Tobacco tax cut passes House with veto-proof majority
While many states resort to raising taxes on tobacco and cigarettes in times of budget strife, New Hampshire is trying something new this year. The tax has been rising steadily since 2005, from $0.52 cents per pack in 2005 to its current level of $1.78, until this legislative session, when small business owners and pro-business groups successfully argued that the tax was self-defeating. Responding to testimony from merchants across the state, the NH House voted yesterday to pass a bill that would lower the tax by $0.10, bringing the total down to $1.68, the lowest in New England.
While cutting a relatively non-controversial revenue stream in the midst of widespread spending cuts raised eyebrows, particularly on the Democratic side of the aisle, pro-business groups including the New Hampshire Grocer’s Association (NHGA) are arguing that the tax cut will actually be a revenue-generator.
In an economic impact study released by the NHGA, researchers from Southern New Hampshire University predict that the tax cut will actually generate $13 million in new revenue over the current revenue from the current tax rate. The study posits that out of state buyers would be lured by the lower prices, and purchase additional items like fuel, alcohol and lottery tickets; additionally, Granite Staters currently purchasing their cigarettes online to avoid the high taxes would bring their business back to the state.
The measure passed with a huge majority of 236-93, making it veto-proof in the house. The bill now heads to the State Senate, where it is expected to pass as well, due to the 19-5 Republican majority. Democratic Gov. John Lynch has publicly opposed the tax cut, and may potentially use his veto power, so advocates of the legislation will be watching eagerly to see if it also attains a veto-proof majority in the Senate.