Lawmakers: do no harm
“Do no harm” is the primary tenet for such varied tasks as restoring antique furniture or fine art, or even providing emergency medical treatment. The reasoning is straightforward. When addressing a delicate task, it’s critically important not to do something that makes the situation worse.
This simple concept is one we hope state legislators of both political parties follow as they set policy and craft the next state budget. Lawmakers must fill the $75 million to $100 million gap in this year’s budget before June 30; then they must address the huge budget shortfall – perhaps half a billion dollars – for fiscal 2010 and 2011. Finding new revenue and making additional budget cuts will be, at best, challenging. It will be an even greater challenge given the current U.S. and worldwide recession.
We all know business taxes are an important source of revenue for government. What many people don’t realize is that New Hampshire businesses are already the state’s largest source of tax revenue. Businesses contribute more than $600 million in business profits tax and business enterprise tax each year. In past years, when the Legislature was faced with a significant deficit, the solution – the place they eventually turned to “fill the gap” – was the BPT and BET. Given current economic conditions, this option, if chosen again, will bring damaging results to private-sector employers and the hundreds of thousands of working men and women they employ.
Contrary to popular opinion, New Hampshire is not necessarily a “tax haven” for business. At 8.5 percent, the BPT is already one of the highest in the country. Overall, businesses contribute 55 percent of all taxes collected at the state and local levels. The national average is 44 percent. Only six other states have a higher percentage of state and local taxes coming from businesses.
Other significant revenue sources from New Hampshire’s business community include the unemployment insurance tax, communications tax, insurance premium tax, and rooms and meals tax. Some studies even suggest New Hampshire’s business tax climate is among the worst in the country.
A recent analysis from the Tax Foundation noted specifically that New Hampshire’s poorest-in-the-nation ranking was due to our high BPT rate combined with the BET, a business tax unique to New Hampshire. A reasonable person can disagree with this ranking, but one thing is clear – New Hampshire businesses are already providing more than their fair share of government tax revenue.
Decisions the governor and state Senate and House members make during the 2009 legislative session concerning business taxes, energy initiatives and health-care costs will, for many companies, determine whether they keep the lights on and people employed, file for bankruptcy, or simply expand or relocate somewhere else.
New Hampshire businesses, along with the hundreds of thousands of working men and women they employ, are counting on our elected leaders to consider the impact their decisions will have on employers and New Hampshire’s economy during this difficult economic time. We are counting on our elected leaders to do no harm.
Jim Roche is president and chief executive of the Business and Industry Association of New Hampshire.