The House has just passed a $1 tax hike on cigarettes in what I am calling An Act to Benefit New Hampshire Border Convience Stores. This brings the total cigarette tax to $2.51. Massachusetts will soon have the 3rd highest cigarette tax in the country.
Economists call this a positive cross-price elasticity of demand. It's a fancy way of saying that when the price of cigarettes increases in Massachusetts people will go to New Hampshire, where cigarettes are much cheaper, to buy a carton.
And with gas prices surpassing $4/gallon, you can expect people to do the rest of their shopping in sales tax free New Hampshire while they're up there.
This means less business for Massachusetts convience stores and longer drives for Massachuetts consumers. The only winner here is convience stores and markets near the New Hampshire border.