Senate panel weighs insurance tax break



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A proposed bill to give property and casualty insurance firms a $40 million tax break over five years hit a snag in its Senate committee hearing Tuesday. House Bill 678 would cut the tax rate paid by the insurers from 2 percent to 1 percent between now and 2012 to help save what proponents estimates are up to 1,000 high-paying jobs and attract more. Rep. Ben Parker, R-Londonderry, who chaired the House study of HB 678, warned senators that revenue from the tax has dropped from $44 million a year to $40 million, and nobody understands why. That might create an extra $4 million a year hole in future budgets, he suggested. “Had we known that when we voted in the House, we might have come to as different conclusion,” he testified. “We just learned about it last week from the insurance commissioner. It won’t affect the impact of the bill, but it affects overall revenue.” He added that the bill would “still increase business in the state.” The House passed the bill March 22 on a 183-85 vote, based on the understanding it might keep several firms from leaving the state. New Hampshire has lost 1,000 jobs in the industry since the late 1990s. The bill would lower the rate by 0.25 percent each year and cost the state $2.4 million in revenue in the first year. The subsequent rate cuts would cut revenue by $4.2 million in 2009, then $9.1 million, then $11.1 million, then $13.4 million. Rep. Neal Kurk, R-Weare, called the legislation a giveaway to insurance firms, with no benefit to taxpayers. He said firms could easily redomesticate to New Hampshire without bringing any jobs. And, he said, the bill might not stop New Hampshire-based firms from leaving. “New Hampshire has always had a policy of not buying jobs with tax breaks,” Kurk added. “We don’t have enough tax revenue to cover our growing needs. We’ll have to replace that lost revenue or cut spending.” Kristine Vardo and John Cusalino of the insurance firm Liberty Mutual said two of the company’s five New Hampshire-based subsidiaries could save $1.9 million by moving to Wisconsin, with its 0.5 percent rate. Insurance Commissioner Roger Sevigny said he has the statutory power to make any firm domesticating here bring jobs with it. “They can’t incorporate in New Hampshire without my permission,” Sevigny said. Senator Bob Odell, R-Lempster, said he dislikes considering legislation with what amounts to a gun to his head. Donald Baldini, legal counsel for Liberty Mutual, said that the corporation conducts a yearly tax analysis of each of its subsidiaries. “This not personal to New Hampshire, and nobody is holding a gun to anyone’s head,” he said. “We have to save money where we can.” - CHRIS DORNIN/GOLDEN DOME NEWS Edit ModuleShow Tags
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