3 Northeast States May Lower Cigarette Taxes

More cigarette sales can mean more tax revenues for state governments, which is why budget-conscious New Hampshire, Rhode Island and New Jersey are considering reducing tax rates on tobacco products.

Supporters claim lower tax rates would make cigarettes more competitive with the same brands sold in neighboring states, bolstering sales performance in those jurisdictions that lower taxes.

The proposed reductions, however, are far from dramatic. New Hampshire's House voted March 17, by 236-93, to lower the levy only by 10¢, to $1.68 a pack. A similar bill in Rhode Island would cut the tax by $1 per pack, while New Jersey considered a 30¢ slash last year without approving it.

By comparison, New York City smokers pay $5.85 a pack in state and local taxes.

According to The Wall Street Journal, opponents argue that if tax rates are slashed too deeply, sales may rise but state revenues could still fall. More smoking also means more long-term spending on healthcare, opponents claim.