NH, RI, NJ Buck Trend, Propose Cigarette Tax Cut
Legal News Feed
Bucking a national trend of raising cigarette taxes, New Hampshire, New Jersey and Rhode Island have considered reducing theirs, hoping to draw smokers from other states and increase revenue.
Supporters argue reducing the tax by a dime would make New Hampshire more competitive with Maine, Vermont and Massachusetts, while opponents say that even if the state experienced higher sales as a result it still would lose millions of dollars in revenue.
It's very unusual for states to lower the tax, University of Illinois at Chicago economics professor Frank Chaloupka says. The increase in sales isn't enough to offset the drop in state tax revenue, he says.
Instead of lowering the tax, states have enacted 100 increases over the past decade, he says.
"New Hampshire has been going in the same direction as the rest of the country, basically forever," Chaloupka said.
New Hampshire raised its tax repeatedly since Democratic Gov. John Lynch took office in 2006, increasing it from 52 cents per pack in 2005 to $1.78 currently.
That changed Thursday, when the state House passed a bill that would cut the rate 10 cents to $1.68 per pack in hopes of attracting smokers from surrounding states with higher taxes. Rhode Island's bill would cut its tax by $1, to $2.46 per pack. New Jersey last year considered reducing its tax 30 cents, to $2.40 per pack, but hasn't followed through on it.
New Hampshire Senate Finance Chairman Chuck Morse says he believes the Senate will support the cut.
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