EagleTribune.com, North Andover, MA

April 7, 2013

Tobacco tax hike plans raise concerns

Tobacco tax proposals concern smokers, store owners

By Doug Ireland
direland@eagletribune.com

---- — Many smokers groaned when they first heard about a proposal to increase New Hampshire’s tobacco tax by 20 to 30 cents. But then they heard about a Massachusetts plan to raise its own tax by $1.

Maybe a 30-cent increase — or the 20-cent hike recently passed by the New Hampshire House — isn’t so high after all, they said. It just means they may not spend as much money on other items such as snacks and drinks, some said.

“That’s not bad,” Sherry Boyd, 49, said of the 20-cent increase. “But $1 is really high. Why pick on (smokers)?”

The Lowell woman was walking into Ace Discount Cigarettes at 30 Bridge St. in Pelham to pick up cigarettes.

Smokers from both states and border store owners said Friday they are not happy with the proposed increases. But they said they could accept New Hampshire’s 20-cent hike a lot easier than the proposed $1 per pack proposed hike in Massachusetts.

The president of New Hampshire Grocers Association is concerned sales of all consumer goods will be affected.

Association president John Dumais said at least 40 percent of all food store sales in New Hampshire are to out-of-staters, including many Massachusetts residents.

Raising New Hampshire’s tobacco tax would have a huge impact on those cross-border sales, Dumais said. For every $1 spent on tobacco products, approximately $2.50 is spent on other items, he said.

“Naturally, what’s going to happen is these people will come to New Hampshire less often,” he said. “And when they do come to New Hampshire, they are going to buy fewer other items.”

The bill to raise New Hampshire’s tax from $1.68 to $1.88 per pack of cigarettes is headed to the state Senate. Massachusetts’ lawmakers unveiled their proposed ax increase, from $2.51 to $3.51 per pack, last week as part of their transportation financing plan.

Those who frequent the border stores — stopping off to buy cigarettes, gas, beer and snacks — said the Bay State’s proposed $1 increase gives them more of an incentive to buy cigarettes in New Hampshire. That includes many people who live in Massachusetts.

The New Hampshire store owners said any kind of tax increase hurts cigarette sales and affects sales of other items. They said some people will decide to quit smoking and not return to the store until a couple of weeks later — after deciding it was too tough to kick the habit.

Alka Patel, owner of Cousins Convenience Store at 116 Bridge St. in Pelham, said she would welcome an increase in store sales if Massachusetts passes the $1 tax hike. She doesn’t think a 20-cent increase in New Hampshire will make a big difference in tobacco sales even if people decide to spend less money on other items.

“People will still buy cigarettes,” she said.

Mike Adalla, owner of BP gas station and convenience store at 32 Bridge St. in Pelham, is concerned an increase in New Hampshire’s tobacco tax would affect sales of all items at his store. He’s also worried about a proposal to raise the state’s gas tax.

“It’s going to hurt business,” Adalla said of the tobacco tax proposal. “Every time they raise it, volume goes down. Of course, we are going to get more business if they raise it in Massachusetts, but I would rather have them leave it the way it is.”

Massachusetts residents, mostly from nearby Dracut and Lowell, account for 85 percent of Adalla’s business. The store is several hundred yards from the state line.

“Cigarettes, gas, beer — everything costs less in New Hampshire,” said a customer from Dracut.

While a typical pack of cigarettes costs about $8 in Massachusetts, the same pack costs approximately $6.50 in New Hampshire, Adalla said.

Chris Matte, owner of Ace Discount Cigarettes at 30 Bridge St. in Pelham, said he’s worried a tobacco tax increase would hurt his sales. The store also sells cigars, beer and soda, and Massachusetts’ residents represent about 90 percent of its business, Matte said.

“I think now is not the time,” Matte said. “With gas prices so high, people just can’t afford it. We’re worried about it. I feel New Hampshire would make more money if they just left it alone.”

Ace customer George Patrikas, 65, of Windham said tobacco tax increases over the last several years prompted him to start rolling his own cigarettes to save money. He no longer spends $55 for a carton of cigarettes, but said he would still buy beverages at the store.

Frank Sergi, 54, of North Andover, a customer at Stateline Paysaver on South Broadway in Salem, said he stocks up on cigarettes in New Hampshire whenever he visits the area, but usually doesn’t buy much of anything else.

Karima Sahraoui, 18, of Methuen crossed the border to pick up a drink and a pack of cigarettes. She doesn’t expect the tax increase would affect her spending habits, but she isn’t happy about it.

“Twenty cents now, 20 cents next time, another 20 cents later,” she said.