High NH cigarette tax linked to rising cigarette sales in Maine for 1st time in 20-plus years

High NH cigarette tax yields rising sales in Maine

PORTLAND, Maine — Cigarette sales are rising in Maine for the first time in more than 20 years, and New Hampshire’s higher cigarette taxes may be one reason why.

The number of tax stamps sold in Maine for the first six months of 2010 is up about 5 percent over a year ago, according to Maine Revenue Services. Cigarette sales had been falling steadily for years, so the increase comes as a surprise to state officials.

A number of factors may be at play — a crackdown on illegal Internet sales, a rise in youth smoking rates and last year’s increase in New Hampshire’s cigarette tax to $1.78 a pack compared to $1.98 in Maine. Cigarettes generally cost between $5 and $8 a pack.

With New Hampshire no longer the land of cheap cigarettes, more Mainers may be buying their smokes at home rather than venturing across the border, said Mike Allen, research director with Maine Revenue Services.

“We talked to some of the wholesalers and they indicated they were seeing a shift in their sales from New Hampshire stores along the border to Maine stores along the border,” Allen said. “That reinforced for us a little bit that that may be what’s going on.”

The smoking rate among Maine’s high school students rose last year — from 14 to 18 percent — for the first time in years, and the federal government has cracked down on illegal Internet sales of tax-free cigarettes, forcing smokers to buy packs with tax stamps on them, said Dr. Dora Anne Mills, director of the Maine Center for Disease Control and Prevention.

Some Mainers who used to go to New Hampshire to save money are probably buying their cigarettes in Maine, she said, but that alone wouldn’t account for a 5 percent increase in sales.

“Regardless of what it’s caused by, it’s a wake-up call,” she said.

Mainers, especially those who live near the New Hampshire border, for years have traveled to the Granite State to buy cheap alcohol and cigarettes. Nationwide, state cigarette excise taxes range from 17 cents a pack in Missouri to $4.35 a pack in New York, according to the National Conference of State Legislatures.

New Hampshire’s tax on a standard 20-cigarette pack of smokes stood at 52 cents until 2005, when it rose to 80 cents a pack. The tax went up to $1.08 in 2007, to $1.33 in 2008 and to $1.78 in July 2009, said Carol Guyer of the New Hampshire Department of Revenue Administration.

Maine’s taxes, meanwhile, used to be substantially higher than those in New Hampshire, which lured smokers across the border with the promise of cheaper cigarettes. But now the gap is just 22 cents, making it barely worth the while.

While Maine cigarette sales have been increasing, sales in New Hampshire have fallen since the latest tax increase, said Guyer. Final figures won’t become available until September, she said.

Guyer wouldn’t venture a guess why sales were down “beyond the obvious that the price is increasing.”

“Maybe people are quitting,” she said.

Cigarette sales have fallen steadily in Maine for years. In 1997, the state sold 123.3 million tax stamps, which are on every pack sold in the state. In 2009, sales had fallen to 68.2 million stamps — a decline of 45 percent.

Ed Miller of the American Lung Association of New England hopes the increase in cigarette sales is a short-term aberration. “Hopefully this increase is just a blip on the screen and we’ll continue to move the sales down,” he said.