After a two-year reprieve, smokers could be paying more for their cigarettes and other tobacco products.
The House Wednesday voted 193-167 to approve House Bill 659, which increases the cigarette tax by 20 cents — from $1.68 to $1.88 per pack — beginning July 1.
The increase would provide about $20 million a year in additional state revenue.
The vote was largely down party lines with 10 Republicans voting in favor of the increase and 17 Democrats voting against it.
Republicans say the tax has more than doubled in the last 10 years and is undercutting the state's ability to attract out-of-state residents to purchase cigarettes and other products such as gasoline, liquor and lottery tickets.
"When we raise the tobacco tax, we are saying don't bother to come to New Hampshire, we don't need your money," said Rep. Laurie Sanborn, R-Bedford, "Talk to businesses on Main Street right now and they will tell you what they need are more customers."
But bill supporters said the state needs the additional money to begin restoring the services and programs cut during the last term, and increasing the tax would discourage young people from smoking.
"The primary intent of this bill is revenue that we need to begin repairing the damage done last term to services," said House Ways and Means Committee Chair Susan Almy, D-Lebanon. "The secondary intent is to discourage young people from smoking. When you smoke as a teen, you have a much harder time quitting than anyone else."
She argued the increase in the tobacco tax would still maintain the state's advantage over bordering states whose taxes on tobacco are much higher.
"Retailers should be able to maintain the New Hampshire advantage with these prices," Almy said. "The big problem is gas prices have gone up a lot and people are not willing to drive any distance to buy cigarettes."
House Minority Leader Gene Chandler said increasing the tobacco tax is not the way to improve the state's economy.
"With tobacco sales on the decline and border sales dwindling, the last thing we need is another increase to the tobacco tax," Chandler said. "This regressive tax not only makes New Hampshire businesses less competitive, but according to the Department of Revenue Administration, will result in 5.4 percent reduction in sales, hurting state revenues."
Other Republicans called the tax very regressive, saying the biggest impact is on the poor, who smoke in a higher percentage than the rest of the population.
"We are also concerned that this tax increase will (disproportionately) hurt lower income families in our state, who tend to purchase more cigarettes, and ask our colleagues in the Senate to defeat this bill," Sanborn said after the vote.
Gov. Maggie Hassan included a 30-cent increase in her proposed budget, but the House Ways and Means Committee members refused to go along with the hefty jump.
She said after the Governor and Executive Council meeting Wednesday she would continue to push for the 30-cent increase with lawmakers.
The bill now goes to the Senate where it faces an uncertain future.