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NH opposes trend, considers cigarette tax cut

Cigarette packs are on display for sale in a shop in New York City.

STEVE CHIOTAKIS: You often hear about cigarette taxes going up as states try to plug budget holes. But today the story is cigarette taxes potentially going down. Lawmakers in New Hampshire are the latest to try and boost revenue by cutting tobacco taxes.

Marketplace's Mitchell Hartman reports.


MITCHELL HARTMAN: The argument goes lower your cigarette tax, and more smokers will come over the border from neighboring states where the tax is higher, to buy their smokes.

The Republican-controlled New Hampshire House yesterday passed a 10 cent tax reduction to $1.68 a pack compared to $2 or more in Maine, Massachusetts and Vermont.

JOHN DUMAS: 40 percent of all of our sales in New Hampshire are sold to out-of-state consumers.

John Dumas heads the state grocers association. He says raising cigarette taxes -- as New Hampshire has done in recent years -- just drives away sales.

DUMAS: It forces those who legally want to smoke to go to either internet sales or the black market or some Indian reservations outside of New Hampshire to buy their product. They're still going to buy it, but it's just human nature that they're going to buy it at the lowest price they can.

Opponents to states lowering their cigarette taxes, though, say it's a net loss for state revenues at a time they can ill afford it, and it might increase smoking, leading to higher health care costs.

I'm Mitchell Hartman for Marketplace.

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.

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