Rep Ken Wyler, R-Kingston NH, took the Portsmouth Herald to task, in Fosters Daily Democrat, (Fosters.com) for its recent editorial on the cigarette tax decrease. The Herald would like us to continue raising tobacco taxes every year, just like when the Democrats were in power, essentially pimping the Democrat party argument that we need the revenue, and that the tax decrease was pointless.
I’ve been arguing for a much larger decrease of the cigarette tax than the Republican House settled on for years. It seemed obvious to me. We make a hell of a lot more on Rooms and Meals taxes and that revenue is shared with towns–(ironic considering how Democrats pilfered that tax for reasons that will become obvious in a moment.) Increased commerce overall is a benefit to the business community, profits, employment, wages, and the business tax revenue that grows as a result. Cigarettes are a draw, even as sales drop. Why don’t Democrats see it?
Lower sin-taxes have always drawn commerce to New Hampshire, particularly given the tax habits of neighboring states. This fact continues to allow us the opportunity moving forward to stabilize or even grow revenue from slightly more reliable sources (restaurants, motor fuel, retail sales) than cigarettes, whose unit sales have been declining for years; sales that may be declining, as if the left needs one more policy irony piled atop all the others, because of aggressive nanny-state Democrat policy goals designed to keep people from smoking in the first place.
So here we have a concerted effort to prevent the sale of something from which the left insists we must try to milk more tax revenue, but which even the CDC says is an unreliable source. Now that’s what I call Progressive! But then all their favorite taxes are like that.
Only a progressive would rely on more revenue from something they want to get rid of. Increasing the tax on a declining market will only accelerate the unreliability of the revenue stream. That creates the opportunity for bigger budget holes that must then be filled on the fly. (Everyone recall the Democrat tradition of last day of session, post-midnight, budget balancing circus of tent taxes, LLC tax, fee increases, and screw holding hearings–we need revenue now taxes!?) No one in New Hampshire will question that indictment because it describes the entire budget and revenue process nightmare we underwent during the entire brief–but still far too lengthy–Democrat party monopoly on power in New Hampshire.
But they will deny their own incompetence and continue to pine for those unreliable taxes.
Sales and income taxes, another giant check box on the left wing to-do list, are probably the worst sources of revenue because they are so volatile. Dips in the economy erode employment and commerce first. Rising unemployment creates increased need for state revenue and adds increased burdens on the lefts utopian welfare state, which now finds itself trying to feed the very people that were just feeding it. Such is the complete and total failure of the role of government in progressive economic theory.
This is why states that rely on sales and income taxes are in such bad shape these days and have suffered the most during ‘The Great Recession®.’ The people who used to give them tax dollars have not only stopped but immediately jumped to the debit side of the spreadsheet at the same time because that is what the Democrats have trained them to do. So these states find themselves buried in debt, and cutting off people suddenly in need; slashing services and public workers because the state has taxed itself into a corner.
Cigarette taxes have become an unreliable source of revenue. It only makes sense from a budget perspective to rely on them less and less moving forward. Raising the tax is simply the wrong direction to be headed.
Cigarette taxes should be sun-setting over the next five to ten years, not because we want people to smoke more, (or less) but because we can’t count on them. Odds are good that this revenue is going to dry up, and only a “zipper-head” would try to take it the other way. But until that happens, lowering these taxes on our side of the border will attract what commerce there is and slow the decline of sin-tax revenue, while helping to stabilize other forms of retail commerce from which New Hampshire draws more reliable revenue.
As people pay more attention to every penny, New Hampshire continues to present the people of New England with opportunities to get more with what they have. With the economy stagnating, an real recovery still years away, we are uniquely positioned to provide more value for every dollar. The demise of the cigarette tax as a source of income incentivizes us toward a path to reduce the States own addiction to cigarettes, and reap what rewards we can on the way down. It only makes cents.
And by the way. Have you heard my plan for reducing New Hampshire’s gasoline taxes? It’ll be great for business. And Democrats will hate it.