The Senate’s discredit
By the time you read this, there’s a chance the full New Hampshire Senate has recovered from the bout of temporary insanity that afflicted its finance committee late last month.
For those who need to be reminded – and our apologies to those who’d like to forget – the Senate committee voted on May 28 to suspend for two years the business enterprise tax credit used against a company’s business profits tax bill. It was, in a single stroke, a careless and ill-considered proposal. At the very least, it stemmed from an apparent ignorance of how New Hampshire ended up with a BET in the first place. At worst, it exhibited a negligent disregard for the state’s business community.
Obviously, New Hampshire state government faces its most severe financial crisis since the Depression, and measures – some of them severe – must be taken, on both the revenue-raising and cost-cutting side.
Nevertheless, elimination of the BET credit – even for the promised two years – would be the worst possible move at a the most delicate time in memory for New Hampshire’s businesses, large, medium and small. In one stroke, it would further erode a company’s ability to hire, or even keep, employees. It would choke up credit, since the state’s banks would be among the hardest-hit. It would send a message to businesses already in the state and those outside that New Hampshire doesn’t take seriously its supposed reputation as a business-friendly state.
One of the most disappointing aspects of the BET credit mess is the apparent failure of members of the Senate Finance Committee to put in perspective how the BET came into existence. It was created in 1993 to bring some fairness to a business-tax structure that had relied solely on the business profits tax, paid by mostly larger corporations. Governor Merrill sought to fix the system by instituting the BET, which is paid by far, far more businesses. The credit against the BET was established partly to meet another of his goals – to make the new tax revenue-neutral.
While future legislatures saw fit to raise the BET by tripling its rate, none has even considered the idea of making a business liable for both the BET and the BPT. Until now. It can only be hoped that the full Senate understood how unfair and misguided such a policy would be. If not, it will be up to members of the House, or perhaps Governor Lynch, to inject sense into the process.
Jeff Feingold can be reached at editor@nhbr.com.
