My Turn: Cigarette tax increase will ruin my business
New Hampshire Gov. Maggie Hassan has proposed a 30-cent cigarette tax increase to help offset our state budget expenses. As a small business owner, I urge our elected officials to think through the potential consequences of this legislation on tobacco retailers and small-business owners. A cigarette tax increase will not only negatively affect the tobacco consumer but will also be detrimental to the smaller tobacco retailers.
I own a small convenience store in Concord, Rose Belle Mobil Mart. Even with a convenient location, I, like many other small-business owners, find it difficult to compete with larger, corporate stores.
My cigarettes are not as inexpensively priced as competing corporations; however, a good location and varied tobacco selection has kept me in business – for now.
Tobacco sales are crucial to keeping my store afloat, especially in a down economy. In 2012, tobacco products accounted for 22 percent of my sales volume. Since I was forced, by previous tobacco taxes, to try to keep my prices low, tobacco only accounted for 10 percent of my gross revenue. These tight margins make it difficult to keep my store in business to begin with, and a tobacco tax increase would be detrimental to my store.
The governor, like many politicians, believes the logic is simple: If the cigarette tax is raised, the consumer will absorb the additional cost. This does not take into account the resources of larger corporations and is therefore significantly flawed.
There is a distinction between the way smaller stores, like mine, and larger stores buy tobacco products. Both stores have contracts – based on shelf space and tobacco sales – with the tobacco companies. Yet, the contracts are created to favor the larger corporations by allowing them to buy a larger amount of cigarettes at a decreased rate. The basic premise is the more you buy, the more money you receive back from the tobacco companies. So the larger corporations will be able to absorb the tax increase without passing the additional costs to the consumer, whereas, a smaller business, like mine, will need to pass along about 25 cents of the 30-cent tax to the consumer.
Since larger corporations will be able to sell tobacco at an unaltered price and consumers will ultimately purchase their cigarettes at the cheapest rate possible, this will force the consumer to stop buying products from my store and will ultimately put me out of business.
I strongly urge our elected officials to take the time to understand the intricacies of the tobacco market before passing along this cigarette excise tax increase, which would bankrupt my small business.
(Peter Potenza owns the Rose Belle Mobil Mart and Nadeau’s Subs on Main Street in Concord.)