He said obesity was a more pressing health issue that needed to be addressed first.
"If the Government was really concerned about the most worrying aspects of public health they would have policies to deal with the tsunami of obesity.
"This shows the gross hypocrisy of the Government. They want to have the country smoke-free by 2025; why not fat-free by 2025?
"The Government is charging multinationals less than half one per cent taxation while thumping smokers with a tax which will bring in $425 million over four years.
"What's fair about that?"
Taxpayers Union executive director Jordan Williams backed Mr Peters calls that raising tobacco taxes was an unfair measure.
"Winston Peters is right. These price increases will see kids go hungry.
"The only thing more addictive than smoking cigarettes is this Government's addiction to the excise tax revenue."
He said the legalisation of e-cigarettes would help lower smoking rates.
"E-cigarettes are the number one tool used by smokers to kick the habit in Britain, but the Government has kept the sale of them illegal here."
Meanwhile British American Tobacco spokeswoman Janice Thien said the increased tax places an "unreasonable burden" on smokers, and warns it could create black market selling.
"There are numerous examples around the world where excessive excise increases have fuelled a black market in tobacco.
"This risk is heightened in New Zealand given the inexplicable exemption for domestically grown tobacco from excise or tobacco control regulations, which is fuelling a growing black market."