Associate Health Minister Tariana Turia says the new limit will bring New Zealand into line with Australia.
“I considered recommending that the duty free allowance be removed entirely,” she said on Thursday.
“Although that would be consistent with the government’s goal of making New Zealand effectively smoke free from 2025, it would not be practical.”
Mrs Turia says if no duty free cigarettes were allowed, that would mean people arriving with a packet or two would have to either dump them or declare them and pay duty.
“Either way, it would have potentially created considerable compliance costs for customs in processing passengers at busy airports,” she said.
“Consequently, the cabinet has agreed to reduce rather than remove the allowance.”
The reduced allowance will be in next week’s budget and Mrs Turia says the new limit is forecast to raise an extra $NZ50 million ($A46.55 million) in revenue over a full financial year.
The budget will also remove tobacco from the concession that allows gifts sent from overseas to be free of duty and GST when they arrive in New Zealand.
The Customs Service will be given an extra $NZ2.7 million to help it implement the new rules.
Tobacco excise increases 10 per cent a year under legislation that’s been passed by parliament and Mrs Turia says it’s anomalous for that to be happening when there’s a duty free allowance of 200 cigarettes for every adult entering the country.