Businesses Concerned Cigarette Tax Increase Could Send Shoppers Over the Border

By Steph Machado

Published 05/13 2014 07:32PM

Updated 05/13 2014 07:54PM

BARRE, Vt. - Vermont's cigarette tax is getting a small bump: 13 cents per pack.

It might not sound like much, but it's the sixth increase since 2002. That's why M&M Beverage owner Gilles Moreau isn't shocked.

"It seems like any time they need money, they always go back to cigarettes," he said.

He's right, according to Vt. Tax Commissioner Mary Peterson.

"It's almost always on the table," Peterson said. "Which is kind of interesting for a tax."

Health advocates are constantly pushing to raise the cigarette tax, with hopes it will convince people to kick the habit.

"It's the one tax that actually has advocates. You don't find that a lot in the tax world," Peterson said.

Moreau says as the cigarette tax goes up, his weekly sales go down.

"Over the last eight years, I've gone from about 650 cartons down to about 150," he said.

Of course, plenty people have stopped smoking over the years. But just people are buying fewer cigarettes in Vermont, doesn't mean they're quitting.

"That just means people have gone to New Hampshire, or bought them online," Moreau said.

"The border towns are always a concern," Peterson agreed.

Vermont's new tax is $2.75 per 20-pack, nearly a full dollar more than New Hampshire's $1.78. That's a big incentive for people to cross the border. New York tax is much higher, at $4.35 per pack.

"I get less customers in the door," Moreau said. "When they go to New Hampshire, they don't just buy cigarettes. They buy alcohol...groceries. They're not going to go down just to buy a carton of cigarettes."

The Tax Department does try to go after online cigarette distributors.

Vermont's cigarette tax increase is expected to raise $1.1 million in revenue. It goes into effect July 1, 2014.

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