Testing Tax Cuts

Republican leadership at the State House has made tax cutting and budget balancing top priorities and today, the House Ways and Means Committee will hold public hearings and may have executive session votes on nine tax-related bills.

They include three measures we are watching that could lead to tens of millions in tax cuts on tobacco sales, rooms and meals and gambling winnings — but possibly make budget balancing even more difficult.

Tobacco tax cut – Sponsored by Finance Committee Chairman Rep. Kenneth Weyler (R-Kensington), House Bill 156 would cut tobacco tax rates by 10 cents a pack and 17.03 percent from “other tobacco products” such as smokeless tobacco, loose tobacco and cigars. If enacted, Weyler’s proposal could cut tobacco revenues, according to state estimates, from between $7.7 million to $14.8 million depending on sales volume. The state has enacted a half-dozen tobacco rate increases since 1990, the most recent a 45-cent per pack hike in 2009. For FY 2011, tobacco taxes are estimated to be the state’s third largest revenue generator after business taxes and rooms and meals (see below). Current projections split about $220 million in tobacco tax revenue between the general and education funds.

Rooms and Meals – Rep. Christopher Ahlgren (R-Wolfeboro) has proposed a one percent cut in the nine percent rooms and meals tax. House Bill 166 would return the rate to its previous level of eight percent, where it was before the latest increase in 2009. If enacted, the bill is estimated cut state revenues between $16.3 million and $27.2 depending on the strength of economic recovery. After business taxes, collections for rooms and meals (which also include car rentals) are the second highest revenue source with an estimated $245 million projected for FY 2011.

Gambling Winnings – A ten percent tax on a wide range of gambling winnings was enacted in 2009, but Rep. D.L. Christensen (R-Merrimack) has sponsored House Bill 229 to repeal the tax outright. For FY 2011, the state projected that the tax on gambling winnings will raise $3.4 million.

>> Tuesday, Feb. 8 — Public hearings for the House Ways and Means Committee, Legislative Office Building, Room 202.

10:00 a.m. HB 156-FN-A, reducing the rates of the tobacco tax. Executive session may follow.

11:15 a.m.        Executive session on HB 37-FN-A, reestablishing the initial monthly gross charge exemption to the communications services tax, HB 68, establishing a committee to study reducing the rate of the interest and dividends tax for New Hampshire residents over 65 years of age, HB 154-FN-A, increasing the threshold amounts for taxation under the business enterprise tax, HB 166-FN-A-L, reducing the rate of the meals and rooms tax.

1:00 p.m. HB 229-FN-A, repealing the tax on gambling winnings.

2:00 p.m. HB 201-FN-A, establishing deductions from the tax on gambling winnings, the business profits tax, and the business enterprise tax for gambling losses.

2:30 p.m. HB 215-FN-A, establishing a credit for gambling losses against the tax on gambling winnings.

3:00 p.m. CACR 13, relating to prohibiting any new tax on personal income.  Providing that no new tax on personal income shall be levied by the state of New Hampshire. Executive session may follow.

This Daily Dispatch was written by Michael McCord.

Posted by Hilary Niles on Feb 8 2011. Filed under business taxes, Commerce, gambling, Government, Health, Money, smoking/tobacco, state budget, taxes, tobacco & cigarettes, Weekly Briefing. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry