NZ Government Expresses ‘Extreme Concern’ as PMI Uses Tax Loophole

A new cigarillo brand that undercuts three years of excise hikes by exploiting a tax loophole, is targeting price-sensitive smokers.

Diane Caruana

July 23, 2022

PMI’s cigarillos are subject to a lower excise duty, at about $5.24 less per pack, enabling the company to sell them for 10% less than the next cheapest cigarette.

Philip Morris NZ’s new ‘cigarillo’ looks like a cigarette and is marketed as one, but is sold at about $3 cheaper per pack. The Philippines-made cigarettes come in a brown paper which is reportedly meant to look like a tobacco leaf, hence allowing them to be imported as “cigarillos.” These products are subject to a lower excise duty, at about $5.24 less per pack enabling the company to sell them for 10% less than the next cheapest cigarette.

Meanwhile Philip Morris has been doing its best to portray themselves as moving away from combustible tobacco towards more sustainable products. “We are working towards a future without cigarettes: a future where adult smokers have access to smoke-free alternatives that are a far better choice than continued smoking.” Yet it has introduced a new combustible product, at a very attractive price.

Dr. Rachel Nicholls from New Zealand’s Cancer Society said the group condemns the product. “We believe this is yet another cynical attempt by tobacco companies to hook new users and encourage people to continue to smoke … The Cancer Society condemns the underhand tactics that are used by the tobacco industry to increase their profits at the expense of people’s suffering.”

Associate Health Minister Dr. Ayesha Verrall said cigarillos are not new in New Zealand, and are subject to many of the same strict conditions for sale as cigarettes. However, marketing them as cigarettes is new. “It’s extremely concerning to see cigarillo products being sold with the same brand name as a line of cigarettes, in indistinguishable packaging and at such a low price point,” she said.

New Zealand’s Smokefree Plan

Meanwhile, last December New Zealand launched its Smokefree plan. Verrall, was commended for engaging with a number of health entities to gather opinions about the right action plan. These included organisations, services, advocates, academics, researchers and individuals who have left a mark on their communities.

Aotearoa Vapers Community Advocacy (AVCA) co-director Nancy Loucas said that ministerial diary records show that Dr. Verrall held teleconferences ahead of releasing the Smokefree Aotearoa 2025 Action Plan discussion document for public consultation. The consulted groups included ASH, Hapai te Hauora, and the NZ College of Physicians.

The co-director added that the fact that these groups were consulted is a positive sign, as they are aware of the role that safer nicotine alternatives can play in reducing smoking rates. “These groups are very supportive of vaping’s key role in smoking cessation. It’s very encouraging then that Dr. Verrall is prepared to listen to their on the ground experiences before she finalizes her smokefree action plan.”

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