A cadre of pro-business groups and trade associations have heralded the tax cut on tobacco products included in the New Hampshire Legislature’s final biannual budget. Passed as part of a compromise between the House and Senate, the measure will reduce the state tax on cigarettes by $0.10 per pack, making it the lowest in the New England region by far.

New Hampshire Grocer’s Association President John Dumais and New England Convenience Store Association Executive Director Donna O’Donoghue spoke to the Nashua Telegraph:

“Clearly there hasn’t been any cut in this tax anywhere in the recent history,” said John Dumais, president of the New Hampshire Retail Grocers. “More states are looking at this because tax increases on cigarettes have failed to bring in revenue,” Dumais said.

The head of the New England Convenience Store Association said cigarette sales for the state’s 828 outlets make up 40 percent to 50 percent of all receipts.

But cigarette sales volume has dropped steadily as the Legislature and Gov. John Lynch have approved raising the tax four times in the past six years, said Donna O’Donoghue, executive director of the New England Convenience Store Association.

“Even a small reduction in the tax will help the state’s convenience stores increase sales and will benefit the state in this challenging economic time,” O’Donoghue said.

Supporters insist the tax cut will increase cigarette sales enough to generate even more revenue for the state.

“A lower cigarette excise tax will move New Hampshire away from the tipping point where states raise cigarette taxes to a point that results in less tax revenue than the previous lower rate,” Dumais said.

Republican legislators who fought to pass the tobacco tax cut also hailed it as a pro-business measure. House Speaker Bill O’Brien and Rep. Ken Weyler cited the tax cut as an example of House Republicans keeping their campaign promises in an op-ed in the Portsmouth Herald:

We also promised the voters that we would pass tax cuts to help our residents, make our state more competitive and get our economy moving again. We have done that by lowering the tax burden on small businesses to help them grow, by eliminating the car registration hike our citizens have been forced to pay the past two years and by repealing the gambling winnings tax and lowering the tobacco tax to give our small retailers and grocers a greater advantage against other states. With this budget, New Hampshire is making clear that we are open for business and we will lead the region in job creation.

Critics of the tax cut cite concerns that it will decrease state revenue and force the legislature to make cuts in other areas to compensate, while business groups counter that increased sales will actually create more revenue. Either way, the built into the tax cut is a provision to roll back the provision if revenues decrease over the next two years.