New Hampshire Experiments with Lower Cigarette Taxes
File this under “Adventures on the Laffer curve.” The New Hampshire House is seeking to lower its cigarette tax from $1.78 per pack to $1.68. Almost every other state has increased cigarette taxes over the past few decades. In New York, an individual pays an extra $4.35 per pack (minimum, not including any local taxes) of cigarettes, about $.20 per cigarette.
Some legislators believe it will bring increased revenues, through increased cigarette sales and other economic activity near the border, among other things. The opponents do not believe this:
But state Rep. Christine Hamm, a Hopkinton Democrat, called the move “fiscally stupid.”
“No state has cut their tobacco tax and seen a revenue increase,” she said.
According to this data from the Tax Foundation, it isn’t clear that any states have actually tried cutting their tobacco taxes (is this something that we would expect a lawmaking body to try?), so I’m not sure that statement is relevant. From 2000-2010, cigarette taxes in the 50 states either stayed steady or increased.
According to this map, Vermont ($2.24/pack), Maine (2.00), and Massachusetts ($2.51) all already have higher state taxes per pack. A $.10 per pack decrease isn’t incredibly significant, but it will be interesting to see what happens to tax revenues and other economic activity on the New Hampshire border.