New Hampshire seeks to lower cigarette tax by 10 cents

Posted March 18, 2011, at 6:32 p.m.
Last modified March 28, 2011, at 4:51 p.m.

CONCORD, N.H. — As some states look to tobacco tax increases to plug budget holes, a few are bucking the national trend and saying, “If you smoke ‘em, we got ‘em,” looking at dropping the rate to boost cigarette sales.

In New Hampshire, supporters argue that reducing the tax by a dime would help the state compete with Maine, Vermont and Massachusetts, while opponents say it would still lose millions of dollars even if higher sales resulted.

New Hampshire’s House voted Thursday to reduce the tax and sent the bill to the Senate, where its prospects are uncertain. New Jersey and Rhode Island also have considered reducing their taxes.

Aaron Evans, 25, weighed his potential new option Thursday as he stopped at a convenience store in Haverhill, Mass., for a sandwich and a $7.13 pack of Marlboro cigarettes. A pack would cost him $5.99 a couple miles away in New Hampshire, which already has significantly lower taxes than Massachusetts.

He welcomed any move to make smokes cheaper but said a dime a pack wouldn’t make him change his buying habits.

“You’ve got to average it out,” he said. “I could either drive all the way over to New Hampshire and waste the gas — it kind of evens it out.”

It’s very unusual for states to lower the tax, said Frank Chaloupka, an economics professor at the University of Illinois at Chicago. The sales increase isn’t enough to offset the drop in tax revenue, he said.

States have enacted 100 increases over the past decade, he said.

New Hampshire raised its tax repeatedly since Democratic Gov. John Lynch took office in 2006, increasing it from 52 cents per pack in 2005 to $1.78 currently.

“New Hampshire has been going in the same direction as the rest of the country, basically forever,” Chaloupka said.

The bill passed by the House would cut the rate 10 cents to $1.68 per pack. The taxes are $2.51 in neighboring Massachusetts, $2 in Maine and $2.24 in Vermont.

Rhode Island’s bill would cut its tax by $1, to $2.46 per pack compared with $3 in neighboring Connecticut. New Jersey last year considered reducing its tax 30 cents, to $2.40 per pack, but hasn’t followed through.

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