The $300m Labour fiscal hole media have ignored

Here is Labour’s fiscal plan:

You will see they are forecasting $365 million over four years from “reversing tobacco tax cut”.

This is the 50% reduction on excise tax for heated tobacco products. This was a minor change designed to incentivise smokers onto a less harmful product. So it is easy to calculate the “lost” revenue from the policy, as you simply double the actual excise paid on heated tobacco products, and subtract what was collected – ie the lost revenue is equal to the actual collected revenue.

Labour’s fiscal plan has $365 million from changing this excise tax back to what it was. So what has been the actual data?

A March 2026 OIA said that excise tax was $2.26 million in the 2024/25 year, which means the “cost” was also $2.26 million.

Now I wondered if there was data for the most recent 2025/26 year, so I asked. And I just got the reply. It was $3.45 million.

Labour’s fiscal plan says they will make $82 million from reversing the change, while the actual data is it will bring in $3.45 million. So the actual revenue is 4.2% of what they claim, or to put it another way their fiscal plan is out by 2377%!!

UPDATE: The fault may be Treasury’s, not Labour. It seems Treasury doesn’t even look at actual data and has kept in its forecasts a projection the HTP excise reduction will cost $82 million a year. This is clearly nonsense, as seen by the actual data.

So Treasury is under-estimating revenue data by $82 million a year. Labour is claiming that reversing the policy will magically bring in $82 million a year. It won’t. Both Treasury and Labour are wrong, as the Customs data is crystal clear the fiscal impact is less than 5% of that. But the greater blame lies with Treasury.

Also thanks to The Post who did check this out, and pointed me to the Treasury estimates.