TLP: It Turns Out That Lower Taxes Could Kill You After All
New Hampshire, where they put "Live Free or Die" on the license plates,could be in the running for a new motto. Maybe something like: "Smoke Cheap and Die."
AP via HuffPost:
As some states look to tobacco tax increases to plug budget holes, a few are bucking the national trend and saying, "If you smoke 'em, we got 'em," looking at dropping the rate to boost cigarette sales.
In New Hampshire, supporters argue that reducing the tax by a dime would help the state compete with Maine, Vermont and Massachusetts, while opponents say it would still lose millions of dollars even if higher sales resulted.
New Hampshire's House voted Thursday to reduce the tax and sent the bill to the Senate, where its prospects are uncertain. New Jersey and Rhode Island have also considered reducing their taxes. ...
It's very unusual for states to lower the tax, said Frank Chaloupka, an economics professor at the University of Illinois at Chicago. The sales increase isn't enough to offset the drop in tax revenue, he said.You can understand Rhode Island wanting to cut its tax, since its neighbors have lower rates and the state is so small it's no problem to drive across the border for cheaper smokes. But New Hampshire seems to be giving up revenue for no real reason; its neighboring states all have higher tax rates.
States have enacted 100 increases over the past decade, he said.
New Hampshire raised its tax repeatedly since Democratic Gov. John Lynch took office in 2006, increasing it from 52 cents per pack in 2005 to $1.78 currently.
"New Hampshire has been going in the same direction as the rest of the country, basically forever," Chaloupka said.
The bill passed by the House would cut the rate 10 cents to $1.68 per pack. The taxes are $2.51 in neighboring Massachusetts, $2 in Maine and $2.24 in Vermont.
Rhode Island's bill would cut its tax by $1, to $2.46 per pack compared with $3 in neighboring Connecticut. New Jersey last year considered reducing its tax 30 cents, to $2.40 per pack, but hasn't followed through.
Just look at the map. Anyone who really wants to save money on cigarettes can figure out where to go.