Vermont Residents Will Soon Buy Their Cigarettes in Neighboring New Hampshire

Vermont and New Hampshire are small states. For many residents the border with each state isn't that far away. So it will be interesting to watch how cigarette taxes soon affect the behavior of residents of these two states. I bet you didn't know that in some states, you are supposed to declare if you bring cigarettes across the state line. Of course, this rarely happens, but the law requires you too so the state gets its share of sin tax if you you stockpile cigarettes from other states that charge less in taxes.

With that said, Vermont is raising their cigarette tax and the "Live Free or Die" state is lowering their cigarette taxes. Wanna bet cigarette sales in New Hampshire climb while they fall in Vermont. Want to take this bet further and see which state actually increases its tax revenue from cigarettes and which one loses revenue? My bet is New Hampshire will make more by lowering it as people from neighboring Vermont will purchase more cigarettes across the state line.

Vermont is raising the tax by 38 cents. New Hampshire is lowering it by 10 cents. Having lived in Chicago, I watched residents of Chicago drive out to the burbs to avoid Chicago's higher sales tax on larger goods like appliances. That appears to be what happens in New Hampshire from states that border that have higher tax  rates.

The NH Journal writes:

The dual moves could prove a boon for New Hampshire businesses, which already do a steady trade in selling goods taxed heavily by other states to residents of neighboring states who drive across the border to stock up. Now, Vermonters may have an added reason to do so, and New Hampshire grocery and convenience stores hope to clean up.