The Ministry of Health has discussed raising the cost of a packet of cigarettes to $100 over the next eight years.
In a working paper presented to Health Minister Tony Ryall, the ministry suggested raising the cost of cigarettes to $100 a pack would significantly help achieve the Government's goal of a smokefree New Zealand by 2025.
The idea was floated in a document that the Government hike the price of cigarettes to $60 next year and then 10% every year thereafter, making the cost of a pack $100 by 2020.
The paper said "if we are to continue to lower smoking prevalence we need to both increase the numbers who successfully quit smoking, and reduce smoking initiation among young people".
The ministry said the most effective way to do this was through raising the price of a packet of cigarettes.
"The smokefree 2025 goal is unattainable by stopping smoking initiation alone and requires significant increases in cessation rates among current smokers.
"Some significant step-change measures are probably required early on - for example a very large increase in tobacco excise tax - to achieve the change in trajectory required."
The New Zealand Institute of Economic Research (NZIER) provided figures to the Health Ministry that the goal was achievable, but would require "ambitious" mid-term targets.
The ministry said almost all smokers picked up the habit between the ages of 14-24 and smoking rates peaked at age 20-30. It was estimated about 650,000 New Zealanders were smokers.
The document said a test simulation from NZIER showed a one-off taxation increase of 60% would halve the numbers of those who picked up smoking in a year.
A 30% increase each year after that, combined with extensive media coverage of the smoke free goal and health programmes to enforce quitting, would reduce smoking prevalence to about 5% by 2025.
The NZIER recommended that for the 2025 goal to be achieved, smoking prevalence would have to be reduced to between 10 and 13% by 2018. That required Maori prevalence to drop from about 44% today, to 25% in 2018.
"Tobacco taxation is the single most effective intervention available to drive down smoking prevalence figures," the briefing paper said.
Tax on tobacco has been hiked incrementally since 2010. Ministry figures showed since then, sales in roll-your-own tobacco had dropped by 14.7% and manufactured cigarettes by 6.2%.
The document said the NZIER had modelled a further tax hike to "kick start" the momentum toward the 2025 goal where, combined with a large "shock increase" in 2013, the price would rise 10% every year after that.
It said that would be a more "realistic approach" than increasing the price of cigarettes by 30% every year until the goal was achieved.