House OKs R&D credit
After a long floor fight and a roll call vote, the New Hampshire House passed its version of a research and development tax credit late Thursday afternoon.
While the bill still has to be reconciled with the Senate version, it does look like some version of the credit is now likely to become a reality.
Supporters of the bill argued that the credit – capped at $50,000 a year per company, and $1 million a year in total state spending – would pay dividends when it comes to private high-tech investment, which has stalled in recent years. That’s because, they say, the state is one of only 10 states nationwide, and the only one in New England, without such a credit.
But supporters weren’t helped by a study paid for by the tax credit’s main advocate – the Business & Industry Association – which said the tax wouldn’t pay for itself.
But critics seized on a study that found that, while $1 million might generate $1.8 million in new research and development spending and some 70 jobs, it would result only $50,000 return in taxes. Critics seized on this finding and argued that it would only encourage businesses to do what they were going to do anyway.
“We need … to ensure that it is not simply used to line the pockets of companies already profiting from defense contracts,” Rep. Dennis P. Vachon, D-Northwood.
Opponents also pointed to the mid-1990s, when the state repealed an R&D tax credit because very few companies took advantage of it.
“We have the most business-friendly structure without a credit,” said Rep. Roger Wells, R-Hampstead. “This is all hat and no cattle.”
But Rep Susan Almy, D- Lebanon, argued right before the vote that the “small investment” will be used as “part of a package to attract business” and by “encouraging exiting business to innovate we can create a synergy that will attract more students into science and technology. We need that innovation to secure the state’s future economy.”
The House passed the measure, 199-104.
Another proposal backed by the BIA passed even more easily, but it could be held up over a tussle with another bill trying to close corporate tax loopholes. That bill would continue the Community Redevelopment and Opportunity Program tax credit, which gives credits to those that build in economically disadvantage areas. So far few firms have taken advantage of it, but the bill would try to make it more attractive by increasing the value created for jobs and simplifying the rules while still keeping an $825,000 cap on the entire program.
The House passed the bill, but tacked on an amendment that redefines the term “business activity” for the purposes of the business profits tax and specifying that it include “employment of business assets.”
A bill with similar language had been retained by the Senate, so on Thursday the Senate tacked the CROP bill onto the trailer bill to the budget in an attempt to keep the CROP measure going.
The House also moved forward a bill clearing the way for the construction of renewable energy facilities in the North Country, again leaving Public Service of New Hampshire – at least as a regulated utility – out of the picture.
Resigned to what was essentially the elimination of PSNH from the picture, which has already occurred in both chambers, many former opponents reluctantly supported the bill.
“It does not bring jobs to the North Country very quickly,” said John Thomas, R-Belmont, who was hoping for another vote on allowing PSNH to be involved, but he was overruled by House Speaker Terie Norelli, D-Portsmouth.
Thomas still maintained that the regulated utility, by passing any savings realized by fast-tracking such plants to the ratepayers in the state, while “merchant” plants would pass it on to investors, mainly located out of state. He also thought a large utility like PSNH is more likely to go ahead with its project.
Rep. Neal Kurk, R-Weare, in questioning Thomas, suggested that the bill would actually result in rate increases to the public.
But Michael A. Kaelin, D-Lyndeborough, argued independents were “lining up” to build plants in the North Country, but would back out if they had to compete against a utility that could pass along the risk to ratepayers and could monopolize the fuel from the area by undercutting prices. While that might bring down costs in the long run, it would eventually result in higher prices, Kaelin said.
The bill – which has to return to the Senate because of an amendment studying various aspects of the program, including examining whether to let public utilities into the game, — passed 237-83. – BOB SANDERS