CONCORD, N.H. ? On Wednesday, the New Hampshire Legislature approved the state budget for the next two years, which includes lowering the state?s cigarette tax by $1 per carton and the tax on smokeless tobacco products by close to 25 percent.
A contingency built into the bill states that if New Hampshire does not receive as much tobacco tax revenue in fiscal years 2012 and 2013 as it did in the two previous years, the tax rates would revert to their current levels prior to the tax cut. The two budget bills are now with the governor, who has until Tuesday to sign or veto the measures; otherwise, the budgets will become law without his signature.
This result has the state?s grocers and convenience stores rejoicing, the Nashua Telegraph reports. Slashing the cigarette tax by a dime will mean more new jobs and more work for current employees, according to convenience and grocery store lobbyists. The tobacco industry says New Hampshire would become the first state to lower cigarette taxes in more than four decades.
Currently, the state?s cigarette tax is $1.78 per pack. ?Clearly there hasn?t been any cut in this tax anywhere in the recent history,? said John Dumais, president of the New Hampshire Retail Grocers, adding, ?More states are looking at this because tax increases on cigarettes have failed to bring in revenue.?
With cigarette sales volume decreasing at a steady clip because of raising taxes four times over the past six years, cutting the rate would help convenience stores immensely, said Diana O?Donoghue, executive director of the New England Convenience Store Association: ?Even a small reduction in the tax will help the state?s convenience stores increase sales and will benefit the state in this challenging economic time.?
Advocates for the reduction say it will raise cigarette sales higher, thus bringing in even more revenue. ?A lower cigarette excise tax will move New Hampshire away from the tipping point where states raise cigarette taxes to a point that results in less tax revenue than the previous lower rate,? said Dumais.
Recently, Louisiana?s governor exercised his veto power on permanently enacting a 4-cent hike in that state?s cigarette tax, returning the tax to 32 cents per pack. However, the House recently revived talks on extending the 4-cent increase.
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