News that New Hampshire’s state revenues for July were down $6.6 million from last year has created controversy across the state over the impact of the recently implemented 10-cent cigarette tax cut. With revenues down from $92.9 million last July to $86.2 million this year, some have expressed concerns that the cigarette tax cut is having a negative effect on state coffers while others are urging calm and stressing the long term economic benefits of the tax cut.
Although in the short term, the decline in cigarette tax stamp sales accounts for a portion of the revenue shortfall, DAS officials warned that it is important to keep in mind that there is a month’s lag time when reporting these figures. The tax cut went into action on July 1st and no rebates were offered on tax stamps purchased prior to implementation, so retailers waited to buy stamps. Keeping this in mind, the Union Leader reported that DAS commissioner Linda Hodgon is expecting the state to see a “big increase” in tax stamp sales in the report due out in August, which will cover sales in July. Hodgdon told the Union Leader that it would take until the fall to know the true impact of the tax cut.
The timing of the tobacco tax cut also coincided with a national hike in cigarette prices of about nine cents last month. The nine-cent hike affected all states in New England, including all of New Hampshire’s neighbors. New Hampshire Grocers Association president John Dumais was quick to point out that the Granite State still has a price advantage because of the tax cut; cigarettes now cost comparatively more in neighboring states than they did before the cut. Proponents of the cut believe this will draw increased traffic across the New Hampshire border to stock up on inexpensive cigarettes. “We’re still encouraged with this tax cut program,” Dumais told the Union Leader.