Editorial: Raise the cigarette tax? That’s easy!

Last modified: Tuesday, April 02, 2013
Gov. Maggie Hassan’s budget address gave legislators a lot to think about. Many of her proposals will prove controversial, and some will no doubt fall by the wayside before June.

But here’s an easy proposal from Hassan that legislators should seize on: raising the cigarette tax.

New Hampshire’s cigarette tax – like that of nearly every other state – has been raised repeatedly in recent years, usually amid a hodgepodge of small tax increases and spending cuts aimed at solving the state budget crisis of the moment. The increases were always just modest enough to keep New Hampshire’s tobacco tax lower than those in surrounding states, so as not to dissuade hard-core smokers on the border from crossing the line for their smokes. The added tax revenue came with a sweetener too: Studies have consistently shown that higher prices for cigarettes are a deterrent to smoking among teenagers. And even in tax-phobic New Hampshire, raising the cigarette tax has never produced much of a political backlash for the politicians who supported it.

Two years ago, however, the Republican-led Legislature tried something different. In an attempt to make the state more business-friendly and with the logic that lower taxes would encourage more cigarette purchases and therefore more revenue, lawmakers lowered the tax by 10 cents per pack. How did that work? Not so well. Cigarette manufacturers raised the price of their product, so consumers saw little extra change in their pockets. State revenue from the cigarette tax didn’t meet expectations. And the politicians behind the decrease didn’t exactly win accolades from the voters in November.

Hassan’s budget would reverse that tax cut and also raise the tax an additional 20 cents, to $1.98 per pack. That’s still lower than Massachusetts ($2.51), Vermont ($2.62) and Maine ($2). The highest cigarette tax in the country? New York, at $4.35. At the other extreme you’ll find Missouri (17 cents) and Virginia (30 cents).

The impact of Hassan’s proposal shouldn’t be too difficult to estimate. According to the Campaign for Tobacco-Free Kids, which supports higher tobacco taxes at the state and federal levels, the effect of significant cigarette tax increases are easy to predict: The reduction in sales is typically dwarfed by the new revenue from those who keep buying.

The governor described her proposal not only as a way to help generate sufficient revenue to meet the state’s needs but also as a way to help knock down the rate of youth smoking. New Hampshire, she noted, has the notorious distinction of being home to the highest youth smoking rate in the Northeast, with 19.8 percent of high school students smoking cigarettes.

It is, of course, easy to be cynical about the youth smoking rate in New Hampshire. After all, politicians only seem to pay attention to it as an after-thought when they’re looking for revenue for other purposes. And while the U.S. Centers for Disease Control and Prevention recommends that the state spend $19.2 million a year to have an effective, comprehensive tobacco prevention program, what New Hampshire actually sets aside from state-generated revenue for this purpose is – perhaps not surprisingly – zero. This, despite collecting more than $200 million from tobacco settlement payments and the tobacco tax each year.

Nonetheless, raising the tax makes good sense. There are myriad pressing challenges the revenue could help solve. We’ll leave the fight over how to split it up for another day.