Panel backs cap on rooms and meals tax fee

A House Ways and Means subcommittee voted 6-1 Feb. 8 to limit the amount large restaurants and lodging firms can hold back as an administration fee in collecting the state’s rooms and meals tax.

Lobbyists for the hospitality industry opposed House Bill 1329 at its hearing and work session, fearing the bill imposes a new tax on a sector already paying its fair share.

Currently these businesses retain 3 percent of receipts from the 8 percent state tax, but only if they file an electronic return by the 15th of each month. If overdue, they lose their fee and pay a 6 percent annual penalty instead.

In its latest version, HB 1329 would cap the monthly collectors’ fee at $100 per restaurant or hotel, regardless of its sales volume. Each outlet in a business chain would get the same $100.

The bill would cost the 998 largest tax filers a combined $3.1 million, according to spreadsheets prepared for the Ways and Means Committee. The other 5,277 filers would see no loss because the payment still covers their 3 percent cut.

As a general rule, a restaurant or motel would suffer no drop in fee if it generates less than $41,600 per month in taxable sales.

The original draft of the bill removed the aggregate $5.5 million commission, which would have hurt every firm in the hospitality sector. The $100 cap was a compromise.

The bill’s prime sponsor, Rep. Steve Vaillancourt, R-Manchester, said HB 1329 corrects an injustice. He said convenience stores get nothing for processing the revenue from cigarette stamps.

“It’s clear people are getting more money (on rooms and meals) than it actually costs them,” Vaillancourt said.

Tom Boucher, CEO of the T-Bones restaurant chain, said his firm’s five outlets spend a total of $45,000 to collect the tax, and they keep roughly the same amount. The bill would cost his firm $39,000 a year.

“I can’t just absorb this loss,” he said. “I have to pass it along to my employees or my customers.”

Vaillancourt called Boucher’s figures “serendipitous” because the costs exactly equal the commissions. After the vote Boucher said, “I take offense he didn’t accept my numbers as factual.”

Rep. Peyton Hinkle, R-Merrimack, cast the only vote against the $100 limit and called it unfair.

“There has to be a relationship between the size of our payment and the size of the company,” he explained.

Vaillancourt was surprised the subcommittee gave the bill such strong support.

“But I’d be amazed if it passes in both houses and gets signed by the governor,” he said.

Senate Majority Leader Bob Clegg, R-Hudson, said the bill reneges on a deal lawmakers made with the industry decades ago when the tax was enacted. In return for collecting it, businesses were given the commission.

“Here we go again, hurting them,” said Clegg.


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