During a recent New Hampshire House Ways and Means Committee meeting, the discussion centered on proposed changes to tobacco and vape product taxation, with significant implications for local businesses and state revenue.

Tom Frawley, president of Summit Distributing, voiced strong opposition to House Bill 290, which seeks to increase taxes on tobacco products. He highlighted the negative impact of similar tax hikes in neighboring Massachusetts, where a tobacco tax increase led to a 15-18% drop in sales at his stores. Frawley emphasized that New Hampshire's relatively low tobacco tax has attracted out-of-state customers, generating approximately $950 million in tax revenue from visitors. He warned that raising taxes could jeopardize this advantage and harm local businesses.

Brett Scott, president of the New Hampshire Vapors Association, echoed concerns about tax evasion in the vape market. He noted that his stores pay a disproportionate share of the state's vape taxes, suggesting that many retailers evade taxes, which undermines compliance and revenue collection. Scott called for improved enforcement and auditing processes before considering any tax increases.

The Department of Revenue Administration (DRA) provided insights into the potential fiscal impact of the proposed tax changes. They estimated that a $1 increase in the tobacco stamp rate could generate an additional $87.5 million in revenue, while changes to e-cigarette taxation could yield around $3 million annually. However, they acknowledged limitations in their data, particularly regarding the tracking of closed-system vape products.

The committee's discussions highlighted the delicate balance between generating state revenue and maintaining a competitive market for tobacco and vape products. As lawmakers consider these tax proposals, the voices of local business leaders and the DRA will play a crucial role in shaping the future of tobacco taxation in New Hampshire.