EagleTribune.com, North Andover, MA

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November 27, 2011

N.H. political parties split over tax cut results

Republicans will tell you one thing, Democrats another. But store owners and customers will tell you straight: New Hampshire's recent reduction in the tobacco tax has failed to increase sales.

Republicans said the 10-cent-per-pack tax cut would help stimulate the Granite State's economy and generate millions of dollars for state coffers.

But it hasn't.

State Administrative Services Commissioner Linda Hodgdon said earlier this month the tax cut has been a major disappointment, with revenues $2.6 million below projections for October and $3.3 million behind last year's numbers for the month.

Despite the tax break, state tobacco sales continue to plummet. They have dropped 2.5 percent since July and 8 percent since last year, according to the state Department of Revenue.

The tax cut was passed by the GOP-led Legislature in June. It was, they said, designed to generate more revenue at a time when the state was strapped for cash. Republicans backed the move, but Democrats did not.

The reduction was expected to draw more people from Massachusetts, where the tax is $2.51 per pack compared to $1.68 in New Hampshire. The 10-cent cut is roughly a $1 decrease per carton.

The idea was that Bay State residents would buy other items when they crossed the border to buy tobacco.

In what can only be described as bad timing, manufacturers raised prices 10 cents a pack within 24 hours of the state rolling back the tax.

Store officials had embraced the reduction, hoping it would boost their sales. They were soon disappointed.

Retailers see little difference

"It didn't really make a difference," said Cory Ste. Marie, manager of Stateline Paysaver on South Broadway in Salem.

Sam Batel, manager of M&N Borderline Store in Salem, agreed.

"They cut the 10 cents, then the manufacturer raised the price 10 cents," he said. "It didn't make a difference."

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