Nothing makes me smile like watching another left wing New Hampshire Democrat narrative go up in smoke. Which narrative, you ask, there are so many to choose from? Why, the one about how irresponsible it was to cut the tobacco tax and how it would never stimulate enough other forms of cross border commerce to make up the difference. A notion that is not just backwards, it runs counter to the entire concept of the New Hampshire advantage.
So right out of the gate, the Democrats had no where to run on this issue–not that they didn’t try–and now things are looking bad for their tobacco tax narrative.
As a long time advocate of lowering the tobacco tax, I suggested a larger cut than the one we got and a decrease in the gas tax to boot, so I am happy (cheeky even), to report that in May tobacco revenues in New Hampshire were 2.2% above projection (tobacco tax revenues are consistently coming in above estimates month after month now), and business taxes were almost 22% above estimates as well–and wasn’t that exactly the point?
The objective was to reduce a declining and potentially unreliable source of revenue–which tobacco is–and to leverage regional consumption to stimulate other revenue from non-tobacco purchases. With the business tax revenues 22% over projections in May, alongside another month of increases in tobacco revenue, you could begin to make the case that that is what is happening. If the trend continues, and budget estimates come in even or above projections, with increased tobacco sales paralleling higher and higher business taxes, it becomes increasingly difficult to suggest that the reduction didn’t do what it was intended to do.
Having Tobacco revenue over projection would just be a bonus. But let’s not get too cocky about it. Instead let us ask important questions about the oppositions opposition and their so-called alternative.
Democrats complained publicly and often about lower tobacco revenue after the tax was first lowered. But isn’t that the point of the tax? To lower consumption and therefore revenue? To end a practice many in government, and more so in the nanny wing, argue adds to the long term cost borne by the public? Is that not the goal? To make smoking (and therefore its revenue) history?
And we know that raising the tax reduces consumption, and lowers traffic into New Hampshire to buy tobacco, becasue we’ve seen it happen. So less tobacco revenue was always the goal for Democrats if they are being even remotely honest about it. This means that at some point we (even the left) were going to have to look someplace else for that revenue–or were the democrats planning on increasing the tax per pack on the last smoker to 30 million (or whatever it is) to make up for everyone else who had quit at their urging?
Do you see how stupid that logic is? If Decreased consumption really is the goal then lower tobacco revenue should have had our left leaning friends dancing in their liberal ghettos. But instead, they got mad, called it irresponsible, and get this…even deigned to insult parents by suggesting that the lower tax will increase youth smoking (which no parent could ever prevent without the State, apparently), all of which is a perverse twist of irony because the only way the Democrats would ever gather more revenue from tobacco in the first place is to either get young people to take up the habit (which they claim to object to) or to attract more traffic from outside New Hampshire–which raising the tax on tobacco actually reduces.
The people in the Democrat party leadership are dopes, yes? When are our residents including other Democrats going to notice? (Or have they already?)
For New Hampshire Progressives to cry about lower tobacco revenue suggests that they don’t really care about smoking at all, nor whatever health risks they claim it presents. They are looking to raise a tax so they can then falsely estimate even higher revenues and then spend it before the real–and much lower–numbers roll in. (And we know this to be true, because that is how they ran the state when we were dumb enough to let them.)
Consumption is declining, even now, and that’s not necessarily a bad thing–though I think people should be free to make that choice themselves. The larger point–at least in my mind–has been making the most of the remaining tobacco tax base, represented by people who still smoke, by encouraging them to find more value in buying tobacco here instead of someplace else while they are still buying it; to then let the improved purchasing power of the New Hampshire Advantage stimulate other purchases while they are here, thereby adding commerce and tax revenue (and jobs and growth) to replace or exceed revenues lost to the decline of tobacco use.
And there are promising signs. Tobacco revenue started to climb back toward estimates at the end of2011 and has been up every month in 2012 except March when, and this may have mattered, gas prices soared. (This increased cost to travel may have had an effect by decreasing the value of making the trip.) Tobacco revenue overall–while still down as should be intended–is closing in on estimate, as Business taxes perk up, even in the stagnating Obama economy.
This is how the New Hampshire Advantage works. For Democrats or Republican opponents of lower tobacco taxes to argue that lowering the tax will not at some point drive more traffic and therefore more tax revenue from businesses, is to ignore the very nature of the New Hampshire Advantage and human nature in general. If people will drive a few miles extra miles to save $50.00 in sales tax on a sofa why wouldn’t they do the same thing to save as much or more buying cigarettes a few times a year or more? And isn’t almost everything else cheaper in New Hampshire without the sales tax? Why should cigarette’s be any different?
They are not. The long term reality is simple. Lower taxes and lower prices will drive traffic. More traffic means more secondary sales you didn’t have before. More sales means… more sales, jobs, growing consumer base, income, BET, BPT, and so on. And the numbers are beginning to suggest that this could be where we are headed and for all the reasons I mentioned. And that Democrats are either clueless about how this all works or they are lying about their intentions.
