Taxes Matter 14: Cross-Border Shopping and Liquor

The Portland Press Herald ran an editorial on September 8 stating that lowering Maine’s liquor prices is bad public policy. Their logic: lowering prices is bad because it might encourage more people to drink, which would unleash other social costs.

The problem with that logic is that Mainers already have easy access to cheaper booze: they can simply buy it across the border in New Hampshire.

Cross-border shopping in New Hampshire is a major pastime for Mainers. We all know people who make a regular run to buy liquor, cigarettes or other everyday items in New Hampshire. When Mainers go on out-of-state vacations, they take orders from friends and family for the quick stop at the Portsmouth liquor store on the way home.

Put simply, with a little planning, there is virtually no one in Maine who doesn’t already have access to cheaper liquor in New Hampshire. In fact, as shown in the picture above, New Hampshire even pays you to come buy it. The state offers you a $25 coupon, which more than covers your gas bill to make the trip. As the ad in Down East magazine puts it:

“Explore Endless Summer Savings at your nearest New Hampshire Liquor and Wine Outlet—conveniently located across the state. Offering the best selection of wine and spirits at the lowest prices in America.”

In addition, New Hampshire is running a larger ad campaign, called “Load Up New Hampshire.” The state’s online website, www.loadupnh.com, proclaims:

“NO SALES TAX! Every Day, Every Year!

Substantial savings on all beer, wine, and ales

Up to 30.5 cents savings per gallon of gasoline

No state withholding on lottery ticket winnings

As much as $26.70 savings per carton of cigarettes”

Furthermore, the Portland Press Herald editorial misses a much larger point. Think about this: Why does New Hampshire go through all the trouble of running glitzy ads just to sell liquor? Because it isn’t just about liquor.

They know that once you get to New Hampshire, you’ll stay for other shopping and take advantage of other lower taxes on items such as cigarettes and gasoline—plus, there’s no general sales tax in the “Live Free or Die” state.

Of course, retail stores do this all the time. Take any “Marketing 101” course, and one of the first tactics you’ll learn is how to use targeted sales to lure customers who will stay to buy other goods—often negating their initial savings. From a tax perspective, customers save when buying just about anything in New Hampshire, compared to buying it in Maine.

Add up all of these cross-border shopping trips, and you end up with a very big problem. Recent MHPC research has estimated that Maine is losing up to $2.2 billion in retail sales each and every year to New Hampshire. This has created a 40-mile desert of big-box retailers on the Maine side of the border. At the same time, big-box retailers in New Hampshire locate as closely to the Maine border as possible.

Cross-border shopping also hits state and local government coffers. Higher Maine retail sales would mean greater income, sales and property tax revenue. Higher tax revenue would enable reductions in tax rates, which would fuel more economic growth.

Unfortunately, instead of this virtuous tax cycle, Maine has a vicious tax cycle that drives Mainers to spend their hard-earned money elsewhere.

Equalizing Maine’s liquor prices would be an important first step toward taking back our economy. Without the savings from liquor, the overall incentive to shop in New Hampshire is greatly reduced, especially with today’s high gasoline prices.

At some point, Maine’s policymakers have to come to the realization that Maine’s tax policy must become competitive in at least one area. Why not start with liquor?

But wait there’s more, the Union Leader is reporting that New Hampshire’s liquor sales are soaring:

Retail sales at New Hampshire Liquor & Wine Outlets since July 1 are up $9.8 million year-to-date, an increase of 9.4 percent over the previous fiscal year.

Spirit sales increased 9.5 percent and wine sales increased 9.3 percent, according to the New Hampshire Liquor Commission.

The commission said it is seeing continued growth at new and recently relocated stores across the state. Seven state liquor stores have been relocated over the past two years as part of a goal to update them statewide. Collectively, those stores experienced $7.9 million in growth in fiscal year 2012, which ended June 30, the commission reported.

This story originated as an editorial for The Maine Wire.

Unions Win: Right-to-Work Fails in New Hampshire

Verizon_Workers_Strike-0401
Creative Commons License photo credit: pweiskel08

Just moments ago, the New Hampshire House attempted to override Gov. Lynch’s veto on Right-to-Work. Unfortunately, the veto override failed 240-139, a mere 14 votes shy of the needed two-thirds.

However, the supermajority vote in the Senate and near-supermajority vote in House shows that there is very strong support in New Hampshire for Right-to-Work. New Hampshire is only one supporting Governor away from enacting Right-to-Work which could happen as early as 2013 (New Hampshire’s Governor is on a two-year term and Gov. Lynch has announced he will not run again).

Another thing we should also worry about are the actions of the anti-Right-to-Work forces who stopped at nothing to get their way. Consider these shenanigans as reported by New Hampshire Speaker O’Brien:

That’s why I have become seriously concerned about the coercion, threats and outright intimidation specific to the Right to Work issue that we have learned some of our colleagues have suffered. Here are several examples, some of which have just come to me today:

• One older representative was told that public emergency personnel might not respond in a timely fashion if they learned of a problem at this representative’s home after a vote to support Right to Work.

• Another representative’s daughter attending a public school was told that she would not be an appropriate candidate for a captain of her basketball team should her parent vote in support of Right to Work.

• Yet another representative who has been supporting the veto override was first told by his public employer he had to work tomorrow. Then he was unexpectedly called in by the head of the employing agency and told that he would be allowed to go to Concord to vote, but that, given the presence of the two unions that had members at the agency, he really needs to vote against Right to Work.

• A representative’s spouse was threatened on the job based upon a vote for Right to Work, leaving that spouse with the impression that he might lose his job or suffer worse consequences if that vote was not for the union bosses.

• A representative’s spouse was told in a telephone call from a senior union official that their pension could be in jeopardy if this representative voted in favor of Right to Work.

These are examples that go beyond the pale, yet do not include the numerous other instances in which union bosses have subtly implied veiled threats against representatives on this issue.

How many more instances of intimidation went unreported? These tactics simply do not belong in America.

Words of Wisdom from the New Hampshire Constitution

Picture of NH Road Maker State Capitol Concord

So recently I was perusing the New Hampshire State Constitution and I found some words of wisdom that I thought I would share with the world.  Both are from the Bill of Rights:

[Art.] 10. [Right of Revolution.] Government being instituted for the common benefit, protection, and security, of the whole community, and not for the private interest or emolument of any one man, family, or class of men; therefore, whenever the ends of government are perverted, and public liberty manifestly endangered, and all other means of redress are ineffectual, the people may, and of right ought to reform the old, or establish a new government. The doctrine of nonresistance against arbitrary power, and oppression, is absurd, slavish, and destructive of the good and happiness of mankind.

June 2, 1784

[Art.] 38. [Social Virtues Inculcated.] A frequent recurrence to the fundamental principles of the constitution, and a constant adherence to justice, moderation, temperance, industry, frugality, and all the social virtues, are indispensably necessary to preserve the blessings of liberty and good government; the people ought, therefore, to have a particular regard to all those principles in the choice of their officers and representatives, and they have a right to require of their lawgivers and magistrates, an exact and constant observance of them, in the formation and execution of the laws necessary for the good administration of government.

June 2, 1784

Gov. Lynch Vetoes Right-to-Work Bill

Gov. John Lynch & Dr. Susan Lynch
Creative Commons License photo credit: sskennel

As promised, Gov. Lynch (D) of New Hampshire vetoes Right-to-Work Bill.  Here is an excellent article from the National Review, Work Free or Die, that discusses the political side of the story.

Of course, Gov. Lynch had to justify his veto and did so by saying some goofy things like this:

“New Hampshire has a lower unemployment rate and a stronger economy than most states with so-called right-to-work laws,” Lynch said in a written statement.

And why do you think that is?  New Hampshire also has one of the lowest tax burdens in the country.  Might New Hampshire’s economic performance have more to do with that fact?  This is the very “New Hampshire Advantage” that Gov. Lynch has been trying to undo ever since winning office–including his LLC tax fiasco.  Right-to-Work would strengthen the New Hampshire Advantage, not weaken it.

There is still a good chance that the Legislature will overturn the veto.  First, the Senate already passed this version of the bill by a supermajority.  Second, while the house failed to pass the bill by supermajority, missing the mark by 14 votes . . . however, 31 members were MIA during that vote so only half of them are needed for override.

This is not over folks, stay tuned as the House will likely revote on May 25–only two weeks from today.  If any of my dear readers live in New Hampshire, be sure to call your Representative today and tell him/her to vote for the override.

New Hampshire Inches Closer to Right-to-Work

Today the New Hampshire House voted to send the Senate version of the Right-to-Work bill to Gov. Lynch.  The Governor has 5 days to sign it or let it become law without his signature.  However, he has already vowed to veto it.  In which case, it goes back to the Legislature for an override.

This version was already passed by the Senate with a 2/3 majority so I’m guessing that won’t problem in the override process.  However, the House did not pass its own version with a 2/3 majority.  It remains to be seen as to whether or not this particular Bill, which originated in the Senate, would garner more votes in the House than in the last go-around.