EagleTribune.com, North Andover, MA

New Hampshire

July 8, 2012

NH's tobacco tax revenues plummet

There are no ifs, ands or "butts" about it.

Reducing New Hampshire's tobacco tax was a big mistake, according to state Democrats..

The 10-cent-per-pack cut was touted by Republican leaders as a way to increase state revenues by stimulating cross-border sales.

But the year-old tax reduction failed to live up to expectations — falling $11.5 million below projections.

With the fiscal year ending a week ago, figures from the state Department of Administrative Services show a $20.1 million drop in tobacco tax revenues.

The tax produced $212 million in revenue in fiscal year 2012, down from $232 million in fiscal year 2011. The 10-cent cut was enacted July 1, 2011.

The reduction was expected to draw more people from Massachusetts, where the tax is $2.51 per pack of cigarettes compared to $1.68 in New Hampshire.

Democrats such as Sen. Lou D'Allesandro of Manchester said they still question why the Republican-led Legislature would support such a measure.

"I just didn't think it made any sense," D'Allesandro said. "They (Republicans) ought to come up with the $11.5 million it was down."

D'Allesandro said cutting the tax and other levies was unwise at a time when the state is strapped for cash.

Overall, state revenues are $26.6 million below projections, although the state's hospitals still owe $34 million in Medicaid enhancement tax payments.

Other critics include Democratic Gov. John Lynch and Rep. Susan Almy, D-Lebanon.

Colin Manning, the governor's spokesman, said Lynch has strongly opposed the move. Reducing a tax leads to less revenue, he said.

"It's certainly not a surprise," Manning said Friday. "That's just one of the reasons why the governor did not support that budget."

Almy, House policy leader for the Ways and Means Committee, agreed the tax cut was ill-advised.

"On the face of it, it's totally absurd," she said. "They (Republicans) have decreased taxes by a huge amount that can't be made up."

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