NH's Tobacco Tax

Brian Gottlob, an economist from Dover, announced recently that findings from PolEcon Research contradict claims that New Hampshire revenues will benefit from a decrease in the state cigarette and other tobacco products tax.

Gottlob completed a review of NH specific tobacco sales and tax changes over a 10-year period and the possible impact on other state revenue; gasoline, rooms and meals, and alcohol. The PolEcon report found no correlation between tobacco sales and the sales of these other retail products, which provide tax revenue to support the NH state budget. His findings disprove those presented by the NH Grocers Association to NH lawmakers, which led to the passage of a bill to reduce cigarette taxes by 10 cents and on other tobacco products by 17 percent.

However, PolEcon's report does determine that the state can expect to lose revenue on its tobacco sales should it reduce tobacco tax rates.

Campaign for Tobacco-Free Kids' Director of Advocacy Northeast Region Kevin O'Flaherty spoke at the press conference on the issue of the effect of cigarette taxes on convenience store profitability. "Convenience stores and retailers are acting as pawns of the tobacco industry again in this misguided effort to reduce the cigarette tax by 10 cents. Higher cigarette taxes haven't hurt New Hampshire's economy or convenience stores. To the contrary, higher cigarette taxes have been shown to improve state revenue and increase the number of convenience stores while preventing NH kids from becoming addicted to these deadly products," he said.

The report, "The Fiscal and Economic Impacts of Decreasing the Cigarette Tax in New Hampshire, March 2011" contains several key findings:

      NH will lose $9 million in tax revenue from a tobacco tax decrease,
      Cigarette sales do not exert a significant influence on other state revenues such as from Rooms and Meals, Gasoline, or Alcohol taxes,
      A gasoline price above $3 per gallon erodes the incentive for out of state travelers to come to NH to purchase cigarettes,
      Other tobacco products, used increasingly by NH youth, such as cherry cigars and disposable nicotine sticks, will become cheaper and more attractive to youth.

Several leading health organizations were represented at the press conference, including the American Lung Association of NE, American Heart Association, American Cancer Society, Campaign for Tobacco-Free Kids, the American Cancer Society Cancer Action Network, Breathe NH and March of Dimes.  Each organization advocates for higher tobacco taxes as a way to reduce tobacco use and offers states revenues for tobacco prevention and cessation programs.

Tobacco is the leading, preventable cause of disease and death in the United States. Increasing the price of tobacco products by raising the excise tax is one of the most effective ways to discourage youth from starting to smoke and encouraging adults to quit. In recent years, many states have raised cigarette tax rates, and in every case, they have reduced smoking among both youth and adults while increasing revenues to balance budgets and fund vital programs. A decrease in NH's tobacco excise tax would encourage more tobacco use among young people and adults, including pregnant women resulting in an additional $21 million in long-term health care costs.