Nanny State Dems Still Trying to Kill NH (vol. 23)
The cigar tax: Burning down the house
DAVID GAROFALO of Londonderry, owner of the Two Guys Smoke Shop chain, moved his shop from Boston across the state line to Salem after Massachusetts put him out of business with a cigar tax in 1996. Now New Hampshire is about to do it to him again.
"In 1996, Massachusetts was going to pass a tax on cigars from zero to 15 percent. As the biggest retail store in Boston at the time, I said you are going to force me to move," he said.
"They did it, we moved up here to Salem, N.H., and our business thrived."
Massachusetts doubled that tax to 30 percent in 2002, and Garofalo's business increased again.
Having no tax on cigars is helping New Hampshire's economy. There are 27 cigar shops in the state, store owners say. And more are on the way. Garofalo plans to open one in Nashua in April. But not if House Bill 1510 passes.
"We will be out of business the day before the tax goes into place. That's a promise. We can't pay it."
HB 1510 bill would impose a 60 percent tax on the wholesale price of all cigars. You read that right: 60 percent.
The tax would apply to all inventory, not just each cigar sold. So a dealer such as Garofalo, with an 8,500-square-foot store and thousands of cigars in stock, would suddenly have to hand tens of thousands of dollars to the state for the privilege of continuing to do business.
Roy Kirby, a former employee of Garofalo's, opened a Two Guys Smoke Shop in Seabrook. He took out a loan on his home to open the 3,000-square-foot store. He cannot afford to pay a 60 percent tax on his inventory, he said.
"I'll go bankrupt and be out on the street," he said.
New Hampshire cigar shops thrive on business from Massachusetts residents who come here to buy their cigars or stop on the way to or from other attractions such as skiing or hiking. A 60 percent tax would push the price of cigars sold here higher than the price of those sold in Massachusetts, with its 30 percent cigar tax and 5 percent sales tax.
New Hampshire cigar shops are booming because the absence of a sales or cigar tax gives them a competitive advantage over their Massachusetts counterparts. This is the very definition of the New Hampshire Advantage.
And yet legislators are proposing to hand that advantage to Massachusetts cigar shops. Many, if not most, New Hampshire shops would immediately go out of business. The additional revenue legislators hoped to soak from them, as well as the business tax revenue they currently generate, would disappear with them.
It is our Legislature's job to protect the New Hampshire Advantage, not destroy it. If legislators continue to attack businesses of which they disapprove, they will soon find the state even shorter on cash, and on businesses from which to extract it.
Oh, no! Local businesses are thriving! More companies are choosing to relocate to New Hampshire. New Hampshire residents are finding gainful employment as a result of it! And, families are running the "risk" having more disposable income!
This must be stopped at once!!!
UPDATE: From the NH General Court website (with links added to provide contact info for the sponsors of this horrendous bill)...
HOUSE BILL 1510-FN-A
AN ACT redefining tobacco products and increasing the tax on tobacco products other than cigarettes.
SPONSORS: Rep. W. Chase, Ches 1; Rep. E. Merrick, Coos 2
COMMITTEE: Ways and MeansANALYSIS
This bill redefines tobacco products for purposes of the tobacco tax and increases the tax on tobacco products other than cigarettes.
The bill also establishes a tobacco use prevention and cessation program fund and designates the increase in the tax on tobacco products other than cigarettes to such fund.
Because some things bear repeating...
Behold, the biggest load of crap ever to be smeared over the eyes of a public all to willing to lap this shit up - this "promise" that a small tax of X percent is needed to fund program Z, a program which, without fail will be geared toward helping The ChildrenTM, feeding homeless kittens, saving the planet from a fiery death, or whatever the PC cause celebre du jour happens to be at the time.
After a year's time (well beyond the memory capacity of the average voter) that X percent tax will become X+Y percent, and when the voters are told that this tax increase will be needed to offset budget shortfalls brought on by Programs A, B, and C, no one will so much as bat an eye.
And, why should they? None of them will even remember what Program Z was in the first place.
And, I'm tempted to call this so-called fiscal analysis of theirs a ragged old sack full of goose droppings, but that would only be insulting to goose droppings. And ragged old sacks.
The Department of Revenue Administration has determined this bill will increase state general fund unrestricted revenue by $426,787 and state restricted revenue by $4,468,000 in FY 2009 and each year thereafter. There will be no fiscal impact on county and local revenues or state, county, and local expenditures.
So, by taxing these local companies out of business, putting their employees out of work, and driving all their customers into Massachusetts for their tobacco products, the state will miraculously rake in an extra five million bucks a year.
Step 1: Steal underpants.