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Taxing tobacco: Hassan's bad proposal

EDUCATION
March 31. 2015 7:51PM




One of the ways Gov. Maggie Hassan managed to balance her proposed budget earlier this year was to raise the state tobacco tax by 21 cents and expand it to cover both electronic cigarettes and premium cigars. In less time than it takes to finish a good cigar, we will explain why these are all bad ideas.

New Hampshire’s tobacco tax was raised multiple times in the Gov. John Lynch era to avoid tough spending decisions. For cigarettes, the tax is $1.78 per pack. For other tobacco items, excluding premium cigars, it is 65.03 percent of the wholesale price. The tobacco tax does not apply to premium cigars, which are defined in the law as hand-rolled and costing at least $2 each.

Hassan’s proposal would raise New Hampshire’s cigarette tax to $1.99 a pack, just one penny shy of Maine’s tax. Business at grocers and convenience stores along the Maine border would drop.

Covering e-cigarettes would apply the tobacco tax to a non-tobacco product. E-cigarettes can deliver nicotine, but they do not use tobacco. They often provide smokers with a way to transition off of cigarettes. The state would be raising the price of a product that some use to quit smoking.

As for premium cigars, New Hampshire owes its abundance of cigar shops to Massachusetts’ effort to apply its cigarette tax to premium cigars. Cigar sellers fled over the border; then local entrepreneurs stepped in to serve untapped markets. Some cater to tourists, others to locals. All are products of the New Hampshire Advantage, which Hassan’s proposal would erode.

These bad ideas should be ignored this year — and every year.


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