September 3, 2008
Seacoast Online
CONCORD — New Hampshire is on the verge of raising its cigarette tax 25 cents a pack.
Last spring, grocers pleaded with lawmakers not to raise the tax to help deal with a budget gap. They said they could bring in the same revenues if given a chance to market the state’s lower cigarette prices to neighboring states. Sympathetic lawmakers put the tax increase on hold to see if the marketing campaign would bring in the promised money.
But the grocers never launched a marketing campaign — saying now they lacked money to do so — and the revenues aren’t enough to avoid triggering the tax increase on Oct. 1. The tax rate will be $1.33 per pack unless the tax produces $18 million this month. By comparison, the state only got $15 million in August.
The ad campaign was to be aimed at Massachusetts’ smokers whose tax rose $1 this summer. Massachusetts’ cigarette tax now is $2.51 per pack. Vermont also raised its tax 20 cents this summer to $1.99 per pack. Both states also have sales taxes. New Hampshire does not have a sales tax.
New Hampshire Grocers President John Dumais said Tuesday his group approached the tobacco companies for help.
“They didn’t feel they should get involved in anything like that,” said Dumais.
Bill Phelps, spokesman for Altria, parent company of Philip Morris, declined to comment on Dumais’ description of events.
Dumais blamed the weather, gas prices and the sluggish economy for the tax missing its target.
In July and August, tobacco taxes totaled $32 million. Lawmakers set the threshold to trigger the tax if $50 million was not in hand by Oct. 1.
Administrative Services Commissioner Linda Hodgdon said summer sales were so slow that it would take an extraordinary month to reach the $50 million mark and avoid the tax hike.
Rep. Daniel Eaton, D-Stoddard, who helped broker the deal with grocers said the result is disappointing. He said he thought the grocers, not tobacco companies, would do the marketing.
“It’s frustrating. I don’t want to see the trigger kick in, but if it does, it’s self-inflicted,” he said.
Overall last month, state revenues fell $10 million short of expectations. Three key taxes targeted at tourists accounted for $8 million — taxes on tobacco, liquor and on restaurant meals and hotel rooms. The tax on real estate sales also continues to lag behind projections.
Last spring, grocers pleaded with lawmakers not to raise the tax to help deal with a budget gap. They said they could bring in the same revenues if given a chance to market the state’s lower cigarette prices to neighboring states. Sympathetic lawmakers put the tax increase on hold to see if the marketing campaign would bring in the promised money.
But the grocers never launched a marketing campaign — saying now they lacked money to do so — and the revenues aren’t enough to avoid triggering the tax increase on Oct. 1. The tax rate will be $1.33 per pack unless the tax produces $18 million this month. By comparison, the state only got $15 million in August.
Overall last month, state revenues fell $10 million short of expectations. Three key taxes targeted at tourists accounted for $8 million — taxes on tobacco, liquor and on restaurant meals and hotel rooms. The tax on real estate sales also continues to lag behind projections.