New Zealand’s tax incentive for Heated Tobacco Products, initially introduced in mid-2024 as a one-year pilot, has been extended for two additional years, with the formal review now moved to July 2027. The excise tax was halved in a bid to encourage smokers to switch from combustible cigarettes to less harmful alternatives.
The initial trial failed to generate viable data: health ministry briefings confirmed that Philip Morris did not pass cost savings to consumers in the critical early phase, and IQOS devices were removed from shelves for approximately five months due to non‑compliance with battery-removability regulations. Officials described any evaluation at that point as “meaningless,” given that reduced priced HTPs were unavailable for the majority of the trial period.
Associate Health Minister Casey Costello justified the extension by citing her own “independent advice,” later revealed to consist of five articles—many outdated or about different products—that offered only marginal support for HTP-friendly tax policy. Treasury officials warned that Philip Morris, as the sole importer, would reap the bulk of the estimated NZ$200–300 million cost over the extended term.
Opposition health advocates suggest the extension favors multinational manufacturers—particularly Philip Morris, which dominates New Zealand’s HTP market—and question whether it undermines broader tobacco control efforts. Government officials maintain that lifting the removable battery requirement for IQOS was a necessary compliance fix and that further data is essential to assess whether price reductions have prompted meaningful user transitions away from conventional cigarettes.
Cabinet and Costello’s office emphasized the need for more robust market data before concluding the HTP pilot. The extended evaluation, now slated for 2027, will not only assess smoker uptake but also unintended demographic use—particularly young people—and any substitution away from vaping or cigarettes. Simultaneously, documents released from JUUL litigation revealed lobbying initiatives targeting NZ First, alleging PMI had pitched draft regulations to align with its interests. While party leaders deny wrongdoing, critics highlight the decision as symptomatic of “highly industry-friendly” policymaking.
