New Hampshire Needs to Lower the Cigarette Tax to Preserve Retail Competiveness

The Union Leader has an editorial today arguing that New Hampshire’s $1.78 per pack cigarette tax rate is too high.  However, the editorial does not really touch on the cross-border shopping angle.  As we found recently, New Hampshire’s economy is a retail mecca for out-of-state shoppers.  More specifically, in 2007, New Hampshire’s economy benefits from an additional $2.2 billion in sales thanks to Maine cross-border shoppers adding thousands of jobs to the economy.

New Hampshire’s cigarette tax back in 2007 was very favorable relative to Maine’s with a tax differential of $14.40 per carton (includes sales tax in Maine) . . . now, not so much with a tax differential of only $5.19 per carton.  Cutting the cigarette tax rate by 10 cents, as currently proposed in the Legislature, would help ensure New Hampshire keeps its retail competitiveness–the tax differential between Maine and New Hampshire would climb to $6.24 per carton.