It seems like we've seen a new tobacco tax increase pop up every day at the state level over the past few years. Though a dubious revenue raiser and all-around ill-advised policy change, tobacco tax hikes are politically palatable ways for politicians to "balance" their budgets on the backs of an unpopular minority without making difficult decisions about how to shrink the size of government.

Most recently, Illinois (surprise!) is looking at a 102 percent cigarette tax increase to help fund a massive ongoing spending project. Nevermind the fact that roughly 80 percent of such tax hikes at the state level fail to meet their revenue projections. Recently New Jersey and Washington, D.C. actually realized a net revenue loss after increasing the levy.

Some states, however, are beginning to realize that tobacco tax hikes very rarely raise the amount of revenue promised, leaving gaping budget holes in their wake. Maine and Vermont have begun serious discussions about cutting taxes on tobacco and alcohol. But New Hampshire may be the closest to getting a bill through the legislature.

HB 156, which would reduce cigarette taxes by 10 cents per pack while also bringing down the rate on other tobacco products, passed out of committee on a 14-5 vote and looks to be headed for a floor vote in the House this week. With tobacco taxes especially high in the Northeast, HB 156 would increase New Hampshire's comparative tax advantage in the region, helping along the state's small business environment relative to that of its neighbors.

And the bill could actually be a boon to government coffers as well. A study done by the University of Southern New Hampshire shows that a 10 cent-per-pack tax cut could raise as much as $13 million for the state as consumers from other jurisdictions come to New Hampshire to purchase tobacco at a lower cost.

To see ATR's vote alert to the New Hampshire General Court, see below.

Legislative Alert
Vote "YES" on HB 156

Americans for Tax Reform urges you to vote “YES” on HB 156, which reduces the excise tax on cigarettes and other tobacco products.This is a commonsense measure to reduce New Hampshire’s tax burden on the job-creating private sector and improve its competitive tax advantage with other New England states.

HB 156 reduces New Hampshire’s tax burden while states like New York and Connecticut allow theirs to continue to rise. States compete – for jobs, investment and people. New Hampshire has set itself apart in the past with its low tax burden. By reducing the tobacco tax, consumers from other states will be even more inclined to come to New Hampshire to purchase tobacco, along with the gasoline and food they buy during their trip.

HB 156 is about getting government out of the way of the private sector. Convenience stores and other retailers that realize a significant portion of their incomes via tobacco sales are struggling like any other small business. In the recent past in New Hampshire and elsewhere in the region, they have been a target of state government through consistent tax hikes. Now, as the small business community looks to pull itself out of the economic downturn and continue to create jobs, it’s time to give them (and their consumers) a tax break.

New Hampshire can be a national leader on this issue. Other states in the region like Maine and Vermont have begun to discuss tobacco tax reductions. They recognize that tobacco tax revenue is an unstable funding source for state government, and that most attempts to fund ongoing expenditures via higher tobacco taxes in other states have failed miserably. In keeping with New Hampshire’s low-tax legacy, we encourage you to lead on this issue by supporting HB 156.

Support HB 156, which gets government out of the way of small business.

Stand up for Taxpayers and Consumers.
Vote “YES” on HB 156.

Posted by Joshua Culling on Wednesday, March 16, 2011 5:21 PM EDT

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