A tobacco product tax cut slated for one year has been extended by two
Photo:
VNP / Louis Collins
The tax break for Heated Tobacco Products (HTPs) made by Phillip Morris has been extended for an extra two years.
In July 2024, the government
cut the tax on HTPs in half
, in what it said would be a one-year trial subject to an evaluation.
But NZ First Associate Health Minister Casey Costello told RNZ the evaluation would now be done in July 2027 and the reduced tax rate would apply to HTPs at least until then.
Labour's health spokesperson Ayesha Verrall said the extension of the tax cut was striking, given the strain on the health system.
"This government has the wrong priorities. It is giving tax breaks to tobacco companies now valued at over $300 million and the evaluation they promised, to check that it was helpful, is a total sham."
Costello cut the HTP tax rate by 50 percent last year, with the aim that cheaper prices may encourage people to switch from cigarettes to HTPs.
The cut was made despite health officials telling Costello there was
no evidence HTPs worked to stop people smoking or were significantly safer than cigarettes
.
Costello told Cabinet she had her own "independent advice" which, when she released it later,
turned out to be five articles
that were either about different products, outdated, or offered only weak support for her view.
Treasury said Philip Morris had a monopoly in the HTP market in New Zealand and would be the main beneficiary of the move.
Costello's office told RNZ the tax cut trial would be extended because Philip Morris had to
pull its IQOS device from sale last year
, as it did not comply with requirements for vaping devices to have a removable battery. Last week, Costello ditched the requirement for removable batteries, saying Cabinet was advised this was the best way to resolve legal action from Mason Corporation, which owns the Shosha vape store chain.
A spokesman for the Minister said with HTPs off the market for months last year, the original plan for an evaluation after one year did not make sense.
"There wasn't an evaluation because of the withdrawal of HTPs from the market. Any report back would be meaningless as the cheaper HTPs were only available for two months," the spokesman said.
"Cabinet agreed to extending the HTP review to July 2027 as there will be more market data available."
The spokesman said the evaluation would then be able to show whether "a sustained price reduction encouraged uptake by smokers" and if it had helped reduce smoking.
The assessment would also look at whether HTP use "encouraged smokers away from vapes" and the extent of "unintended uptake by young people".
A March 2025 Ministry of Health (MOH) briefing to Costello, focused on how to evaluate the HTP tax cut, said Philip Morris had not initially passed on the excise reduction to consumers.
"There was no price change passed through to customers for the first month, though this is an observation of value in and of itself," the MOH said.
The briefing, obtained by RNZ under the Official Information Act, said Philip Morris had to pull its IQOS device just three months into the tax cut trial.
"All HTP devices were removed from the market in New Zealand due to not meeting new safety regulations. This has meant there have been no HTP devices available for purchase for at least 5 months of the 12-month trial period."
Costello has said that HTPs "have a similar risk profile to vapes", but officials from Treasury and Ministry of Health advised her they were much more harmful than vaping.
In its March briefing, the MOH told Costello it would be difficult to assess whether people using HTPs had decreased their harm or not.
"While we will be able to assess whether the percentage of current or recent smokers who use HTPs increases, we will not be able to track whether those same people were previously using, or likely to use vapes, for example, whether they moved from a safer alternate product to a more harmful one."
Verrall said the onus should be on Philip Morris to prove its product was safe.
"There is no reason why the government should be running a study for Philip Morris to help get its products used," she said. "This product is not a health product. It is a harmful product."
Verrall said the latest update from the Treasury showed the HTP tax cut was forecast to cost up to $293 million if continued until 2029.
"It's deeply worrying when our health system is underfunded that the government is giving away $300 million to the benefit of a single company with links to one of the coalition partners," Verrall said.
The extension of the tax break for the Philip Morris products comes after RNZ published documents alleging a
close relationship between NZ First and the tobacco giant
.
The documents, released in litigation against US vaping company JUUL, allege Philip Morris pitched draft legislation to NZ First as part of a lobbying campaign for its HTPs.
The documents claim Philip Morris corporate affairs staff "reached out to NZ First to try and secure regulation to advantage IQOS".
A lobbying firm advising JUUL claimed that NZ First leader Winston Peters had a relationship with Philip Morris and also that "any regulation he champions is likely to be very industry friendly and highly geared towards commercial interests in the sector".
Peters did not address the allegations that NZ First received material from Philip Morris, but
said RNZ's story was a "tissue of baseless accusations"
and that engagement with the tobacco industry was legitimate.
"Multiple government departments have themselves proactively reached out to, and met with, 'big tobacco' for direct feedback and advice on tobacco legislation," he said, in a post on X.
Health Coalition Aotearoa and Vape-Free Kids want Prime Minister Christopher Luxon to strip NZ First of the tobacco and vaping portfolio but he says Costello is doing a great job.
Sign up for Ngā Pitopito Kōrero
,
a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
RNZ News
4 minutes ago
- RNZ News
Fisheries Minister Shane Jones on industry reforms
An overhaul of the rules will allow greater catch limits when fish are abundant and stop on-board camera footage from being made public. Oceans and Fisheries Minister Shane Jones spoke to Corin Dann. To embed this content on your own webpage, cut and paste the following: See terms of use.
RNZ News
34 minutes ago
- RNZ News
NCEA isn't perfect but NZ shouldn't forget why it was introduced in the first place
First published on Photo: 123RF Education Minister Erica Stanford has called time on "credit counting", announcing plans to scrap the National Certificate of Educational Achievement (NCEA) . Under the proposed changes, from 2028 NCEA Level 1 will be replaced by foundational literacy and numeracy tests, dramatically reducing the amount of assessment in Year 11. Levels 2 and 3 will be replaced by a New Zealand Certificate of Education and an Advanced Certificate. The current achieved, not achieved, merit and excellence grades will give way to marks out of 100 and traditional letter grades: A, B, C, D and E. Students in Years 12 and 13 will be required to study at least five complete subjects and pass four of them in order to gain each certificate. The reforms are meant to address long-standing concerns over how students accumulate credits to complete their qualifications. With NCEA, students can opt out of assessments, including final exams, once they have accumulated enough credits. But as the government seeks to address the "gaming" of the system , it shouldn't lose sight of why NCEA was introduced in the first place - and who it was designed to help. While the system has its flaws, a return to an exam-based model may not make the grade either. Education Minister Erica Stanford says there's been too much "gaming" of the system. Photo: RNZ / REECE BAKER NCEA was introduced between 2002 and 2004 to replace the School Certificate, Sixth Form Certificate and Bursary qualifications. Its aim was to broaden educational success, recognising diverse forms of learning as legitimate. The previous qualifications primarily valued traditional academic subjects because those were, in large part, the only ones available for assessment. NCEA represented a shift away from viewing vocational learning - for example, in trades or creative subjects - as less valuable and not a viable path to formal qualifications. It also marked a departure from "norms" based assessment, which scaled student results to fit predetermined pass and fail rates. In contrast, NCEA was "standards" based: if a student could demonstrate the required skills or knowledge, they received the credits. But since the early days of NCEA, there have been concerns students could achieve the qualifications without really having gained an adequate education. The flexibility of NCEA - allowing schools, teachers and students to tailor learning pathways - is both its greatest strength and its greatest weakness. It has been criticised for being confusing, inconsistent and lacking credibility. Last year, Mike Grimshaw, an associate professor of sociology at Canterbury University, raised concerns that students were entering university "functionally illiterate". He said New Zealand was "under-educating but over qualifying". Concerns such as this over NCEA have fuelled repeated calls for reform. Photo: Unsplash/ Greg Rosenke While few dispute changes are needed, the scale and pace of the government's proposals are another matter. Schools have already contended with numerous policy shifts under this government, including rapid curriculum changes and new assessments in primary and secondary schools. Now they are being told the entire NCEA framework will be replaced. The sheer volume and speed of these changes puts significant pressure teachers. This is not the only concern. Under NCEA, a Year 12 student who worries they might fail the calculus "standard" can still do maths, knowing they have the option not to sit the calculus exam. Under the new system, this sort of flexibility disappears. Students will either take Year 12 mathematics - or they will not. This inflexibility raises the stakes. It may deter students from taking certain subjects altogether for fear of failure. The renewed emphasis on exams is also problematic. Research has shown exam outcomes can be influenced by gender, anxiety and even personal circumstances on exam day. In other words, exams are not necessarily the "credible" measure of learning they are made out to be. There are also important questions that the government's policy consultation proposal does not answer. What are the options for a student who fails the certificate on their first attempt? Will schools still be able to tailor internal assessments to suit their students? There are, however, reasons for cautious optimism. The government has promised to retain the NCEA standards-based approach. Preserving the integrity of whole subjects means students are more likely to learn topics, such as algebra, that keep academic options open but are often left out in NCEA. But this will come at a cost. The stakes will feel higher and students will face greater pressure to succeed. NCEA delivered on the promise that we shouldn't automatically assume half of our population will fail. Over the past two decades, more young people have left school with qualifications. But did they learn more? That remains an open question. The new system will likely bring consistency and arguably credibility to high school qualifications. But some students will pay the price of this higher-stakes approach to education. * David Pomeroy is Senior Lecturer in Mathematics Education, at the University of Canterbury. This article first appeared in The Conversation .
RNZ News
34 minutes ago
- RNZ News
Neurodivergent student quits University of Canterbury after being accused of cheating
A neurodiverse adult student has abandoned his tertiary degree after being accused of cheating. Photo: RNZ / Nate McKinnon A neurodivergent adult student has abandoned his tertiary degree after being accused of cheating by the University of Canterbury. David* is an adult student with Asperger's syndrome and ADHD. His conditions meant he was allowed use a computer for spell-checking in exams, but he was accused of accessing the internet during an exam in June. It took six weeks for the university to clear him of wrong-doing and David said the process was drawn out, lacked inclusivity, and the stress it caused him affected his physical and mental health. But the University of Canterbury defended its handling of the matter, saying its standard processes were followed. David's early years of schooling were marred by memories of shame and being treated as the "naughty boy" due to his conditions . But now in his 30s, after encouragement from his wife, he decided to become the first person in his family to go to university. The first year and a half of his study went well, reaffirming his decision to pursue a Bachelor of Arts. "It took me probably a good year to convince him to go to university and give it a go," his wife, Margaret*, told RNZ. "I went when I was in my 20s, so I'm like 'I know you, you're very intelligent, you will thrive there' and he was. His first year and a half was great. Everybody was saying he actually found his place. "I'd spent a long time in my life working menial middle-range jobs and I thought why not give it a shot, and I've thrived up until this point. I'm sitting on a decent GPA, which is sort of unexpected," David added. However, it was not without its difficulties and his neurodiversity entitled him to use a computer for spell-checking during his exams. That was where the problem arose. While sitting a 200-level closed-book exam on 9 June, an exam officer told David he had seen him access Google using the computer. David said he had no intention of going into Google and he believed it opened as a result of a hyperlink in the word processing programme he was using for spell checking. After explaining that to the officer, he assumed that was the end of it. More than two weeks later, on 25 June, he received an email: "I have had a matter referred to me by the Proctors Office. The allegation against you is that you accessed the internet on two separate occasions in a closed book exam". David met with the proctor the next day. "I said 'if anything's happened, it's purely by mistake. It might have accidentally opened an external tab. That wasn't my intention'," David said. "She turned round and said to me 'well, look, sometimes we make mistakes. We all make mistakes and sometimes it's easier just to own up and admit it and we can make this go through a lot smoother'." David said he reiterated his innocence and the proctor responded by telling him "well the process is going to be a long, drawn-out one then". He left the meeting feeling as if his guilt had been decided. "I said to [my wife] they're going to find me guilty anyway," he said. "We even started putting together an appeals process because that was the opinion I got when I met the proctor - they had already determined my guilt." Then came silence. David received his exam results, but his grade for the paper in question was not published. On 8 July, he reached out to the proctor. "I am still investigating this case and waiting for a reply to an internal email I sent on 30 June. This process may have been delayed due to the term break and colleagues taking annual leave. I have followed up with the colleague concerned and hopefully I receive a reply soon," the proctor's response said. Margaret said the stress and anxiety it caused David was difficult to watch. "This has been really heartbreaking to see him just lose all this faith in this institution and just crumble beneath the really poor policies," she said. David said he felt awful. "Disenfranchised. Embarrassed. I try to keep my neurodiversity hidden and the fact that I opened myself up enough to tell UC, I feel like they abused my trust," he said. By 13 July, his GP was so concerned he wrote a letter to the university on David's behalf. "Based on [David's] account, these allegations appear to be unfounded and the way they have been handled has had a profound impact on both his mental and physical health," the letter said. "[He] reports that he was given very limited support when informed of these accusations, and the process appears to have lacked appropriate sensitivity . He has since experienced severe psychological distress, including panic attacks, and I have noted a marked deterioration in his overall well-being." Finally, on 24 July, four weeks after his meeting with the proctor, David received an email clearing him of wrongdoing. "Thank you for taking the time to meet with me on 26 June 2025. I appreciate the honest and open conversation and as discussed; I am following up formally advising you of the outcome of this referral," the letter started. "As indicated at our hui I have investigated this allegation and gathered the necessary information required to make an informed decision regarding this referral from UC Concerns. I appreciate your patience while I have done so and with the information before me, I have reached the decision that you did not breach the University Academic Misconduct Regulations." There was no apology and no further explanation. "No sorry for the stress. No sorry for the accusation. Just we carried out our process and we consider it the end of the situation," David said. The University of Canterbury needed to assess whether its processes were suitable for neurodiverse students, he said. His treatment meant he no longer felt safe to pursue his studies and he would not be returning next year to complete his degree. Instead, David had used his credits to attain a certificate and diploma of arts. "It feels like they've actually stolen part of my future identity because I'm actually the first person in my family to go to university," he said. "I was hoping that some of the nieces and nephews would actually follow me in, but not after this experience." The university did not directly address RNZ's questions about whether an apology was warranted. In a statement, the University of Canterbury defended how it handled David's concerns. However, in a statement it said: "[David]'s case was managed in line with our normal academic misconduct process, which, by necessity, takes time to investigate thoroughly and ensure fairness. "[David] participated in a closed book exam on 9 June. For closed book exams, students are advised that they may not refer to any course materials or other resources during the exam. The two exam supervisors reported that during the exam, on two separate occasions, they observed [David] opening an internet page on the device he was using during the exam. "It is usual process for students to be invited to attend a meeting with a Proctor to discuss an allegation of academic misconduct, and they are able to bring a support person. "The UC Proctor's recollection of the meeting differs from that of [David]. The Proctor explained that this was an initial meeting to discuss the allegation and to give [David] an opportunity to respond. The process moving forward was also discussed, including that there would be a period of investigation, which could take some time factoring in minor delays such as UC's mid-year exams, the Proctor being on leave for part of this period, and the course coordinator also being unavailable for a time. [David] was advised of the timing, and the investigation was completed within that timeframe. "At the time of the first meeting, the Proctor did not have access to [David]'s neurodiversity information, as this is securely managed through UC's Accessibility Service for formal exam and learning arrangements. [David] shared this information with the Proctor during the meeting to explain why he had special exam arrangements in place. "The academic misconduct process that was followed in [David]'s case has been reviewed by UC's Head Proctor, in response to the concerns raised by [David]. The review confirmed that UC's standard processes were followed and that [David] was given a fair opportunity to respond. "Following the completion of the investigation, the Proctor determined that academic misconduct had not occurred. "[David]'s privacy complaint has been investigated by UC's Privacy Officer, and a response has been provided to him on 4 August. The Privacy Officer determined that no privacy breach occurred." David and Margaret have also complained to the Human Rights Commission and the Ombudsman. *Not their real names Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
