Vermont versus New Hampshire


Not surprisingly, Maine is not the only northeast state to worry about its competitiveness with New Hampshire.  Vermont also struggles with many of the same issues that Maine does . . . high taxes, too many regulations, anti-business political climate, etc.

Thanks to MHPC’s sister free-market organization in New Hampshire–the Josiah Bartlett Center–I have become aware of this very interesting study by the Atlantic Institute for Market Studies based in Halifax, Nova Scotia.

The author of the study is Dr. Art Woolf from the University of Vermont and is titled “A River Divides It: A Comparative Analysis of Retailing in the Connecticut River Valley of Vermont and New Hampshire.”  From the executive summary:

“This study examines the nature and extent of changes in retailing activity in the border counties of Vermont (Essex, Caledonia, Orange, Windsor, and Windham) and New Hampshire (Coos, Cheshire, Sullivan, and Grafton) over the past 40 years.  The border counties have exhibited similar rates of population growth over that period of time, but the economic growth rates of the two regions have diverged significantly . . . New Hampshire’s border county stores are able to offer lower prices to consumers than their Vermont counterparts primarily because of Vermont’s sales tax.  The study also presents evidence that Vermont’s bottle deposit law has affected the location of larger supermarkets in the border region . . . the study finds that, if Vermont had not implemented its sales tax, Vermont’s border counties would have 1,900 more retail jobs and $322.7 million more in retail sales than existed in 1997.”

The only thing I would add to the study is differentials in excise taxes, especially cigarette, alcohol and gasoline, also add to the tax differential driving cross-border shopping and business relocation.