"And here we've got these Nazi police looking out the darned windows, taking a sneaking photograph - don't you people feel bad about that?"
Mackay said he sided with the "Nazis", describing himself as an "anti-smoking zealot". Peters thought this was hypocritical.
"Explain to me why you Nazis then, if that's the case, are seeing the collection of tobacco and cigarette taxes go up to beyond 2 million and rising, when you're trying to get rid of the industry because you want to be smoke free by 2025 - and just to make sure that's not going to happen - you want a referendum on marijuana."
Listen to the full interview below:
"When will you people put together a consistent argument instead of screwing with the workers of this country?"
Meanwhile, Peters had nothing but praise for Shane Jones' entertaining interview on The Country earlier this week.
The Deputy PM said it showed that the Regional Economic Minister was a rural man at heart.
"He was excellent actually, reminding you where the repository of truth lies when it comes to the rural voters of this country."
Jones' interview was an example of New Zealand First being made up of "men and women from the country," Peters said.
"We've not forgotten our backgrounds and we're prepared to defend provincial voting and the country economy when others won't."
Peters had also shown his rural side recently, driving a tractor on the beach for The Country.
Last month Mackay challenged the Deputy PM to drive a silage harvester after an interview where Peters said it was easy to drive a tractor.
However Peters' display of tractor prowess was not met with much enthusiasm from the rural community. Mackay pointed out that he was going so slowly he "may as well have pushed" it.
The Deputy PM defended his tardy pace.
"Well it's a New Holland, I don't know if you've driven one of those but when you're on the beach, first of all there's a speed restriction and you do not want the salt coming off the sand on to the seal of your tractor; so you drive real slow and you look after the vehicle."
Mackay wasn't the only person to issue a tractor-driving challenge, Peters said.
"Judith Collins was in the Hawke's Bay and she said ... to the journalists - I bet Winston Peters can't drive that."
"Funnily enough, as she was saying that, I was at Telford, you know, the agricultural college? And I was shown this tractor and they said would you like to drive? And I said I'd love to do that."
"So I got in ... and started round the system just to show Judith Collins - and you Jamie - that driving a tractor is not that difficult."
Also in today's interview: Peters talked about tax, cannabis reform and live cattle exports.
