Business tax rates to stay the same after trigger avoided 

Monitor staff
Published: 7/9/2020 2:48:19 PM
Modified: 7/9/2020 2:48:09 PM

New Hampshire’s business taxes are not likely to rise in 2021, after the state avoided a key trigger set in motion by the 2019 budget.

The Department of Administrative Services announced that the state appears to have sidestepped a trigger that would raise taxes if revenues fell short for Fiscal Year 2020.

The economic downturn sparked by the coronavirus has devastated state revenues in recent months. That in turn had sparked worries that the state might cross the threshold to set off the tax increases next year.

Under the 2019 budget compromise between Gov. Chris Sununu and State House Democrats, the business profits tax was allowed to stay at 7.7% and the business enterprise tax at 0.6% – despite Democrats’ wishes to reverse prior tax cuts – but only if revenue stayed steady. If revenue for the whole Fiscal Year 2020 came in at least 6% stronger than planned, the business taxes would be reduced. If revenue came in 6% weaker, taxes would be raised. 

The state’s 2020 fiscal year ended on June 30. 

But despite a wave of business shutdowns taking a toll on business revenues and taxes since March, the final haul did not fall 6% below plan, according to the Department of Administrative Services, which produces a monthly report on overall tax revenues. 

Political leaders on both sides praised the news. The potential tax hike – which would have taken formal effect in April 2021 – had prompted Gov. Chris Sununu and Republican lawmakers in the House and Senate to press Democrats to pass a bill last month to suspend the triggers entirely, arguing that the coronavirus provided extreme circumstances.

Democrats had declined to suspend the triggers, voting down the proposed bill and arguing that the state would likely make it through the year without hitting the trigger.

“New Hampshire is fortunate to have remarkable people who monitor the budget and our revenues,” Manchester Democratic Sen. Lou D’Allesandro, who chairs the Senate Finance Committee, said in a statement Tuesday.

Sununu also hailed the development.

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