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Business tax cuts, income tax proposal likely to come up in 2017 legislative session

  • The State House dome as seen on March 5, 2016. (ELIZABETH FRANTZ / Monitor staff)

Monitor staff
Published: 12/12/2016 10:31:28 PM

More than 30 bills related to taxes are slated for the New Hampshire Legislature’s 2017 session, ranging from an increase on the beer tax to fundamental changes in how the state taxes it residents.

With Republicans controlling the legislature and a newly elected Republican governor, further lowering of business taxes is likely to be a major priority in the coming year.

“The big question mark is how much we’re going to try and lower business taxes,” said Steve Norton, executive director of the New Hampshire Center for Public Policy Studies. “Any other changes that might occur are going to be dwarfed by this potentially large change.”

Governor-elect Chris Sununu will unveil his budget proposal in February. One of Sununu’s promises during his 2016 campaign was to further reduce and simplify the state’s business taxes.

Republicans in the Legislature cut business taxes in the 2015 budget with Gov. Maggie Hassan initially opposed to the move.

The business enterprise tax was reduced from 0.75 to 0.72 percent and the business profits tax was reduced from 8.5 to 8.2 percent. The taxes will drop further in 2018 on the condition that state revenues hit specific projections.

Those in favor of more business tax cuts argue the reductions will help attract new businesses to the state.

“You certainly make New Hampshire a more attractive state to bring your business,” said David Juvet, senior vice president of public policy at the New Hampshire Business and Industry Association.

Juvet said that even with the reductions, New Hampshire’s business taxes are still higher than other states. He hopes additional cuts will make the state cheaper for the businesses that are already here, in addition to the ones looking to move.

He said his organization is looking forward to working with Sununu and the Republican Legislature toward accomplishing the goal.

“I think our general impression is a good one,” Juvet said of Sununu.

Other legislation

Other changes would be more significant. Democratic state Rep. Paul Henle is suggesting the state get rid of property taxes and dramatically change business taxes. In its place, Henle is proposing an income tax.

Henle’s plan would effectively get rid of New Hampshire’s property taxes and the business enterprise tax. It would also cut back on the state’s business profits tax and repeal the utility property tax.

Altogether, that accounts for about $1 billion, Henle estimates.

He would replace it with a 3.95 percent income tax, which he said would be a more transparent way to raise revenue for the state.

“If we have an income tax, everyone in the state will know about it,” Henle said.

Henle, of Concord, argues that the current tax on utilities and businesses ultimately trickles down to the taxpayers without them realizing it. For instance, taxes on utilities like Liberty Utilities and Eversource can get passed onto ratepayers in the form of higher bills.

Henle’s proposal has components that appeal to both Republicans and Democrats.

Still, he said he’s under no impression that the fight will be easy. New Hampshire is one of the few states in the nation with no sales or income tax, and gubernatorial candidates of both parties routinely pledge they won’t introduce them.

“This is a high hill to climb,” he said. “Nobody wants to be the first person to stick their head out of the foxhole.”

Though the bill is still a longshot in tax-averse New Hampshire, he’s hoping state residents fed up with rising property taxes will say something to their legislators.

“If this is to pass, the impetus is going to have to come from the bottom, it’s going to have to come from the voters, the property taxpayers, the business owners,” Henle said. “They’re the people I’ve been talking to.”

Other proposed bills include repealing the education tax credit, removing an exemption for premium cigars from the tobacco tax, establishing a small business jobs fund and tax credit, and introducing a local option sales tax to reduce the state’s property taxes.

(Ella Nilsen can be reached at 369-3322, enilsen@cmonitor.com or on Twitter @ella_nilsen.)

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