NH Cigarette Tax Reduction: Smoke & Mirrors?

Cigarettes just got 10 cents per pack cheaper for New Hampshire smokers - or did they?

The state will collect a dime less in tax for every pack of cigarettes sold, as part of the state budget likely to be finalized today by the New Hampshire House and Senate. Instead of bringing in $1.78 per pack, the state will now get $1.68. However, this will not translate to lower costs for smokers, according to Mike Rollo, director of government relations for the American Cancer Society. Instead, he says, it's more money in the pocket of Big Tobacco.

"The tobacco industry, on average, raises their prices on a pack of cigarettes 10 cents a year - so, coincidentally, the New Hampshire Legislature has now given them a 10-cent tax break."

Many proponents of lowering the tobacco tax say it will spur cross-border sales, prompting others to come to New Hampshire for cigarettes and other tobacco products. Rollo, however, says the state already has the lowest price for cigarettes in the Northeast.

The New Hampshire Senate agreed to the House tax cut, under the condition that it would be eliminated if the new rate brings in less revenue over the next two years. Rollo says now is not the time for the state to give up much-needed revenue.

"New Hampshire stands to lose $12 million in tax revenues over the next two years, thanks to this deal that was given to the big tobacco manufacturers in Virginia and North Carolina. Unfortunately, the people of New Hampshire are the ones that are going to suffer."

The tax breaks aren't only for cigarettes, Rollo says, and include a 17-percent tax cut for other tobacco products.

"Grape-flavored cigars, wintergreen snuff and bubblegum tobacco products that are marketed towards children. By reducing them 17 percent, we're making them that much more attractive to children."

Tobacco tax increases are the most effective way to reduce smoking and tobacco use, Rollo says, especially for children.

The federal Food and Drug Administration just released nine new graphic warnings about the health hazards of tobacco use, which are required to appear on all cigarette packs, cartons and ads no later than September 2012.