An expected 25-cent increase in New Hampshire's cigarette tax was put on hold yesterday, as state officials review recent tax receipts to see if an increase is necessary.
If the state determines that it raised at least $50 million in cigarette taxes over the past three months, there will be no tax increase. But if tax revenue falls short of that mark, the 25-cent increase will take effect. State revenue counters have until Oct. 15 to determine whether the $50 million mark had been reached. New Hampshire cigarette tax currently stands at $1.08 per pack of 20 cigarettes.
The possible tax increase was a provision approved by lawmakers earlier this year.
Budget writers looked to an increase of the cigarette tax as a way to raise extra money, but cigarette retailers argued that a recent increase in Massachusetts's cigarette tax would result in increased sales in New Hampshire, where the cigarette tax is nearly $1.50 less per pack.
Peter Boisvert of the Department of Revenue Administration said state officials were tallying up last minute sales totals to see if the $50 million mark had been reached or not.
"Everything's on hold," Boisvert said. "We're trying to confirm the actual amount that's been collected."
The anticipation around the potential tax hike came as Gov. John Lynch announced yesterday that the state's overall tax revenues for September fell $46 million short of expectations. Lawmakers have often increased the cigarette tax as a quick way of raising extra money.
But Rep. Susan Almy, chairwoman of the House Ways and Means Committee, which helps determine tax rates, said she wasn't sure that Massachusetts's recent tax increase resulted in a boost in New Hampshire cigarette sales.
John Dumais, president of the New Hampshire Grocers Association, said members of his group are anxiously waiting to hear if they'll have to reprogram their cash registers to reflect a tax increase.
He said the state's cigarette retailers were told Friday to start charging the higher tax starting yesterday, only to be told that the tax increase was being put on hold.
"This was a very fluid process," Dumais said. "We didn't know until the last minute whether (the tax increase) would or would not happen.