Smokers are paying more for cigarettes from Thursday, after Parliament pushed through legislation that raised the price of cigarettes and tobacco from midnight Wednesday.
The legislation raising the excise tax was passed by 118 votes to four, with four of the five ACT MPs opposing it.
The House sat under extraordinary urgency on Wednesday afternoon, in part to avoid people stockpiling cigarettes.
The price of a packet of 25 cigarettes went up from $13.30 to $14.10 at midnight, assuming that all retailers will pass on the 10% tax increase.
The excise on loose tobacco has risen by 24%, and two further 10% increases for both products will be imposed in January of each of the next two years.
The legislation was in the name of Maori Party co-leader and Associate Health Minister Tariana Turia, who says the National Party initially took some convincing.
But as more evidence was presented, she says, National began to see the merits of using price hikes to reduce smoking rates.
Labour's Ruth Dyson told Parliament the move is a significant achievement for Ms Turia. Maori Party MP Hone Harawira says raising the excise is a tough deal but it's a powerful and effective tool.
Labour's Maori affairs spokesperson Parekura Horomia says the sudden rise in the tax on tobacco needs to be matched by an equally urgent boost to quit smoking programmes.
Mr Horomia says the jury is out on whether the tax rise alone will reduce the number of smokers, so something more needs to be done to help people quit.
Lobbyists generally pleased
Paula Snowden of the charitable trust that runs Quitline expects a surge in calls, given an increase in tobacco excise tax a decade ago pushed up the number of calls from 6000 to 16,000 a month.
Action on Smoking and Health director Ben Youdan says by 2012, when further price rises have been introduced, 40,000 people will have quit smoking as a result.
However, the National Addiction Centre has criticised the Government's decision to increase tobacco taxes only a day after after it refused to increase the taxes on alcohol.
Director Doug Sellman says there is unequivocal evidence that price rises would cut down the damage caused by both tobacco and alcohol.
He says the Government may be misjudging public opinion.
Rise counter productive - tobacco industry
The New Zealand branch of international conglomerate British American Tobacco believes the tax rise is likely to increase sales of illegal tobacco; a trend it says has been proven by overseas experience.
The company says the tax increase will penalise individuals and notes the Government already gets $1 billion a year from tobacco taxes.
Imperial Tobacco says excessive tax can be counter productive as evidence from other markets suggests smokers will downgrade to cheaper brands instead of quitting.
Some tobacco retailers spoken to by Radio New Zealand News on Wednesday night knew nothing about the law change, while others said they were confused about much the excise component of tobacco is nor how to raise it.
Ahead of the price rise, Kelly Patel, from a supermarket in the Wellington suburb of Ngaio, said on Wednesday evening that she had already sold out of some brands.
The Association of Community Retailers fears the higher prices will lead to more robberies.
Renewed call for alcohol price rise
Tariana Turia told Morning Report she would also like to see the excise tax on liquor raised.
The Government has ruled this out, despite a recommendation to the contrary from the Law Commission.
Progressive Party leader Jim Anderton says it's hypocritical for the Government to support an increase in tobacco tax, while refusing to take the same approach to alcohol.
The Salvation Army called on the Government to have the courage to push up taxes on liquor.
Not far enough - Pacific advocate
The chairman of the New Zealand-based Cook Islands Health Network says the Government has not gone far enough by raising the tax on cigarettes and should ban the commercial importation of tobacco.
Joe Williams, a former Cook Islands prime minister, says if the Government wants to make New Zealand smokefree then a ban is the way to go.
Dr Williams says Pacific Islanders smoke in similar numbers to Maori and the number of young people is increasing.
He believes that raising the tax, while unpopular with smokers, is a very good move.
Dr Williams says the Government could also consider raising tax on alcohol because of the harm it causes, especially when combined with smoking.