>> WELCOME TO NEW HAMPSHIRE'S BUSINESS, I'M FRED KOCUR.
NEW HAMPSHIRE BUSINESS TAXES, THEY HAVE BEEN IN DISPUTE AT THE STATE LEGISLATURE THIS YEAR AND BETWEEN THE GOVERNOR AND THE LEGISLATURE, BUT A COMPROMISE WAS REACHED THIS WEEK AND THE
COMPROMISE IS INTERESTING, IT LEAVES RATES PRETTY MUCH THE WAY NER THIS YEAR AND NEXT, BUT IT TIES FUTURE RATES TO STATE REVENUES AND WE'RE GOING TO TALK ABOUT THAT WITH MY GUEST.
BUT FIRST, LET ME SHOW YOU WHAT THE RATES ARE GOING TO BE THE REST OF THIS YEAR AND OF COURSE NEXT.
BUSINESS PRODUCTS TAX 7.7% FOR TWO YEARS AND BUSINESS ENTERPRISE TAXES 0.6% FOR 19 AND 20.
WITH ME TO TALK ABOUT THIS AND ABOUT THE INTERESTING AND REALLY DIFFERENT TIE OF THE BUSINESS TAXES TO STATE REVENUES ARE TWO PEOPLE WHO KNOW THIS WELL AND WHO HAVE BEEN AT THE STATE HOUSE
THE WHOLE TIME.
DAVID, THE SENIOR VICE-PRESIDENT.
BUSINESS INDUSTRY ASSOCIATION OF NEW HAMPSHIRE, WELCOME.
>> THANK YOU.
>> AND BRUCE MURPHY, OF THE FEDERATION OF INDEPENDENT BUSINESSES.
>> GOOD MORNING, FRED.
>> NICE TO HAVE YOU HERE.
FIRST OF ALL, LET'S SET THIS UP BY TALKING ABOUT WHAT THE DISPUTE WAS BETWEEN THE GOVERNOR AND LEGISLATURE OVER THE BUSINESS TAX RATES SO IT'S MORE EASILY UNDERSTOOD.
DAVE, WHY DON'T YOU START.
>> THIS STARTED FOUR YEARS AGO WHEN THERE WAS A PHASED-IN REDUCTION OF BUSINESS TAXES.
NEW HAMPSHIRE HAD ONE OF THE HIGHEST BUSINESS TAXES AND WE FELT IT WAS DRAGGING THE HIGHWAY SO THERE WAS A CYCLE TO LOWER THE BUSINESS TAXES.
THIS YEAR THERE WAS A CHANGE OF POWER AT THE STATE HOUSE AND DEMOCRATS WHO NOW CONTROLLED BOTH THE HOUSE AND SENATE THOUGHT THAT THE STATE WAS LOSING REVENUE FROM BUSINESS
TAXES AND WERE SEEKING TO INCREASE THEM.
THE GOVERNOR FELT DIFFERENTLY AND ULTIMATELY WHEN THE BUDGET WAS VETOED, THAT SET UP THE SITUATION FOR WHERE WE ARE.
>> THE COMPROMISE FOR WHERE WE ARE THE PAST WEEK.
>> IT BRULE -- TRULY IS A COMPROMISE AND IT HE BEGINNING OF THE 2019 SECTION WHEN WE WERE LOOKING AT FOUR, FIVE, SIX DIFFERENT BILLS THA WOULD HAVE INCREASED THE COMPROMISE CAME
OUT.
>> LET'S GO TO THE COMPROMISE WHICH IS THE INTERESTING PART BECAUSE IT TIES BUSINESS TAX RATES TO STATE REVENUES AND HERE IS THE FIRST ONE.
NEW HAMPSHIRE BUSINESS TAXES CAN GO UP IN 2021, IF THE GENERAL EDUCATION FUND REVENUES ARE BELOW PLAN BY 6%.
BUSINESS PRODUCTS TAXES WOULD GO UP TO 7.9% AND THE BUSINESS ENTERPRISE TAX GO UP TO 6 OF.75%.
HOWEVER, IF THE NEW HAMPSHIRE BUSINESS TAXES CAN GO DOWN IN 2021, IF THEY GO DOWN, IF THE GENERAL AND EDUCATION FUND REVENUES ARE ABOVE PLAN BY 6%, THEN THE BUSINESS PRODUCTS TAX
GOES DOWN TO 7.5% AND THE BUSINESS ENTERPRISE TAX GOES DOWN TO 0.5 PERCENT.
OK.
THIS COULD BE CONFUSING.
EXPLAIN THIS, BRUCE.
>> I'LL GIVE IT A SHOT.
PERHAPS THE BEST THING THAT CAME OUT THIS WEEK IS THE FACT THAT WE HAVE SOME PREDICTABILITY, WE HAVE SOME CERTAINTY WHERE TAXES ARE.
THIS YEAR, AND NEXT YEAR, AND WITH THE POTENTIAL CHANGES THAT YOU'VE DESCRIBED, WE NEED TO-- IT GIVES THE BUSINESSES A CHANCE TO PLAN.
>> WHO IS GOING TO MAKE THIS DECISION, DAVE, ABOUT WHERE THOSE RATES ARE BASED ON THE REVENUES AND LEGISLATURE, I ASSUME?
>> WELL, IN A SENSE, ALTHOUGH THE DECISION WILL BE MADE ON THE STATE REVENUE REPORT THAT'S PRODUCED BY THE DEPARTMENT OF ADMINISTRATION.
THEY'VE HAD THE ACCRUAL AND AUDITING PROCESS.
THE NUMBERS ARE THERE AND WE'LL BE ABLE TO JUDGE WHERE WE'RE AT.
THE DANGER?
THIS IS-- . I WAS GOING TO ASK YOU THAT.
>> THE DANGER IN THIS IS A LOT OF THIS WILL BE DEPENDENT ON THE ECONOMY.
WE'VE HAD A STRONG ECONOMY AND IT'S CONTINUING TO CHUG ALONG.
AND IF THAT CONTINUES, WE SHOULDN'T HAVE A PROBLEM REACHING THOSE THRESHOLDS.
IF THE ECONOMY FALTERS, THEN WE MIGHT BE LOOKING AT TROUBLE.
>> YEAH.
THIS CREATES A LITTLE UNCERTAINTY FOR 2021, DOESN'T IT, FOR BUSINESSES?
>> IT DOES.
BUT IT GIVES AT LEAST A ROAD MAP TO WHAT THE OUTCOMES COULD BE.
>> YEAH.
>> AND AS WE WERE ALLOWING TO EARLIER, OFF CAMERA, WE'RE SAYING THAT, YOU KNOW, YOU HAVE A SITUATION WHERE THESE REVENUES ARE TRACKED ON A MONTHLY BASIS, SO IF WE SEE THOSE TRACKS AND WE
SEE THE TRACK FALLING SHORT, THE REVENUES FALLING SHORT, THEN, YOU KNOW, BUSINESSES CAN MAKE THEIR DECISIONS.
>> LET ME QUICKLY GO TO THE LAST GRAPHIC.
IT'S THE COMPARISON OF THE STATES AND THEIR CORPORATE INCOME TAX RATES IN NEW ENGLAND STATES.
CONNECTICUT AT 9% IS THE HIGHEST AND MAINE AT 8.93, VERMONT AT 8.5, MASSACHUSETTS AT 8 AND NEW HAMPSHIRE AT 7.7 AND OF COURSE, AS WE SAID, AND RHODE ISLAND AT 7 AT THE LOWEST.
OF COURSE, THOSE RATES ARE MADE UP IN DIFFERENT WAYS IN THOSE STATES, BUT THOSE ARE THE NUMBERS THAT ARE CURRENT.
I WANT TO THANK MY GUESTS, ALL TOO SHORT ON A VERY COMPLEX SUBJECT.
DAVE OF THE BUSINESS INDUSTRY ASSOCIATION AND B