Is Increased 'Tobacco Tourism' on the New Hampshire Horizon? - Granite Grok

Is Increased ‘Tobacco Tourism’ on the New Hampshire Horizon?

smoking - what about the tobacco taxes in New HampshireNew Hampshire Democrats, in their race to the bottom with other New England States, like to raise taxes here–on items like tobacco–so they can grow government but still claim to have a slightly lower tax than those other Democrat run cesspools.

This, of course, does not work.

Three or four years ago, after NH Democrats raised the tobacco tax in the state several times, the end result was a 20% increase in cigarette sales in Maine, as people stopped coming to NH to save money because the difference in taxes did not amount to savings that were worth the trip.   A likely decline in traffic from VT and MA was not reported but can be presumed.   The left’s tax increase “race to the bottom” inevitably cost us long term sales, secondary sales, tax revenue, jobs, and so on.

But Democrats never learn.

Thankfully, voters had a brief moment of lucidity and in 2011 when the Republican legislature arrived, they lowered the tobacco tax to stimulate sales but they didn’t lower it enough.  With gas almost double what it was when Mainers and others stopped making the cross-border trek in 2009, a few dimes here or there hardly made a difference.  The end result was something akin to global warming over the past 16 years; a plateau with signs of a slight decline, nothing to see here, just move along.   But because it was tobacco and a tax cut, Democrats lost their minds and proceeded to predict the end of the world.  It was like living with a state full of teenage daughters.  “OMG! I Can’t believe you did this to me!  My life is over!  I hate you!  um…can I borrow some money?”

Our progressive totalitarian friends on the left can't help but want to regulateWhen the Democrats took the House back in 2013 the prospect of raising the tobacco tax was staring at them like a big candy-apple red button.  They just had to push it.  And they did.  Were it not for a barely Republican Senate they would have succeeded to no good end.

One of the few advantages to being surrounded by socialist states with addictions to other people’s property is that they waste tens of millions more than we do in NH on just being the government so whenever they need to do something necessary (or at least appear to being doing something necessary), like pass a transportation bill to fix some roads and pay off a few cronies, they need to raise new taxes or raise the existing ones even higher.

In such circumstances the Granite State just needs to stand pat and wait, and sooner than we can imagine the junkie’s living next door will increase their taxes high enough to make a cross-border trip to the Granite State for Cigarettes (gas, liquor, fireworks, beer, and other items) a jaunt worth taking.  And if they happen to be here already it makes sense to stock up before you leave.

Well, the Bay state needs $500 million more to feed their new transportation bill and to get there from here they plan to raise their cigarette tax by another dollar a pack.  That’s ten bucks more per carton on top of the existing tax difference with New Hampshire.  That, my friends, creates a difference that makes a cross-border trip into New Hampshire worthwhile.

And here is where you will see the stark difference in philosophy between Democrats and myself.

My first thought is that without raising taxes on our own citizens–that means doing nothing–New Hampshire will see an increase in tobacco revenue.  It could be significant, but let us low ball that and just go with–“there will be more.”   I won’t even guesstimate secondary sales, potentially  more BET and BPT, that’s gravy.  Just adding another ten bucks to the cost of a single carton of cigarettes in Massachusetts will generate easy money for NH without any legislation, no debate, no cost to us nor any need to add more taxes on the backs of low income families who live and smoke in New Hampshire.   So to recap, my legislative plan is to open a beer, maybe take a nap, and let the money come to us.

New Hampshire Democrats, at the sound of one tax rising, are already scrubbing their hands together and cackling as they try to determine how best to sell a new tobacco tax increase on New Hampshire citizens.   They are calculating the maximum increase to our tax after Massachusetts raises theirs.  Some of them might even argue for raising it as high as possible to attain parity with our neighbors without any regard to markets, human nature, or loss of revenue.   It could keep a few of them up at night as they skitter about their musty lairs consulting the entrails of some former Tea Partier they sacrificed in their basement, or to scry the mysteries in the smoke curls emanating from fires fed by cardboard standees of Rand Paul,  Ted Cruz, or even Sarah Palin that they first defecated on and then ran over with their cars.

Whatever the theatrics, there is only one possible outcome.  The left will always see what they want to see.  In the wake of the Bay State Tobacco Tax hike a New Hampshire Democrat will propose their own tobacco tax increase,  insist it will fund something that sounds like “if we do not fund it puppies will be crushed,” demand we debate it in committee, fight it in the press and in the legislature, even call opponents names or suggest they want to stand upon a future filled with high health care cost burdens and the corpses of children (or crushed puppies) to stop them, all so we can end up with…less revenue for all that trouble.

This is why I think them not so bright as they suppose themselves to be.  Not much in the way of higher function just emotion and response.  So where do we start?

First, New Hampshire will never, by itself, generate the kind of revenue from tobacco Democrats insist we must have (that is the point after all) without maximizing the potential customer base by attracting the large populations of smokers from border states.  Call it tobacco tourism if you like, I don’t care.  Facts are facts.  The larger the savings the greater the draw.  (Hey–If you really didn’t want the money you wouldn’t keep overestimating the income and spending it before we knew the truth.)

Second, something I learned from running million dollar franchise restaurants is that low prices equal more volume and more volume gives you options.   Moving consistently more volume at a lower price point can equal significantly more profit, which allows you other indulgences.  In the case of tobacco revenue, if you incentivize more transactions by undercutting the competition (at the largest possible break point to encourage more traffic) you reap millions without expending one iota of effort.  It works, and in this case it is as simple as doing nothing and letting it happen because the “competition” just raised their prices.  And that extra revenue allows you to pursue other policy ideas (never tax relief for some reason) without having to add any new or additional tax burden on the indigenous population who then retain that income for other forms of investment or commerce to the benefit of business owners, employees, wages, and even the state government.

Third, only because it will come up, Democrats are not raising taxes on tobacco to reduce smoking or to reduce teen smoking.  They just want more taxes.  Recent data published on GraniteGrok proves that the Democrats tax increases had no effect on teen smoking at all, and in one case it increased.   But the hard, simple truth is that the left has spent all the tobacco revenue and every chance it gets it estimates more so it can spend that;  Democrats do not want less tobacco revenue they want more,  ergo–more smokers to line the pockets of tax and spenders in Concord, preferably from other states, which also keeps the health care burden down in ours…another win we have been reaping benefits from for years as well.

Solution: whenever possible, outsource your tax burden.  Let the spendaholic proclivities of nearby states drive their citizens to our doorstep for better prices and better value for their dollar, and under no circumstances do anything to impair that value.    This way you can raise tax revenue while sipping a fruity drink on your policy porch with your feet up, which also keeps you from looking for new ways to spend more and tax more despite the win-win of Tobacco Tourism.

But as easy as that appears this is not how it will play out.  Speaking from experience, I can tell you that New Hampshire Democrats wont see it that way.  They would rather fight to raise a tax that results in less revenue in the long run than do nothing and make more.   It is who they are.   They see that tax gap and the opportunity for any tax increase is like that big, candy-apple red button…they just have to press it.

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