Bad News Expected From New Hampshire Tobacco Tax Proposals

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Most stories have good news and bad news. This one, according to the International Premium Cigar & Pipe Retailers Association, has the potential of only bad news when it comes to proposed tax increases on tobacco products other than cigarettes in New Hampshire.

Most stories have good news and bad news. This one, according to the International Premium Cigar & Pipe Retailers Association, has the potential of only bad news when it comes to proposed tax increases on tobacco products other than cigarettes in New Hampshire.

The New Hampshire House Finance Committee has voted to raise state taxes on most tobacco products other than cigarettes from 48.59 percent to 65 percent to make the tax more on a par with the current cigarette tax which is $1.78 per pack.

“That’s the bad news. But it could be worse. The governor’s proposal was to raise the cigarette tax by 20 cents. Also, another proposal sought to raise the tax on most other tobacco products by as much as 72 percent,” said Chris McCalla, legislative director of the IPCPR, an organization representing some 2,000 retailers and manufacturers of premium cigars and premium pipe tobacco. Most of the members are small businesses, mom-and-pop neighborhood tobacco shops fighting for survival in a difficult economy.

“Yes, it’s bad, but it could be worse. One thing for sure is that it’s not over yet,” said McCalla.

The full House is expected to act next week. The floor vote is expected to be tight with many legislators committed to no further tax increases. A similarly tight result is expected in the Senate. Experts are predicting the proposal, if it gets that far, will likely be the subject of a full battle in the House-Senate Committee of Conference.

“We won’t be out of the woods until the legislature’s adjournment which is not expected until June 1,” said McCalla.

McCalla reminded the legislators that higher taxes on tobacco products never result in raising the funds projected. In fact, they lead to higher prices which force consumers to search for and find other sources for these products, sources that produce no tax revenues for the state and often are illegal.

“Consumers will purchase their tobacco across state borders or over the Internet which would completely eliminate tax revenues to the state from these transactions. Also, bootlegged product will pour into the state and will lead to illegal sales and, again, no state revenues. In fact, enforcing tobacco laws will end up costing the state more which would result in negative revenues from these products,” McCalla said.

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Tony Tortorici
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