Bucking a national trend to raise tobacco taxes, the New Hampshire House voted last week to lower the state’s cigarette tax by a dime, the Union Leader reports. The Senate will likely approve the measure shortly.
With a 236 to 93 vote in favor of the reduction, the House slashed the cigarette tax to $1.68 a pack. Republicans pushed for the tax cut as a way to bring in out-of-state visitors to border stores, which would trigger more sales of cigarettes, convenience store items, liquor and lottery tickets. Some Democrats opposed the bill, arguing that it would decrease annual state revenue by $16 million.
The Legislative Budget Assistant’s Office analysis found that a reduction in the tax at current sales levels would lower revenue by $15 million, but the agency also discovered the reduced rate would boost sales enough that the revenue shortfall would be cut in two by 2012.
In the Senate, Finance Chairman Chuck Morse thinks the measure will be approved. “I believe reducing the tax will be a revenue producer,” he said.
Rep. Patrick Abrami pointed out that New Hampshire has had a stagnate tobacco tax revenue since cigarette taxes jumped from 80 cents to $1.78 in 2007. Neighboring state Maine had a $2 per pack tax, which is close to New Hampshire’s current rate.
“We have reached the tipping point. We are hurting our merchants, and we are losing sales on our borders,” said Abrami.
The New Hampshire Retail Grocery Association supports the bill.
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