Raising Cigarette Taxes Is Bad Tax Policy

Published September 4, 2008

Dear Editor:

New Hampshire, a state celebrated for its citizens’ opposition to income and sales taxes, should be just as suspicious of tax hikes on cigarettes (September 4, “Cigarette tax may be hiked 25 cents in NH”). These taxes unduly burden low-income citizens and are a notoriously volatile source of revenue … but the red flags don’t stop there.

Cigarette taxes are bad tax policy particularly because they single out a small segment of the population, thereby giving the misperception to non-smokers that these increase won’t affect them. But falling tobacco use, combined with Internet, cross-border, and black market purchasing, has caused tobacco tax revenues to flatten.

As a result, smokers and non-smokers alike are often called upon to foot the bill as legislators scurry around in search of additional revenue. A recent National Taxpayers Union study found, “Taxpayers face a seven out of 10 chance of seeing another net annual tax hike within two years of a tobacco tax hike.”

If policymakers are unwilling to change their spending habits and enact sensible tax policy, they will end up placing an unnecessary burden on New Hampshire businesses and residents.

John Nothdurft ([email protected]) is the budget and tax legislative specialist for The Heartland Institute.