March 20, 2011 - As some states look to tobacco tax increases to plug budget holes, a few are bucking the national trend and saying, "If you smoke 'em, we got 'em," looking at dropping the rate to boost cigarette sales.
One of the surest ways to help reduce youth smoking is to increase the price of cigarettes. Studies show that a 10-percent increase in cigarette prices leads to a 7-percent reduction in teen smoking. Testimony on Prevention of Teen Smoking by The Honorable Donna E. Shalala, Secretary, U.S. Department of Health and Human Services, Before the House Committee on Commerce, November 13, 1997..
The Campaign for Tobacco-Free Kids estimates that if the New Hampshire cut is enacted it would mean more than $21 million in long-term health costs. The campaign also estimates a 10-cent drop per pack would result in 1,000 new young smokers in New Hampshire.
Maine cigarette sales rise, New Hampshire cigarette sales fall..
In New Hampshire, supporters argue that reducing the tax by a dime would help the state compete with Maine, Vermont and Massachusetts, while opponents say it would still lose millions of dollars even if higher sales resulted.
New Hampshire's House voted Thursday to reduce the tax and sent the bill to the Senate, where its prospects are uncertain. If approved by the Senate, the cigarette tax cut bill would go to the governor, who doesn't support it. But the House and Senate, led by Republicans, could override a veto by the governor, saving cigarette smokers 10 cents a pack.
The House voted 236-93 to send the bill to the Senate anyway. Pro-business Republicans who control the Legislature are siding with Dumais' argument that the ripple effects from cutting the rate make it worth doing. New Jersey and Rhode Island have also considered reducing their taxes. If approved by the Senate, the cigarette tax cut bill would go to the governor, who doesn't support it. But the House and Senate, led by Republicans, could override a veto by the governor, saving cigarette smokers 10 cents a pack.
David Sutton, a spokesman for Altria Group, the parent company of Phillip Morris USA Inc: "Yes, we do support the excise tax rollback as it would benefit retailers, consumers, jobs and bring tobacco tax revenue back to New Hampshire."
Rhode Island's bill would cut its tax by $1, to $2.46 per pack compared with $3 in neighboring Connecticut. New Jersey last year considered reducing its tax 30 cents, to $2.40 per pack, but hasn't followed through. Across the river from New Jersey, smokers in New York City pay the nation's highest cigarette tax, a combined state and local rate of $5.85 per pack.
When states raise the tax, revenue goes up even though sales decline, Chaloupka said. Over time, tobacco tax revenues gradually drop after a tax hike as smoking use declines, he said. To drive revenues back up, states have raised taxes again.
The only time tax revenues dropped after a state raised its tax was in 2006, when New Jersey raised its rate 17.5 cents, he said â€“ though the revenue decline was more likely due to adoption of a comprehensive smoke-free policy. New Jersey raised the tax 12.5 cents in 2009 and revenue rose, he noted.
Chaloupka asserted that any reduction in cigarette prices would add to Medicaid and other health care costs.
State Rep. Susan Almy, a Lebanon Democrat and member of the House Ways and Means Committee, said the health impact was not taken into account in the committee when it promoted the tax cut.
Instead, lawmakers are looking at a study by the New Hampshire Grocers Association, which has consistently criticized the tax increases as hurting small businesses, particularly along New Hampshire's state line. Grocers Association President John Dumais said Thursday its study shows that cutting the rate a dime would cost the state tobacco tax revenues but would be offset by an increase in state taxes collected from people renting hotel rooms, eating in restaurants, and buying alcohol, lottery tickets and gasoline.
Reference: , Written on March 19, 2011 at 4:23 pm by admin, worldnewsmania.com/, 2/19/2011
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uly 1, 2007 - as of 7/1/2007 Smokers in five states will take a hit to their wallets as the tax increase..;