Proposes plan to fight anticipated tax on cigarettes and smokeless tobacco products in New Hampshire. States that best strategy is to demonstrate the economic burden on New Hampshire grocers that the tax would impart. Identifies strategies: economic impact statement, legal support, witnesses, mail and phone campaigns, and a possible point-of-sale and advertising campaign.
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STATE TAX PLAN NEW HAMPSHIRE
LEGISLATtVE ACTION: September 27, 1990
STATE/LOCALITY: New Hampshire
SUMMARY: New Smokeless tax and possible cigarette tax increase.
SPONSOR: New Hampshire Medical Society, et al
LEGISLATIVE STATUS: Anticipated 1991 Iegisla0on
The industry must prepare early and effectively for the possibility of another tax battle in
New Hampshire. Other tobacco products, especially smokeless, will be on the table in
1991 and the cigarette tax may be considered, too. The economic downturn has hit hard
in New Hampshire; legislators will once again be scrambling for revenues while still
avoiding the awful specter of a broad based sales or income tax.
Increases in fees, creation of new "user fees' and excise taxes and increases in some
existing excise taxes are certain. Cable television escaped last year but will have a more
difficult fight in 1991. Liquor sales are down so liquor may have a good argument against
raising taxes. The remaining "sin' does not have that argument. Tobacco sales have not
slumped dramatically despite two 4-cent tax increases in the last 14 months. Our most
important armament this year will be careful, credible economic analysis of the entire
region as well as an inter-state analysis presenting the detrimental impact on New
Other tobacco products are being studied for tax purposes. Presently untaxed, OTP is
a prime target of the state medical association which has as its new president an oral
surgeon. The arguments against OTP taxes must be carefully crafted and monitored to
avoid what would likely be a losing battle to oppose a legislative attack on the whole
tobacco excise tax. Cooperation and teamwork with our OTP members and their
lobbyists is imperative.
Alternatively, creative approaches to revenue enhancement can be produced and
presented. However, it is well to remember that New Hampshire legislators will not easily
embrace new ideas. Mention of a broad based tax (income) was made on the floor of
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the House last year and had a few (four) supporters. It will be mentioned again this year
but will meet the. same fate. An alternative program should be investigated. One new
approach could be a restructuring of the state liquor distribution system which would allow
the state to get out of direct sales, sell its liquor distribution businesses, and tax the
resultant private businesses. Another may be a complete analysis of the state's tax
structures with a goal of making them more productive and possibly progressive. These
are two areas that may allow the industry an opportunity to get not only through this year,
but future years.
RESOURCES NEEDED YES/NO DATE NEEDED
ECONOMIC ANALYSIS/FACT SHEET? YES 10/31/90
Good numbers are the key to this legislative session. If revenues and sales are up we
could see additional taxes. We need the most up-to-date figures an.d a well-considered
analysis of them for both a cross-border impact and a region-wide impact. These
resources must be provided before any bill is offered in order to allow us to work
effectively. For this reason this analysis process must begin in October and then be
updated as needed.
In addition to accurate and up-to-date cross-border analysis, we request an important and
heretofore unexplored economic study of the effect in New Hampshire of the state
withdrawing from the direct sales of liquor. The study must be sponsored by our allies,
the Retail Grocers Association, in order to receive the serious attention it deserves. The
study would result from a T.l. grant to the grocers for them to conduct this economic
study. A $25,000 grant would be reasonable for this significant activit)I. The fQcus or
hoped for condusion of the study would be that the state would realize an immediate,
short-term, very large financial boost from the sales of its retail outlets followed by a
continuing revenue stream from licensing and taxes (of private corporations, the product,
the property, and other incidentals). Proper presentation of this plan, and its enactment,
might catapult the state budget out of the downward spiral.
A broader study of the state's entire tax structure has been planned for six months. The
study would be funded with 50% private donations and 50% state money. The project
may not be done because the state does not have its share. This may present a unique
opportunity for the industry. The state's portion was approximately $30,000.00. We
should consider fully funding this study and working with the contractor.
LEGAL MEMORANDUM? YES 12/30/90
We will require opinion response to arguments regarding the constitutionality of the
present tobacco tax system in New Hampshire.
EXPERT WITNESSES? YES 10/31 /90
Our economic analysis must be prepared by an organization with an unimpeachable
reputation for integrity. The organization must be prepared to fully defend its findings and
methodology to the legislature, the media and economic experts from the other side.
Witnesses could be presented as consultants for one of the affected retail organizations,
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if the analysis is well prepared and the allied group feels comfortable with the findings and
methodology. -Affiliation of any expert witness with or support from a local (liberal)
economist would also be beneficial. The N.H. Retail Grocers are willing to sponsor such
COALITION ALLiES? YES On-Going
Traditional business and hospitality allies may be too busy fending off attacks on business
profits and rooms and meals taxes. Our solid support will come from the N.H. Grocers
Association and the Retail Merchants Association of N.H. Our economic analysis will have
an important part in preparing these allies for useful lobbying efforts. We as an industry
must be careful not to confuse them with multiple messages from multiple sources. Also,
we must avoid 'bum out.'
T1 GRASSROOTS MOBILIZATION? YES 12/30/90
Depending upon the sales figures and hence the seriousness of the tax situation, our plan
is a two stage mailing and phone campaign.
COMPANY RESOURCES? YES 2/91
Coordination with the company lobbyist with whom we enjoy working relations, will begin
early in October. In February computer-based lists of company. activists need to be
assessed as a part of grassroots mobilization. It is imperative that all of the industry's
resources work together and remain focused on the primary issues. Dissipation of our
resources on unproductive legislative forays will only diminish our ability to be successful
on primary issues.
PUBLIC AFFAIRS/MEDIA RESOURCES? YES
The involvement of a media relations consultant who would help bring that component to
our overall legislative effort. Similarly, the LMC will be used to develop labor opposition
to any tax increase. This may need to be bolstered by the presence of CTJ.
ADDITIONAL NEEDS? POSSIBLY
If a tax battle begins to form, there may be a need to consider both a'point of sale' and
advertising campaign to turn the tide.