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Customs Minister Cathy Costello has slashed excise duty on heated tobacco products.
photo: RNZ/Angus Drever
Associate Health Minister Casey Costello has cut excise taxes on heated tobacco products (HTPs) as she aims to make them a more attractive alternative to smoking.
Costello, who is also Customs Minister, has cut the excise duty rate on high-temperature tobacco products by 50 per cent, effective July 1 – a move quietly posted on the Customs website.
Costello declined to be interviewed by Radio New Zealand, but a spokesman said she took the move to reduce product costs and encourage smokers to switch to safer alternatives.
But Janet Hoek, professor of public health at the University of Otago, told Radio New Zealand the move appeared to benefit the tobacco industry.
“This is certainly something the tobacco companies are eager to see happen,” Hawke said. “This is not what the Department of Health is recommending. This is clearly a recommendation that is in the interests of the tobacco industry.”
Tobacco giant Philip Morris owns IQOS, the leading brand in the HTP market, where tobacco is inserted into a device and heated rather than burned.
Philip Morris has been lobbying for a cut in excise duty on heated tobacco products, telling the Tax Working Group in 2018 that the government should “set a tax rate for heated tobacco products that is significantly lower than the tobacco tax rate”.
In a statement to Radio New Zealand, Costello said e-cigarettes were a successful smoking cessation tool and she wanted to see if heated tobacco products (HTPs) were also a useful cessation device.
“E-cigarettes are not for everyone and some people trying to quit have already tried several times. HTPs have a similar risk profile to e-cigarettes and are currently legal, so we are testing what impact halving the excise tax on these products would have.”
The Department of Health said there was no evidence that heated tobacco products could help people quit smoking.
photo: 123 RF
Documents released by the Department of Health show that Costello also sought advice on relaxing regulations on heated tobacco products, but was opposed.
Health ministry officials told her: “There is no evidence to support their use as a smoking cessation tool. We do not recommend relaxing the promotion of HTPs. This could exacerbate concerns about youth use and addiction to nicotine products.”
Costello’s interest in smokeless tobacco and nicotine products
Earlier this year the Government scrapped Labour’s smoke-free plan, which health officials described as a “terminator” for the New Zealand tobacco industry.
The moves will cut the number of tobacco retailers from 6,000 to 600, remove 95% of nicotine from cigarettes and ban the sale of cigarettes to people born after 2009, creating a smoke-free generation.
Costello said she is committed to meeting the 2025 smoke-free goal and is also considering whether allowing the sale of oral nicotine products, such as snus and nicotine pouches, could help achieve that goal.
Department of Health documents show that in March this year Costello recommended to the Cabinet committee “to agree in principle to allow the sale of smokeless tobacco and nicotine products where there is evidence that these products are substantially less harmful than smoking”.
But the Department of Health warned Costello not to allow the sale of snus and nicotine pouches.
“Overall, we do not recommend expanding the range of nicotine products available for sale in New Zealand,” the report said. “Increasing the range of products is likely to exacerbate concerns about nicotine addiction among young people and have little effect.”
The Department of Health told Costello there was “weak evidence” that snus helps people quit smoking. “The risk of addiction from snus may be higher than from tobacco use. Snus use may increase the risk of some cancers.”
According to official advice received by Associate Health Minister Casey Costello, nicotine pouches are “associated with nicotine dependence and addiction”.
photo: stock.adobe.com
The Ministry of Health said nicotine pouches were a new product but concerns had been raised about them.
Officials told Costello: “To date there is no adequate evidence to support their use as a harm-reducing alternative to smoking, nor is there evidence that they are effective for quitting smoking.”
“There is evidence that these products are marketed to children in other countries and are associated with nicotine dependence and addiction. Children, adolescents and non-smokers are considered to be at higher risk of dependence.”
In Costello’s statement to Radio New Zealand, the minister was more cautious about nicotine pouches than was suggested in the Cabinet committee document.
“I have concerns about the nicotine pouches, they appear to be targeted at young people,” Costello said.
The deputy health minister said she would continue to seek advice on the effectiveness and safety of smoking alternatives.
“If there were smokeless tobacco or nicotine products that were clearly less harmful than smoking – that is, they had a similar risk profile to e-cigarettes – then I would want advice on whether there was a use for them to help people quit smoking,” she said.
“We need to find a balance, we don’t want young people to become addicted to nicotine. New Zealand didn’t have any regulation on e-cigarettes until it was too late and youth vaping got out of control.”
Nicotine pouches, which place nicotine between gum and lips to allow it to be absorbed into the bloodstream, are heavily marketed to young people by influencers on TikTok and Instagram.
Big tobacco companies have turned to nicotine pouches as an alternative revenue source.
In 2022, Philip Morris spent $27 billion to acquire Swedish Match, which produces Zyn brand nicotine pouches.
British American Tobacco, which owns the Velo and Lyft-branded nicotine pouches, has lobbied the government to legalize the products.
“The government’s failure to bring smokeless oral nicotine products under the same regulatory framework as e-cigarette products is a significant missed opportunity to advance the 2025 smoke-free target,” the government said in its 2021 report on its smoke-free plan.
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