New Hampshire Tax Cut Effect

Four months in, a state cigarette tax reduction hasn't produced the desired results

Published in Tobacco E-News

CONCORD, N.H. --A 10-cent reduction in New Hampshire cigarette taxes hasn't boosted revenue in the first four months of the financial year, but more information about the results is anticipated in December.

Through the first four months of the financial year, the tax brought in $77.5 million, which was $3.5 million or 4.3% less than legislative budget writers predicted, according to the Nashua Telegraph. The state took in $84 million during the first four months last year.

The New Hampshire Legislature cut the tax to $1.58 a pack after economists working for the New Hampshire Grocers Association predicted the tax cut would lead to $13 million more in cigarette tax revenue. (Anti-tobacco groups hired economic experts who argued the cut would cause a $9 million decline in tobacco taxes this year.)

Tobacco sales also have been going down steadily in New Hampshire and other states as fewer people smoke. The state issued 55.7 million tax stamps for cigarette packs from this past June through October, while 57 million tax stamps were bought over the same period last year.

(The state sold 71.5 million tax stamps during the five-month window five years ago.)

"October is not a big month; November isn't one either, so December is the next one we have an eye on," said Administrative Services Commissioner Linda Hodgdon.

Meanwhile, StateImpact New Hampshire, a collaboration of New Hampshire Public Radio and NPR, reported that GOP Majority Leader Representative D.J. Bettencourt said it’s too early to gauge the impact of reducing the tobacco tax.

"My district is down in Salem. And I can tell you that many of the store owners are just now beginning to get out to their customers the fact that the tax cut has taken place. And they are advertising very heavily. I think as the word spreads, it will work."

The StateImpact report also points to a Union-Leader article that shows that liquor sales are also down 4% for the year, with the last weekend in October being affected by bad weather.

"Both the Telegraph and Union-Leader stories note that October and November aren’t stellar revenue months for New Hampshire, anyway.  December, apparently, is the next big 'benchmark,'" according to StateImpact.