New study refutes tobacco-tax cut claim

The New Hampshire Retail Grocers Association, for now at least, is not getting the last word on the economic effects of New Hampshire’s cigarette tax.A new study released by the Campaign for Tobacco-Free Kids refutes the findings of an earlier study released by the New Hampshire Grocers Association that claimed retailers’ sales would increase by 11.4 percent — and the take from assorted state taxes would grow by $13 million — if the state’s cigarette tax is cut by a dime.The House in March voted to cut the cigarette tax by 10 cents, but the measure is still making its way through the legislative process.But economist Brian Gottlob of PolEcon Research in Dover — who conducted the new study, “The Fiscal and Economic Impacts of Decreasing the Cigarette Tax in New Hampshire, March 2011” denied that lowering or raising the tobacco tax has anything but an effect on tobacco tax revenues.According to Gottlob, if the tax were to be cut by 10 cents, cigarette sales would increase 1.6 percent, but that still would mean a loss of $9 million in tobacco taxes. As for any other tax revenues — levies on rooms and meals, gasoline and alcohol — Gottlob said he found that no significant influence from cigarette tax sales.He did say that a key to slower cigarette sales is gasoline. Anything above $3 a gallon, he said, erodes the incentive for out-of-state motorists to purchase cigarettes in New Hampshire.Gottlob also said he questioned the key finding of Retail Grocers’ study, which was conducted by two professors at Southern New Hampshire University.He said their results were based on assumptions of “extraordinary changes in cigarette sales” in New Hampshire. He added that those assumptions “are demonstrably implausible and unrealistic by historic standards in New Hampshire or any state in the nation.”He said the kind of increase in cigarette sales envisioned because of a 10-cent tax cut would be the third-highest in the last 30 years in New Hampshire. He also said sales haven’t fallen significantly, despite four cigarette tax increases since 2003. — JEFF FEINGOLD/NEW HAMPSHIRE BUSINESS REVIEW