Associate Health Minister Casey Costello says she has no intention of reducing tobacco excise tax — the duty added to the price of smoked tobacco products — after comments on Newstalk ZB raised concern among public health researchers.

Costello told the radio station she was "considering a review of the excise, and that's what we took forward to cabinet, that it's time that we started to consider a review on how our excise structure is for all of these products." When asked separately by RNZ whether she meant to cut the tax, she said no. Her goal, she said, was instead policies that "stop people smoking and stop the supply of illicit cigarettes and tobacco."

The timing matters. RNZ found illicit cigarettes being sold over the counter in Auckland well below the legal price floor — in one East Auckland store, packets for as little as $13, less than half the excise component alone. Importing cigarettes without paying duty and selling illicit product are both offences under New Zealand law, carrying fines of up to $20,000, imprisonment, or both.

Health Coalition Aotearoa, an umbrella group for health organisations, called any tinkering with the excise structure "foolhardy." Its spokesperson on smoking, Otago University public health professor Janet Hoek, said excise — the tax that makes cigarettes more expensive — remains one of the most effective tools for getting existing smokers to quit and stopping young people from starting.

Hoek argued the better fix for illicit tobacco is for New Zealand to sign the World Health Organisation's Protocol to Eliminate Illicit Trade in Tobacco Products. That would require licensing at every point in the supply chain rather than adjusting the tax settings that fund enforcement.

On enforcement, the government's Action Group on illicit tobacco completed its first combined operation, arresting five people and seizing 1.3 million cigarettes — representing more than $2 million in evaded excise.

Costello also flagged caution about following Australia's approach to tobacco excise, telling Newstalk ZB host Ryan Bridge that New Zealand should avoid repeating what she characterised as Australian mistakes on tax settings.

The current scrutiny sits against Costello's earlier record on tobacco tax policy. Cabinet material published by the Ministry of Health in July 2024 shows Costello brought forward a proposal to reduce excise duty on heated tobacco products — devices that heat rather than burn tobacco and sit in a different tax category from cigarettes. Officials later commissioned an evaluation of that reduction.

New Zealand currently taxes smoked cigarettes fully but not nicotine vaping substances, a structure that follows coalition agreement commitments. The approach means heated tobacco sits in a middle position — lower excise than cigarettes, none on vaping. This tax structure has shaped how health researchers read Costello's mention of an excise "review."

The public health concern here stems partly from Costello's record. Last September, she was found to have breached ministerial information-handling rules by supplying health officials with a tobacco industry-friendly document to inform policy work. That history colours how public health figures are reading her current comments. They are parsing her language carefully for signs of intent to cut cigarette excise, while she maintains the review is simply about the structure of the tax system and tackling illicit trade.

Cabinet has not, on the public record, agreed to any change in the smoked tobacco excise rate. Costello has confirmed only that a review of the excise structure "for all of these products" was taken to Cabinet. She has not specified which products beyond heated tobacco that review might touch, or what timeframe applies. That gap — between what was said on talkback radio and what has been confirmed to press — is likely to keep drawing questions, especially given the parallel evidence that illicit cigarettes are already undercutting the current excise structure by a wide margin.