Owners of grocery, convenience and retail distributor stores lobbied state senators Monday to cut – if not eliminate – a proposed increase in the cigarette tax.
The House-approved $10.4 billion, two-year state budget plan relies heavily upon this tax, increasing it from 80 cents to $1.25 per pack.
Gov. John Lynch had proposed the tax only be raised to $1.08 to finance his budget plan.
John Dumais, president and chief executive officer of the New Hampshire Grocers Association, claimed his lobbying organization lost five small businesses that went under after the Legislature last raised the tax July 1, 2005.
Even though the state took in more money from the higher tax, it sold six million fewer packs of cigarettes in 2006 compared to 2005, he explained.
“We aren’t talking about any small consequences for the state,” he said.
The grocer lobby claims that for every $1 in cigarette pack sales, the state receives another $3.40 in other purchases.
Studies have concluded 40 percent of cigarette sales come from out-of-state residents. Massachusetts’ residents make up the largest portion of that group.
Massachusetts Gov. Deval Patrick has said he would oppose any increase in that state’s tobacco tax, which is $1.51 per pack but doesn’t include 20 cents that comes from applying the state’s 5 percent sales tax.
“Massachusetts sold more packs in 2006 and profited from our last increase so you can bet they are hoping to do even better if we make the same mistake again,” Dumais warned.
Supporters insist the state’s retail sector would still profit from cigarettes sold at the higher price and that it would discourage teens from starting the addictive habit.
Ray Tetu said the higher tax would force his business to post …