Dear Chairman Stepanek and Members ofthe Committee:
Onbehalf of the National Taxpayers Union’s nearly 2,100 members in New Hampshire,I urge you to support House Bill 156, which would reduce the state’s excise taxon cigarettes by 10 cents per pack and other tobacco products by 17 percent.Although opponents of H.B. 156 claim that high cigarette taxes are good publicpolicy, the reality is that such taxes disproportionately burden the poor and smallretailers while providing an unreliable of revenue.
Since the poor are more likely to smoke,New Hampshire’s low-income families, especially those who live in the depressedNorth Country, have disproportionately felt the pinch of cigarette tax hikesover the years. A 2007 study by the Heritage Foundationshowed that more than one-fourth of people who smoke live below the federalpoverty line and another quarter of all smokers live within 100-200 percent ofthe poverty line. Reducingthe cigarette tax will help alleviate the tax burden on these families, whostruggling to get by in a tough economy.
Salesof cigarettes and other tobacco products also comprise a substantial portion ofbusiness for small retailers. The National Association of Convenience Storesreports that cigarettes account for about one out of every three dollars oftotal sales nationwide at their establishments. Reversing some of the harmfultobacco tax hikes of recent years could help these businesses attract some ofthe consumer activity that may have migrated across state lines to stores inMaine and elsewhere. While it is unclear from the Fiscal Note what the revenueimpact of H.B. 156 will be, there is no question that the economic impact wouldbe a positive one for the state’s businesses.
Evidencefrom other states casts serious doubt on the assumption that higher tobacco taxeswill lead to greater revenue and lower taxes will lead to less. New Jerseyreported a $52 million shortfall in revenues after it raised its cigarette taxby 17.5 cents. Despite boosting its cigarette tax by 50 cents last year, theDistrict of Columbia reported that it collected $15 million less than expected,and $7.6 million less than it collected priorto the tax hike. Other states, including Arkansas, Maryland, Mississippi,and Rhode Island, have also reported gaps in revenues following tobacco tax hikes.
By enacting H.B. 156, New Hampshire leaders will demonstrate that theyare serious about reforming the tax code to lessen the burden on the poor,lower costs for small business, and reduce reliance on unstable sources ofrevenue. The Granite State can set an example for the entire nation to followand our members hope you will pass H.B. 156.
Sincerely,
John Stephenson
State Government Affairs Manager