NH House backs allowing local rooms tax

Municipalities would be allowed to add $2 per night to cost of hotel room

Municipalities would be able to tack on a local rooms and meals tax and use the revenue to offset tourism costs if a bill passed Thursday by the New Hampshire House becomes law.

House Bill 641 would allow cities and towns to add a tax of as much as $2 per hotel room per night, as long as the price of the room $40 or more.

The local surcharge would be on top of the statewide rooms and meals tax, which is currently at 9 percent, the fifth-highest rate in the country, though many states allow localities to impose their won. Vermont and Maine’s are also at 9 percent. Massachusetts is at 5.7 percent, but in Boston the combined rate is 8.45 percent. In Portland, Maine, it is 11.5 percent.

When the rooms and meals tax was first introduced, municipalities were promised to get 40 percent back from the state after it was collected. They are currently getting 28 percent and the amount received is based on a population. This does not help towns whose populations swell during peak tourism seasons, like Hampton or Portsmouth, or those that attract a lot of business-related travel, like Lebanon and Hanover, thanks to the Dartmouth College and the Dartmouth-Hitchcock Medical center.

Hampton, for instance, said it spends an extra $600,000 on police during the summer, and Lebanon’s population, which stands at 13,000, can swell to 70,000, said Rep. Timothy Josephson, D-Canaan. Businesses in Portsmouth generate $30 million in rooms and meals taxes but the city only received $1.2 million in return, he said.

The $2 would go a long way to help alleviate property taxes in those towns, he said, but “it would make a negligible difference to the hotel owners, “because nobody ever passes up a hotel over a dollar or two.”

But opponents said that tourists do comparison-shop, particularly those looking at the lower end of the scale. “This bill is a tax. Let me spell it for you. T-A-X,” said Rep. James Belanger, R-Hollis. “Isn’t this something we swore to avoid? Some may scoff at the measly $2, but those are people who never grew up poor.”

The House passed the bill 191-154. It now goes to the House Ways and Means Committee before the House takes another vote on it.