New Hampshire's Cigarette Tax Cut Generates Less Revenue

CONCORD, N.H. -- One year after New Hampshire's legislators cut the state's cigarette tax by 10 cents a pack, many are now arguing that the reduction has not raised state revenue as expected.

According to the state Department of Administrative Services, the tax generated $212 million in revenue in fiscal year 2012, which ended last week. That figure is down from the $232 million generated in fiscal year 2012, as reported by the Eagle Tribune. The tax cut went into effect July 1, 2012.

At the time the tax decrease was approved by lawmakers, it was expected that the new $1.68-per-pack levy would draw out-of-state tobacco consumers from bordering states, like Massachusetts where the tax is $2.51 per pack.

Critics can largely be found in the Democrat camp, with Democratic Gov. John Lynch, Rep. Susan Almy (D-Lebanon) and Sen. Lou D'Allesandro (D-Manchester) raising questions as to why the tax reduction was passed in the first place.

The governor's spokesman told the news outlet that Lynch was strongly opposed to the move, adding that reducing a tax leads to less revenue.

"It's certainly not a surprise," Colin Manning, spokesman for Lynch, said. "That's just one of the reasons why the governor did not support the budget."

Still others contend it is too early to tell whether the reduction is a bust. John Dumais, president and CEO of the New Hampshire Grocers Association, told the newspaper that criticism of the tax cut was unfair and that the move helped spur tobacco sales at a time when higher food, energy and transportation costs are hurting the retail industry. He added that roughly 60 percent of all store sales are to out-of-state customers.