New Hampshire Approves Cigarette Tax Hike
- Mar 22, 2013 | Gail Cole
Update, 7.24.13: The NH tobacco tax will increase, effective August 1. The tax rate for a pack of 20 cigarettes will increase 10 cents to $1.78. The tax rate for a pack of 25 cigarettes will increase 13 cents to $2.23. The tax rate for all other tobacco products (except premium cigars) will increase from 48% to 65.03% of the wholesale sales price.
New Hampshire is one of five states without a state sales tax (the others being Alaska, Delaware, Montana, and Oregon). It also has no income tax. In short, New Hampshire is not pro-tax. People who want more taxes move to Massachusetts.
In spite of that, the New Hampshire House of Representatives has voted 193-167 to raise the cigarette tax. If HB 659 becomes law, the tax on a pack of cigarettes will increase by 20 cents. Other tobacco products would see a similar tax increase.
Representative Cindy Rosenwald (D-Nashua), who sponsored the bill, points out that every ten-cent increase generates approximately $10 million in revenue annually. "The projected tobacco tax revenue for fiscal year 2013 is $137.3 million. The 20-cent increase per pack will mean $39.3 million" in additional revenue for FY 2014-15. (Exeter Patch).
Opponents worry that the increased tax sends an unwelcoming message to out-of-staters, "Don't bother to come to New Hampshire." According to House Majority Leader Gene Chandler (R-Bartlett):
"With tobacco sales on the decline and border sales dwindling, the last thing we need is another increase to the tobacco tax. This regressive tax not only makes New Hampshire business less competitive, but according to the Department of Revenue Administration, will result in a 5.4% reduction in sales, hurting state revenues. Studies have shown that when customers travel to New Hampshire to purchase tobacco products they also tend to purchase non-tobacco products as well. These additional sales will undoubtedly disappear hurting our retailers' bottom line."
Yet even with the proposed tax increase, New Hampshire would have the lowest cigarette prices in New England. According to the Campaign for Tobacco Free Kids, a pack of cigarettes currently costs:
- $1.68 in New Hampshire;
- $2.51 in Massachusetts;
- $2.62 in Vermont;
- $3.50 in Rhode Island;
- $2.00 in Maine; and
- $3.40 in Connecticut.
Governor Maggie Hassan has proposed an additional 10-cent tax per pack of cigarettes in her budget, and said "she will continue to advocate for the 30-cent increase she counted on in writing her budget." If all of the cigarette taxes are approved, the price of a pack of cigarettes would jump 30-cents, to $1.98. The cigarette tax is currently on track to increase by 10-cents on August 1, 2013, bringing the cost of a pack to $1.78 (Boston.com).
HB 659 moves to the NH Senate.
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photo credit: ashley rose, via photopin cc
