CONCORD, N.H. ? Last month, the New Hampshire House approved a reduction in the state?s tobacco tax, opening up a heated debate that still continues as the Senate is considering the bill, Seascoastonline.com reports. State Rep. Patrick Abrami supported lowering the tobacco tax as a way to assist small businesses and to be more competitive with border states.
?We have reached the tipping point,? said Abrami, referring to the significant jump in tobacco taxes since 2006. ?We are hurting our merchants. We are losing sales on our borders.?
The New Hampshire Grocers Association (NHGA) showed that tobacco sales generated more than $755 million last year. Lowering the tobacco tax by a dime from $1.78 a pack to $1.68, plus reducing taxes by around 17 percent on other tobacco products would bring in more state revenue. A recent Southern New Hampshire University study shores up that position by revealing such decreases could generate as much as $13 million in revenue for the state.
However, opponents have their own recent study by PolEcon Research, which took to task the university report?s assumptions. The PolEcon study reported that revenue would not rise but instead fall $9 million.
The university study showed that a ?what?s good for the state is good for grocers? approach, said John Dumais, NHGA president. ?This report makes it clear that a cigarette tax decrease, while not a magic bullet, would make a substantial contribution to solving New Hampshire's financial difficulties.?
Meanwhile, Gov. John Lynch views reducing the tobacco tax as hurting revenues. ?We would have to sell 15 million more packs of cigarettes to make up the revenue loss at a time when they are cutting services to the developmentally disabled,? said spokesman Colin Manning.
Dumais, who said nearly all of his members, including many small convenience store owners, want the tax cut because it would lead to more sales of other products and more profits. Those increased profits in turn translates into more business profits tax to the state.
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