May 08, 2008

When Less Is More

This latest Cigarette Tax Increase is going to backfire on the Commonwealth of Massachusetts. Recently the state of New Jersey passed a rather large increase and not only did they not meet their projections, but they actually collected less then before the increase. There are four other states that I know of who have collected much less then projected with their last increase and the more recently the Governor of Florida actualy vetoed an increase from the the legislature, for fear it would hurt revenues.

The topic of today's post, however, is New Hampshire. Check out the story from the Boston Herald here. They are not going to pass an increase in light of the Commonwealth's most increase realizing that they can collect more by not passing an increase. The thing people never consider are the lost revenues from alcohol and lotter sales to New Hampshire and surrounding states when people cross the border to buy cigarettes.

These lost revenues to the Commonwealth have a direct effect of the City of Worcester when 50+ percent of our revenues come from the Commonwealth.

9 comments:

Anonymous said...

WHEN MORE IS MORE

Gov't needs more tax revenue......so telcoms are hit with MORE property tax........and telcoms customers are hit with MORE fees and charges to cover telcoms increased cost of doing business.

Anonymous said...

Maybe someone will start running black market cigarettes into ORH.

As long as you're wearing your airport ID badge, the rent-a-cops will never figure it out.

Anonymous said...

Great thing about smoking is that because it is a addiction, people are not going to make a "quick stop" in NH to buy them. I doubt this loss of tax revenue will appear.

Bill Randell said...

Go into any bar around the City of Worcester and tell the bartender you are looking to buy some cigs. Trust me you can buy a pack on the cheap, with no Mass Sales tax.

Black market is alive and well, getting stronger every day in the City of Worcester.

Anonymous said...

I know a guy who makes a trip to Cow Hampshire ....maybe once every 2 months......for cigs & beer........only for himself....i am guessing he's a 1 to 2 packer a day.......not sure how much beer.....he maybe a weekend warrior.............funny part is he works for the state....frankly.........if was bigtime into cigs & beer...i might consider it too.......

David Z. said...

Actually the Beacon Hill Pols may get more revenue (and then some) from this tax increase. Tied in with the $1 tax increase is a drop of the state set minimum pricing for a pack of cigarettes. Essentially a store could use the cigarette habit as a loss leader. Get more people into their stores by lowering the price. The state wins because even if stores lower the price they will get the $1 per pack tax and not only that but if a price war develops without the state mandated minimum pricing, more young people will light up increasing overall sales. IMHO, pretty ingenious strategy, although I’m dismayed that more young people may start lighting up.

Anonymous said...

Why should the state be setting prices on cigs or auto insurance or anything for that matter?

Whats next, they want to tax Big Macs based on caloric content

Bill Randell said...

I could spend a few hours on the cig issue but there are valid reasons why there needs to be minimums of wholeslae and retail prices.

That said, the law to abolish minimums has not been voted on.

Anonymous said...

fuli"Bill Randell said...
I could spend a few hours on the cig issue but there are valid reasons why there needs to be minimums of wholeslae and retail prices."

There are also valid reasons why the airport spends $5 million per year. Those reasons may not be obvious, but because Nemeth says so, we should just believe that they are valid.

In case you didn't pick up on the sarcasm, I believe that price fixing is wrong, 100% of the time.