SB 130-FN – AS INTRODUCED
2007 SESSION
01/09
SENATE BILL 130-FN
AN ACT relative to the insurance premium tax.
SPONSORS: Sen. Gatsas, Dist 16; Sen. Clegg, Dist 14; Sen. Barnes, Dist 17; Rep. King, Coos 1
This bill reduces the insurance premium tax.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
07-0472
01/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Seven
AN ACT relative to the insurance premium tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Insurance; Premium Tax Decreased. Amend RSA 400-A:32, I(a)(4) to read as follows:
(4) Effective [January 1, 2011] July 1, 2007, a tax of one percent for all lines of business written pursuant to RSA 401:1, I-III and V-VIII, and RSA 401:1-a, I and II.
2 Repeal. RSA 400-A:32, I(a)(1)-(3), relative to insurance premium tax, are repealed.
3 Effective Date. This act shall take effect July 1, 2007.
LBAO
07-0472
1/22/07
SB 130-FN - FISCAL NOTE
AN ACT relative to the insurance premium tax.
FISCAL IMPACT:
The Insurance Department states this bill, will decrease state general fund unrestricted revenue by $7,316,619 in FY 2008, $11,504,489 in FY 2009, $1,210,848 in FY 2010 and $308,387 in FY 2011. There will be no fiscal impact on state, county and local expenditures or county and local revenue.
METHODOLOGY:
The Insurance Department states that this bill provides that the phase-in period for the premium tax reduction currently in law is eliminated, with the one percent premium tax rate made effective 7/1/07. This proposal will affect all lines of insurance other than accident and health insurance. The Department calculated this reduction on a static loss basis with no consideration for either the loss of premium tax resulting from foreign companies relocating to NH or for companies that may relocate from a high premium tax rate state to a low premium tax rate state other than New Hampshire. The decrease in premium tax revenue will be partially offset by New Hampshire’s retaliatory premium tax provision. This provision requires a foreign insurer domesticated in a state with a rate higher than New Hampshire’s rate to pay the higher rate on New Hampshire premiums. The Department states that with these assumptions, general fund revenue will decrease by $7,316,619 in FY 2008, $11,504,489 in FY 2009, $1,210,848 in FY 2010 and $308,387 in FY 2011.
The Department of Revenue Administration (DRA) states that this bill will have no fiscal impact on Business Profits Tax (BPT) or Business Enterprise Tax (BET) collections. Computing a straight line effect of this bill is not possible due to the high amount of insurance tax credit available versus the small amount of BPT available to apply the credit against. In FY 2005, $88.5 million in insurance premium tax was collected but only $24.1 million in BPT was available to apply the credit against (a surplus of available credit of $64.4 million). DRA states no additional BPT would result from this change. The Department states any increase in BET revenue as a result of this change to the insurance premium tax would be offset by an equal decrease in premium tax collections due to the credit. The Department states it could administer this change without additional costs.