By Norma Love
Associated Press
May 07, 2008 05:55 am CONCORD — Gov. John Lynch proposes bumping up New Hampshire's cigarette tax a quarter a pack to help close a budget hole just as Massachusetts considers increasing its tax by $1. But grocers told House budget writers yesterday that New Hampshire might reap a bigger windfall if Massachusetts raises its tax and New Hampshire leaves its rate alone. They said that would entice more Massachusetts residents to cross the border to buy cheaper cigarettes, despite high gas prices. "Let us try to work through the summer. If we can't prove ourselves by fall, you can revisit it," said John Dumais, president of the New Hampshire Grocers Association. The tax is part of Lynch's overall plan to deal with a projected $225 million revenue shortfall in the two-year state budget. He would cut spending $125 million, raise revenues $40 million and borrow $80 million to pay the state's share of school construction costs that currently are paid with cash. The cigarette tax increase would raise an estimated $26 million toward the hole. The current tax is $1.08 per pack. Massachusetts' tax is $1.51 per pack, plus a 5 percent sales tax. Stoddard Democrat Daniel Eaton asked Dumais if he could support a tax increase that only took effect if revenues didn't hit a set target. "That would be very fair," Dumais said. Dumais and wine retailers also criticized Lynch's proposal to halve a 20 percent discount they get when they buy wine from the state. Liquor Commission Chairman Mark Bodi proposed continuing the 20 percent rate for retailers who buy $100,000 or less annually. He said the state would save less, but would return the discount program to its original intent of helping smaller outlets compete with big chains. But small wine retailers said dropping the discount to 10 percent above the threshold discouraged them from growing. Boyd Bush, owner of Abbey Cellars in Lincoln, also said his business plan is built on the 20 percent discount. Anything less could force him to close, he said. "For us to go out of business would put a hole in Main Street and put five people out of work," he said. Dumais suggested that the Liquor Commission instead raise wine prices 3 percent across the board. He also said the state could sell wine on the Internet, shipped to the purchaser's hometown grocery store for convenient pickup. Dumais said the state also could raise money allowing grocers to sell liquor besides beer and wine.
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