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Cigarette tax cuts blamed as NH revenues fall

CONCORD - State revenues in July were $6.6 million less than they were in July 2010, due mainly to a falloff in revenues from cigarette sales.

The state took in a total of $86.2 million last month, compared with $92.9 million a year earlier.

The drop in tobacco revenues is due only in part to a new 10-cent cut in the state's tobacco tax.

Because retailers did not get a rebate on tobacco tax stamps they bought for their existing inventory, they held off buying stamps in June. When July 1 arrived, and the tax was cut to $1.68 per pack, tax stamp sales jumped 26 percent compared to a year earlier, according to a monthly report by the Department of Administrative Services.

Tax stamp sales show up in state revenues a month late, so tobacco revenue will show a big increase when August numbers come out early next month, DAS commissioner Linda Hodgdon said.

It could be September or October before the true effect of the cigarette tax cut becomes clear, she said.

The tax was cut on House arguments that the lower price will bring more smokers to spend money in New Hampshire. But prices haven't changed for smokers, because tobacco companies raised their prices by 9 cents a pack last month.

New Hampshire Grocers Association president John Dumais said the price hike was a national event. That means that New Hampshire will still have a price advantage over neighboring states, he said, and shoppers will still be drawn here by cheaper cigarettes.

'We're still encouraged with this tax cut program,' Dumais said.


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