The real scandal about heated tobacco products

The government’s decision to introduce a lower excise rate for heated tobacco products (HTPs) has been widely framed as “giving tax breaks to tobacco companies”. It’s a provocative line – and politically potent – but it doesn’t help us have an honest, evidence-informed discussion about how to reduce smoking harm, particularly for the most disadvantaged New Zealanders, or how to deal with conflicts of interest.

Let’s be clear: this isn’t a corporate subsidy, so long as the reduced tax is passed on with cheaper products. It’s an excise adjustment applied to a class of tobacco products that heat rather than burn tobacco. (Like vaping products, HTPs are marketed as smoke-free alternatives to cigarettes, but are not the same thing.)

Combustion is what makes smoking lethal. Cigarettes burn at over 800C, releasing thousands of toxic compounds. Heated tobacco products operate at much lower temperatures and don’t produce smoke – just an aerosol – with far fewer harmful constituents. That distinction matters.

The multinational tobacco company Philip Morris holds a monopoly over HTPs in New Zealand. That’s not ideal, but it doesn’t mean the tax policy exists for Philip Morris International. The intention is to make a less harmful product more affordable than cigarettes – a principle long accepted in tobacco harm reduction, and already applied to vaping.

Unfortunately, it appears Philip Morris International hasn’t yet passed on the tax savings to the small number of HTP users in New Zealand – this is the real scandal.

In addition, the apparent impact of PMI on government policy is tough to ignore, and contrary to the WHO Framework Convention on Tobacco Control, which seeks to protect government policy from tobacco industry influence.

New Zealand has rightly taxed cigarettes heavily to deter use. But excise taxes are also regressive. The remaining people who smoke – fewer than 7 percent of adults – are disproportionately Māori, Pasifika, low-income, and more likely to experience mental health distress. The associate minister of health, Casey Costello, justified the excise differential by citing relative harm reduction and the growing inequity of uniform excise. Her reasoning deserves more attention than it has been given.

Critics argue there’s insufficient evidence that HTPs help people quit, but the UK Office for Health Improvement and Disabilities, the UK Committee on Toxicity, and the US Food and Drug Administration all acknowledge HTPs reduce exposure to toxicants compared with cigarettes. That doesn’t make them harmless – but being less harmful than smoking is enough to warrant a differential tax.

The example of Japan is instructive. There, HTPs make up over 30 percent of tobacco sales. Though vaping is banned, cigarette consumption has plummeted by 40 percent in some markets. Surveys suggest many smokers switched completely to HTPs. Youth uptake has been minimal. No policy is perfect, but that’s a shift in the right direction.

What’s really at stake here? Not a tax break for big tobacco – but increasing the options for people who smoke and want to quit, and whether we believe in a response to nicotine products based on their comparative risks to human health as a foundation for public health policy.

A more productive debate would ask:

• Are they less harmful than cigarettes, and do they help smokers quit?
• Are tax savings being passed on to consumers?
• Are HTPs being promoted responsibly?
• Will there be an independent evaluation of their impact on smoking rates?

In a country that leads the world with its Smokefree 2025 goal, we should be asking how to accelerate the decline in smoking, not defending a one-size-fits-all excise regime that’s increasingly disconnected from the realities of risk, behaviour, and equity.

If HTPs can help some people switch, pricing them appropriately is not a scandal. It’s a good policy – provided it’s transparent, monitored, and grounded in evidence, and the tax savings are passed on to consumers.