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Tapped out: Smokers, diners can't pay more

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When John Lynch was first elected governor in 2004, New Hampshire had a cigarette tax of 52 cents per pack. In 2005, Lynch got legislators to raise it by 28 cents to 80 cents per pack. The budget passed on Wednesday raises it for the fourth time since Lynch became governor. It will be $1.78 per pack in five days.

At $1.78, New Hampshire's cigarette tax, once roughly 33 percent to 50 percent of what neighboring states charged, is now only 22 cents less than Maine's and 21 cents less than Vermont's. It's 73 cents less than what Massachusetts charges.

The governor and legislators have relied on this tax to fund their spending increases for four years. What are they going to do in 2011? Smokers in Vermont and Maine already have little incentive to drive over the border for their smokes. Our tax advantage on this product has been nearly erased. Will legislators, addicted to the revenue it produces, turn it into a disadvantage in two years?

They already have done that with our rooms and meals tax. At 9 percent, the tax on prepared meals in New Hampshire is nearly double that in Massachusetts (5 percent). Massachusetts border town residents who cross into New Hampshire for a night of dining out will pay 80 percent more in taxes than they would pay at home.

These two taxes have already been raised so high that they are hurting New Hampshire stores and restaurants that compete with counterparts in neighboring states. Raising them any more is not an option if legislators want New Hampshire businesses to be able to compete. So the question is, what tax will they turn to in two years?

YOUR COMMENTS


Bill said "...this is a tax on something that kills you, and you still oppose it?! The nuts here are baffling...."

Should we tax tiny cars out of existence because they are 'massively' less safe than larger vehicles? The elites who seek power and control

DHMO kills, let's tax it! (Google DHMO to see a parody the essence of elitist left wing 'wisdom').
- Rex, ManchVegas

Well Bill...and others that made similar arguements. Does govt need revenue to run? Yes. Do we need every little public service to be paid for by the govt? No. In fact why dont we start making adults pay to play so to speak instead of trying to ruin our childrens lives. Schools need to be funded either publically or privately. Problem is, just like the toll hikes and cigarette tax hikes and the gas tax hikes, people do not spend as much on these things resulting in less revenue than projected and congress scratching their heads trying to figure it out! Last summer we heard about less people traveling causing less gas and tolls to be purchased. Now the govt is bummed because their revenue is down but so is the service stations providing the gas causing the little guys to suffer, and then the cherry on top is the govt raising more taxes to pay for their indescretions. Cut the services cut the taxes. If you have been reading NH is actually in a better position economically than the rest of the county, I believe that is because of our lack of tax burden and the fact that businesses can afford to do business even in tough times. MA and CA are struggling hard and these are some of the highest tax burdened states. The ratio says it all. Higher taxes yeilds less sales yeilding less revenue for state and retailer. The only thing that would fix this is an income tax, but i certainly do not support that. I am responsible for my own needs, so should everyone else. Responsibility is the key. Govt tries to coddle these people, which causes problems, then needs to fix the problems that they created. It is a self-fulfilling profecy.
- Ryan, Londonderry

Really? If you can't afford the taxes on cigarettes then you can't smoke!!!!! Furthermore if the state had more tax revenue they wouldn't have to do this. I don't want to hear the people complaining about the middle class anymore. The middle class gets by just fine in every other state where they have higher taxes. People who oppose every tax increase are ruining this state. Republicans have destroyed this country by cutting taxes and wondering why we have deficits. New Hampshire cannot support itself without raising taxes. BTW this is a tax on something that kills you, and you still oppose it?! The nuts here are baffling.
- Bill, Manchester

I'm going to boycott getting lunch from a restaurant for 2 weeks when this new meals tax kicks in. Sorry buisness owners. Stick it in you eye democrats.
- Jim, Manchester

I live on the border. Going to restaurants in Tyngsborough, Lowell, Chelmsford and Westford is easy for me. We will spend the vast majority of going out to eat in Massachusetts. Forget eating out in New Hampshire.
- Larry, Nashua

Why do we have to pay for and care for EVERYBODY???? What has happened to self-sufficiency??? WHY do I have to pay for YOU and something I don't use? Isn't self-sufficiency what this country was founded on? How do we go back...
- Ray Pendergast, Newport News VA

Maybe having lived in MA and briefly in IL is what skewers my view on this topic but here we go.

This state is scrapping by, we have no tax revenue to speak of. My high school classes were crowded at a little over 20 students, now there's still not any money for the schools we're increasing taxes AND schools are cutting teachers again. People in this state need to wake up and realize that we need tax revenue to pay for our government, roads, schools, public servants (I've lived in Manchester they need more police), our park service. I really don't think it's right that smokers and tourists pay a large portion of our taxes, and being a resident I should not have to pay for entry into a state park (camping maybe, but not just for a picnic).

Get real this stuff doesn't pay for itself, and the limited taxes we have won't pay for it either.
- Bill, Newmarket

The editorial misses the mark. The biggest portion of the NH state budget is for heath care. If a smoker smokes a pack a day for 40 years and pays a tax of $1.78 a pack, the total life time tax is $26,000. If interest were to accural at 4.5%, the annual rate of a NH Bond, the net value would rise to $80,000 over the life of the smoker. The point is either outlaw smoking, which is impractical, or limit the State's liability for healthcare payments to the value of the tax paid. Now that would give the utterance, "Live Free or Die," the original bite which was intended.
- Bruce, Bow

Tax the drug addicts out of existence, that would be the right thing to do for future generations. Then raise taxes in some ethical manner, like an income tax.
- Robert, manchester

The good old democratic way put the srews to the middle man. Raise taxes so business raise prices (believe me if you are not a business you have no idea what other taxes and fees they have to pay to be in business ask someone) well over half NH population does not smoke, Mass and VT passed no smoking laws, who is going to buy this stuff to get the prjected revenue? Liqour is next so drink draft beer. Soda is great for your teeth and stomach NOT. We may not have a state income tax but the fees we pay are really taxes just a different word. Unemployment is up inspite of what you are being told (don't forget those that drop off the rolls they are still unemployed) Our Congressional leaders and State representatives have done NOTHING to increase employment and what litttle they tell you about is foolish beyond belief. Not one person at our capitol had a serious idea about how to tackle the budget. Was gambling the answer? maybe! at least give it a try and if it doesn't work vote it out. It has been done in other states. Do you think $10.00 per hour is good? that equals out to about $17,600 a year after FICA/SS. Try to support a family on that. Jeb Bradley put out an email with all the taxes that our state legislatures passed. It is really sickening. Do they care ya in words only not action. They don't know what to do and they won't take advice because they feel YOU gave them the right to think and act for you and tell you what is good for you. Now isn't this just a special situation we have put ourselves in. I am ready to move out of this state to somewhere that is more affordable even if they have sales tax. I will have more money in my pocket to spend as I please. Money may not be everything but try to live without it. The good old NH way of life is over and the new way of life is in. It is called GREED and don't you know our state and congressional leaders will take all you got. If they say this is not true then put their backs against the wall and ask them what they have done for you or NH to make it a better place to live/work and play. They can't tell you anything that will satisfy you. Because they have done nothing except put their hands in your pocket even deeper than you realize. So my friends Vote out those now in office give someone with hald a brain the chance to employ sound lodgic, think like a working person and do the right thing by the approx. 1.3 million people who live in New Hampshire. Remember ask the hard questions to your legislature and listen for the answer. Good Luck. Keep paying through the nose. You gotta love it. PS we can't eat the clean air, trees, granite, lake,stream,pond water is not fit to drink. The fish have to much mercury and the wildlife is dwindling so we can't shoot them to eat. So think again about that so called New Hampshire Way of Life.
- RDY, concord

If a company owns a restaurant in Massachusetts and a restaurant across the border in New Hampshire and it has to close a restaurant because of less demand, where do you think it is going to close the restaurant?

If you have a business in Massachusetts and you are going to be spending several thousand dollars on meals during a year, would you be less likely to do business in New Hampshire which has a meals tax significantly greater than Massachusetts?
- Ken Stremsky, Manchester, NH

You people are something else. So what if a few individual taxes that only affect a portion of the population are increasing? We still have one of the lowest OVERALL tax bases in the country!

Since 1996, The Tax Foundation has ranked New Hampshire 46th or BETTER on their annual list of OVERALL tax burden. In 2008, that rank was again 46th with an average 7.6%. On that list, the highest was Maine with 13% (!) and the national average was 10.10%. So, even reflecting the modest tax increases we have seen over the past few years, we're STILL living large on the small tax burden we have.

As the father of a child in the deeply troubled Manchester school system and a non-smoker, I personally have no trouble accepting the fact that our tax burden is simply NOT in line with what the rest of our country's population is being asked to pay. We really have become a state full of entitlement, haven't we???
- JJ, Manchester, NH

Sure they can pay more. The UL just doesn't understand the mindset of the Karl Marx Democratic Party.

Are restaurants still open?
Then diners can pay more.
and more and more still.

The populace, rich to poor, are nothing but a cash cow for greedy little politicians all in the name of fighting for working families, who incidentally just got hit with a full-on 0% to 9% camping tax.

Now that's change you can believe in.
- Jim D, Hillsboro

The UL got this one right!

JMA from Epping, not sure what's in the koolaid (er water) out there in Epping, but it is simple economics that the more something costs the less demand there is for it. If you are talking about businesses in, say, Concord not being affected you are probably right. The issue the the editor raises is that of the effect it will have on border communities. Since you clearly don't own one of these businesses you either don't know or don't care. Fact is what drives these businesses is the pricing of product available in NH vs. the border towns in MA, ME, and VT. As an owner of one (which employs a large number of people) it is clear to me what the impact of being able to be as competitive as possible from a pricing standpoint.

Here is some simple economics; the more you raise the cost of goods thru taxes, the less demand you will have, which will therefore result in LESS overall taxes being collected. Maybe that's a shocker to you in Epping but not to the rest of us.

Perhaps you think that a sales tax would have no impact on business in NH. If so, I have a bridge I can offer you for sale.......
- Bill, Bedford NH

JMA from Epping-

Let's see, family of four deciding where to go on vacation:
Hotel room $100 a night for 7 nights.
9% tax = $63 in NH
5% tax = $35 elsewhere

Factor in a week of meals out, yeah you're right- it's crazy to think anyone would consider this stuff in their budget calculations. Especially corporate types that might have otherwise come to NH for a conference or function.

For those free thinking types with a lack of principals, I guess it wouldn't matter.
- Matt, Wilton

Do the UL Editorial Board members really make their vacation and dining decisions based on where they are likely to pay the least amount of tax on their hotel stay and the meals they eat? When they go out on Friday night, is the difference between 5% and 9% tax really what helps them decide between pizza and Chinese? Really? Really? If so, then what sad, sad lives they must lead, so bound by ideology unlike those of us who live in a world where we don't sacrifice common sense on the altar of mindless obedience to political abstractions. And if not, then this editorial is just a bunch of malarkey.
- JMA, Epping

Since I work in Nashua, we've started doing all our business lunches over the border in Tyngsboro instead. It's cheaper!
- Dave S., Hollis

And if someone did a comprehensive tax analysis I bet you would find that raising the cigarette tax is a net revenue loser when you factor in lower business taxes from reduced complementary purchases. Folks from ME and MA may come for the cigarettes, but "while they are here" will fill up their gas tank and shop for other items. This is classic short-sighted politics at its worst.
- Scott, Haverhill

There will be no more taxes raised because the democratic party is on the verge of an historic blowout. Of course they don't know this, or believe it, and some of Ray Buckley's message-board goons will soon post here telling us that NH is blue now, and they can do as they please. I say just watch.....especially after this vile cap & trade vote. Just watch:)
- Jay Collins, Laconia

I hope the rooms and meals tax will be 5 percent. More people might visit our restaurants and hotels. If the sales of many restaurants and hotels increase, rooms and meals tax revenues from many restaurants and hotels may increase. If more people are employed by our restaurants and hotels, New Hampshire may be able to spend less on food stamps and Medicaid. If more tourists visit New Hampshire, many local government may obtain more property taxes from businesses. If more tourists visit New Hampshire, New Hampshire may obtain more money from the business profits tax.

The higher the rooms and meals tax the less likely people are to visit our restaurants and hotels. Increasing the rooms and meals tax may cause a decrease in revenues from the business profits tax. Increasing the rooms and meals tax may cause many local governments to take in less property taxes from businesses.

If restaurants are allowed to have smoking, rooms and meals tax revenues may increase. Many servers may obtain more tips making it easier for them to support their families. People from other states might come to New Hampshire to smoke and eat.

I would like the cigarette tax to be $1 or less per pack. I have asthma. I have never smoked. Second hand cigarette smoke has sometimes bothered my asthma. Cigarette smokers are being taxed too much now. More people from other states might buy more cigarettes, lottery tickets, and other things from our convenience stores.

I would like the business profits tax to be 5 percent or less. More existing businesses might expand in New Hampshire and more businesses might come to New Hampshire from other states. If more people are employed in New Hampshire, New Hampshire may be able to spend less on food stamps and Medicaid. New Hampshire might obtain more business profits taxes by lowering the business profits tax rate. Local governments might obtain more money from their property taxes on businesses.
- Ken Stremsky, Manchester, NH

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