Zombie stats. You just can't kill 'em.
It's particularly frustrating when NZ Treasury helps birth one of the things and then does nothing to help kill it.
At BEFU 2025, Treasury put up its estimates.
If you think that halving excise on heated tobacco results in $11m in lost excise for year to June 2025, then you must believe that you will collect $11m in excise from heated tobacco for that year (assuming no change in consumption). $11 million per year when excise over that fiscal year (as simple average between the 2024 and 2025 rates) is $789 per kg means you expect 13,900 kg of heated tobacco will be consumed in FY 2025.
And if you think it will total $44m in FY 2026 at an excise rate of $807 per kg (again averaging the two rates), you're banking on imports of 54,500 kg.
Infoshare has heated tobacco imports in the detailed overseas trade tables. Go there, select imports, and expand code 24 to get to 2404110200 and 2404110600. One gives volumes of tobacco intended for heating using reconstituted tobacco, the other without reconstituted tobacco. The latter is what is used.
For the fiscal year ended 30 June 2025, imports totalled 2,374 kg - slightly below the expected 13,900 kg. For the year to June 2026, imports were 4,207 kg - again, just a bit out from the expected 54,500 kg.
At BEFU 2026, Treasury recognised that they'd botched this.
But they refrained from putting up comprehensible alternative figures. Instead, they published a revised overall outlook for tobacco excise where smaller reductions in excise revenue from shifts to heated tobacco melded with sharp reductions in overall expected tobacco excise revenue (with Treasury remaining agnostic about how much is due to people smoking less overall, and how much is due to shifts to the illicit market). It's all mushed together. You can't tell what is the correction to the HTP figures and what is the decline in expected consumption of excised tobacco.
"Furthermore, subsequent research suggests that future HTP uptake will not be as large as was previously assumed." Indeed.
A few weeks ago, while I was out of town, Farrar pointed to Labour's fiscal plan. They were relying on getting some $82 million per year from "Reverse Tobacco Tax Cut".
That... that's just not going to happen. You'd need to expect about a hundred thousand kilograms of heated tobacco being consumed for a doubling of excise from its current $818.53/kg to get you $82 million dollars.
For the year to September 2026, only 4,309 kg were consumed.
So you're betting that doubling excise will result in heated tobacco consumption going up by about 23x. Demand curves don't slope that way.
Labour ought to have known better than to use those numbers. But Treasury really should have put up corrected ones, and especially where Treasury's imprimatur on shonky stats led to the years-long attack on the government for its purported 'giveaway to Big Tobacco'.
