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N.H. House rejects South Dakota v. Wayfair sales tax response, heads back to drawing board

  • The State House in Concord, N.H., is seen on May 18, 2017. Sarah Kinney

Associated Press
Published: 7/25/2018 3:59:25 PM

Lawmakers in tax-free New Hampshire convened a special session Wednesday in response to a recent U.S. Supreme Court ruling on online shopping. But after the House thwarted a bill to deter other states from collecting sales tax in New Hampshire, the message was more “back to the drawing board” than “back off.”

The June 21 South Dakota v. Wayfair ruling, which says states can require online retailers to collect sales tax on purchases in states where they don’t have a physical presence, was a victory for states losing billions of dollars in revenue every year. But it was potential blow to New Hampshire, which prides itself on having neither a sales nor income tax.

Republican Gov. Chris Sununu called for the special session last month, saying lawmakers should act quickly to warn other states they’d face a fight if they tried to turn New Hampshire businesses into tax collectors. But that didn’t happen Wednesday.

A bipartisan task force drafted a bill that would require states and other taxing jurisdictions to register with the attorney general’s office, pay fees and prove compliance with state laws and the Constitution before collecting taxes. The Senate passed it, 24-0, but the House gutted it, leaving in place only a commission to study ways to protect the state’s tax advantage. The Senate refused to concur, and members said they’d be back soon with new legislation.

Senate Majority Leader Jeb Bradley said rejecting the House version would “push the ball further” along than agreeing to the stripped-down bill.

“We have nothing today, so let’s understand we’re probably coming back pretty soon. Let’s stay united, because all 24 of us took a vote to protect New Hampshire business today, to protect the New Hampshire advantage,” he said. “I guess this is the session that’s never going to end.”

The House voted, 164-151, for the gutted bill. It was backed by 85 of the 139 Democrats, 78 of the 175 Republicans and one Libertarian. Members of the House Freedom Caucus said the original bill would create a tollbooth, not a roadblock for other states, because it would have created a legal framework for them to compel businesses to collect their taxes.

Another critic of the original bill, Rep. Carol McGuire, said other than the study commission, the other provisions were premature given that the South Dakota law at the center of the Supreme Court case is not federal law.

“The New Hampshire advantage is ‘no sales tax.’ It is not ‘only sales tax for those jurisdictions who can jump through hoops,’ ” said McGuire, R-Epsom. “We need to draw a line in the sand and say, ‘We support the New Hampshire advantage, that is, no sales tax, no how for nobody.’ ”

Sununu criticized the House for failing to do its job.

“While the House wastes time, they left our state’s small businesses vulnerable to being forced to collect other state’s sales taxes. I have already spoken with the attorney general and his office will do everything in its power to protect New Hampshire’s small businesses,” he said in a statement.

The Senate rejected efforts by Democrats to amend the bill to add funding for drug and alcohol treatment centers and to help businesses hurt by the Trump administration’s trade tariffs.

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