NH lawmakers seek further business tax cuts
Despite Sununu’s budget plan keeping current reductions in place
Gov. Chris Sununu isn’t proposing to cut business taxes more than already planned, but some state lawmakers have their own ideas.
Sununu, in his budget address Thursday, said that with his proposed budget “we will continue our responsible reductions in business taxes already set to take place.”
Legislation passed in 2015 calls for further lowering the rate of the business profits tax – currently at 8.2 percent – to 7.9 percent along with a cut in the business enterprise tax, now 0.72 percent of payroll, interest and dividend income, to 0.675.
But on Tuesday, at a public hearing before the House Ways and Means Committee, those who want to cut business taxes further unveiled their own proposal.
House Bill 615 would decrease the BPT rate to 7.5 percent in 2018 and bring it all the way down to 6 percent by 2020. It also would cut the BET – to .50 percent next year and gradually down to 0.4 percent.
The currently scheduled BPT rate decrease to 7.9 percent would push it just under Massachusetts’ 8 percent rate, but “that level is not enough. We need to go further,” testified Rep. Caleb Dyer, R-Pelham, in support of the bill. “No company would relocate for one-tenth of one percent.”
Dyer added that Massachusetts’ effective tax rate is actually still lower, since it offers a lot of tax breaks that the Granite State doesn’t.
Before the cuts were enacted in 2015 – when the BPT was still at 8.5 percent – fiscal conservatives said that New Hampshire needed the tax cuts to be competitive with our southern neighbor. Gov. Maggie Hassan eventually worked out a compromise with Republican legislative leadership to phase in the cuts, contingent on how state revenue was affected.
It turns out that business tax revenue came in $132 million above projections for fiscal 2016 and remain up from the first six months of fiscal 2017, despite the rate cut, testified Greg Moore, state director of Americans for Prosperity and a strong supporter of HB 615. Moore argued that the revenue picture indicates that “lower tax rates” meant “more tax revenue,” but others argued that taxes were up because the economy has rebounded.
The NH Department of Revenue Administration DRA said the currently scheduled additional tax cuts for fiscal 2018, would result in a an extra loss of $29 million in annual revenue. If the tax rates continue to go down as proposed in HB 615, that revenue loss would climb to $187 million each year.
There are other bills in the Legislature aimed at reducing tax rates, including Senate Bill 1, sponsored by Sen. Rep. Jeb. Bradley, R-Wolfeboro. The bill would cut the rate of the BPT to 7.5 percent by 2020.