NH convenience stores oppose cigarette tax hike

CONCORD, N.H. (AP) -- Convenience stores and grocers urged a New Hampshire Senate panel Tuesday to recommend killing an increase in the tobacco tax backed by the House and governor, saying it would be potentially disastrous to their businesses.

Opponents argue the proposed increase would make New Hampshire less competitive, especially with neighboring states. Supporters say New Hampshire's tax would still be lower than surrounding states and the state needs the money to fund state programs.

Peter Potenza of the Rose Belle Mobil Mart in Concord told the Senate Ways and Means Committee the proposed 30-cent increase — to $1.98 per pack of cigarettes — would potentially destroy his business because he would not be able to absorb the increase like his bigger competitors. Potenza said he could "go out of business because government got in my way."

And Cindy Gagnon, speaking for Cumberland Farms in New Hampshire, said raising the price of cigarettes and other tobacco products could mean closing stores if higher prices drove away customers.

"Customers are very sensitive to price fluctuations in cigarettes," she said.

But state Rep. Cindy Rosenwald, a Nashua Democrat, said the increase is needed to pay for spending in the state budget. She said raising the price also will discourage youth from starting smoking. Lawmakers estimate each 10-cent increase in the tax will raise $10 million.

"We should do everything we can to discourage smoking," said Rosenwald.

Marie Mulroy, of Tobacco-Free New Hampshire, and Scott Colby, of the New Hampshire Medical Society, agreed with Rosenwald that higher prices would reduce smoking and smoking-related health costs. They said the tax increase should be 68 cents to discourage smoking.

House Ways and Means Chairwoman Susan Almy said New Hampshire will continue to enjoy an advantage over neighboring states if it increases its tax 30 cents because their prices are so much higher now.

Two years ago, Republicans cut the tax 10 cents to $1.68 to encourage cross-border shopping. At the time, the New Hampshire Grocers Association and others argued the reduction would make New Hampshire more competitive.

The rate cut was contingent upon revenue not dropping below receipts for the previous two years, but revenue has dropped and the rate is due to rise automatically back to $1.78 on Aug. 1 if lawmakers take no action. Gov. Maggie Hassan, a Democrat, proposed moving up the scheduled increase and hiking the tax another 20 cents to raise money for spending in her budget, and the Democratically controlled House agreed to do that.

Republicans hold a 13-11 advantage in the Senate, and its leaders are backing legalizing a casino to raise revenue instead of increasing taxes.

Even with the increase to $1.98, New Hampshire would have a lower tax than neighboring states. According to the Campaign for Tobacco-Free Kids, Rhode Island's tax rate is $3.50; Connecticut, $3.40; Vermont, $2.62; Massachusetts, $2.51; and Maine, $2. New Hampshire's rate also is lower because it has no general sales tax unlike other states.