"Impact of a Reduction"

Research in New Hampshire details possible effects of a state cigarette excise tax reduction

Published in Tobacco E-News

By
Linda Abu-Shalback Zid, Senior Editor

MANCHESTER, N.H. -- A 10-cent decrease in New Hampshire's cigarette excise tax could mean millions of dollars in additional tax revenue, according to research conducted by Southern New Hampshire University for the New Hampshire Grocers Association.

New Hampshire retailers near the state's borders were used to seeing 40% of their business come from out of state, partially due to New Hampshire having no sales tax, according to John Dumais, president and CEO of the association. "And as the price of tobacco went up," he told Tobacco E-News, "we started seeing an erosion [image-nocss] of those customers."

A bill seeking the reduction is currently being considered by the New Hampshire senate.

The state's $1.78 state tax is also already lower than its neighbors: Maine ($2), Massachusetts ($2.51) and Vermont ($2.24). (The Vermont legislature recently passed a 38-cent/pack cigarette tax increase which actually would take the per-pack tax to $2.62. The bill is awaiting action from the governor.) But according to the "impact of a reduction" portion of the study, a 10-cent per pack excise-tax reduction could mean $1.7 million more profit for the state's convenience stores, and $12.8 million more in cigarette excise and other taxes (such as business-profit and business-enterprise taxes).

"It's primarily to help business, but it ultimately helps the state, because when those cross-border sales come to New Hampshire, they buy a lot of other products," he said, pointing out that some of the other purchases might include gasoline, food, beverages and even hotel rooms. "And that all helps the New Hampshire economy and helps New Hampshire's employment," he said. "And that's been our prime motivation of our entire customer base. And so we need to nurture that as much as possible."

Some have raised concerns about the study. A study released by the Campaign for Tobacco-Free Kids refutes the findings, saying that while the cut would increase cigarette sales 1.6%, it would still mean a loss of $9 million in tobacco taxes. That study also found "no empirical evidence to support the belief that cigarette sales exert a significant influence on other state revenues such as meals and rental, gasoline, liquor, or business tax revenues."

Dumais said he has also been asked, "If 10 cents is going to do a lot of good, wouldn't a 20- or 25-cent decrease be a lot better?" His answer to that is yes. "But because there's still a lot of questions from a lot of people on whether this can actually do what it says it can do, we wanted to walk before we run."

Keywords: 
cigarettes