Revision: Jan. 9, 2018, 8:57 a.m.
SB 544-FN - AS INTRODUCED
2018 SESSION
18-2997
08/10
SENATE BILL 544-FN
SPONSORS: Sen. Daniels, Dist 11
COMMITTEE: Finance
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ANALYSIS
This bill provides that 2 percent of the insurance premium tax shall be deposited in the fire standards and training and emergency medical services fund.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
18-2997
08/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eighteen
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Premium Tax; Collection, Minimum, Penalty, and Prepayments. Amend RSA 400-A:32, III(a) to read as follows:
(a) Except as provided in subparagraph (b), the taxes [imposed] collected in paragraphs I and II of this section shall be promptly forwarded by the commissioner [to the state treasurer] for deposit to the general fund, except that 2 percent shall be deposited to the fire standards and training and emergency medical services fund established in RSA 21-P:12-d. If the projected year-end balance of the fire standards and training and emergency medical services fund exceeds $2,000,000, then all taxes collected under paragraphs I and II shall be forwarded by the commissioner for deposit to the general fund .
2 Unauthorized Insurance Premium Tax. Amend RSA 406-B:11, I to read as follows:
I. Except as to premiums on lawfully procured surplus lines insurance pursuant to the surplus lines laws of this state, and premiums on unlicensed insurance procured by industrial insurers on which a tax has been paid pursuant to RSA 406-B:16, VI and premiums on independently procured insurance on which a tax has been paid pursuant to RSA 406-B:17, every unauthorized insurer shall pay to the commissioner before March 1 next succeeding the calendar year in which the insurance was so effectuated, continued or renewed a premium receipts tax of 4 percent of gross premiums charged for such insurance other than marine insurance and a premium receipts tax of 2 percent of gross premiums charged for such marine insurance on subjects resident, located or to be performed in this state. Such insurance on subjects resident, located or to be performed in this state procured through negotiations or an application, in whole or in part occurring or made within or from within or outside of this state, or for which premiums in whole or in part are remitted directly or indirectly from within or outside of this state, shall be deemed to be insurance procured, or continued or renewed in this state. The term "premium'' includes all premiums, membership fees, assessments, dues, and any other consideration for insurance. Such tax shall be in lieu of all taxes and fire department dues. On default of any such unauthorized insurer in the payment of such tax the insured shall pay the tax. If the tax prescribed by this section is not paid within the time stated, the tax shall be increased by a penalty of 25 percent and by the amount of an additional penalty computed at the rate of one percent per month or any part thereof from the date such payment was due to the date paid. Two percent of the premium receipts tax shall be deposited to the fire standards and training and emergency medical services fund established in RSA 21-P:12-d. If the projected year-end balance of the fire standards and training and emergency medical services fund exceeds $2,000,000, then all taxes collected under this paragraph shall be forwarded by the commissioner for deposit to the general fund.
3 Independently Procured Insurance. Amend RSA 406-B:17, III to read as follows:
III. There is hereby levied upon the obligation, chose in action, or right represented by the premium charged for such insurance, a premium receipts tax of 4 percent of gross premiums charged for such insurance other than marine insurance and a premium receipts tax of 2 percent of gross premiums charged for such marine insurance. The term "premium'' shall include all premiums, membership fees, assessments, dues, and any other consideration for insurance. Such tax shall be in lieu of all taxes and fire department dues. The insured shall, before March 1 next succeeding the calendar year in which the insurance was so procured, continued, or renewed, pay the amount of the tax to the commissioner. In the event of cancellation and rewriting of any such insurance contract, the additional premium for premium receipts tax purposes shall be the premium in excess of the unearned premium of the canceled insurance contract. Two percent of the premium receipts tax shall be deposited to the fire standards and training and emergency medical services fund established in RSA 21-P:12-d. If the projected year-end balance of the fire standards and training and emergency medical services fund exceeds $2,000,000, then all taxes collected under this paragraph shall be forwarded by the commissioner for deposit to the general fund.
4 Effective Date. This act shall take effect 60 days after its passage.
18-2997
12/19/17
SB 544-FN- FISCAL NOTE
AS INTRODUCED
FISCAL IMPACT: [ X ] State [ ] County [ ] Local [ ] None
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| Estimated Increase / (Decrease) | |||
STATE: | FY 2019 | FY 2020 | FY 2021 | FY 2022 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | Indeterminable | Indeterminable | Indeterminable | Indeterminable |
Expenditures | $0 | $0 | $0 | $0 |
Funding Source: | [ X ] General [ ] Education [ ] Highway [ X ] Other - Fire Standards and Training and Emergency Medical Services Fund | |||
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METHODOLOGY:
This bill allocates two percent of insurance premium tax revenue collected under RSA 400-A:32, I-II (not including amounts attributable to premiums written for medical services relative to the expanded Medicaid population) to the fire standards and training and emergency medical services fund (“fire fund”), however if projected year-end balance of the fire fund exceeds $2,000,000, then the revenue would go to the General Fund. Currently, all premium tax revenue (not including that related to Medicaid expansion) is credited to the General Fund.
Based on FY 2019 projected General Fund revenue of the premium tax, the annual transfer amount would be up to $2.11 million, depending on the projected year-end balance of the fire fund:
Estimate Using FY 2019 Figures | |
Calendar Year Premium Tax | $103.50 |
(Less: Prior Year Prepayment) | ($101.40) |
Net Reconciliation | $2.10 |
Prepayment for Next Tax Year | $103.50 |
Total Licensed Company Premium Tax | $105.60 |
2% to Fire Fund | 2.00% |
$2.11 | |
Potential Retaliatory Tax Impact
In addition to an impact on state revenue resulting from the transfer of unrestricted premium tax revenue to the fire fund, there could be an additional impact as a result of the retaliatory tax provisions. Except for Hawaii, all states have laws that include retaliatory tax provisions (New Hampshire’s retaliatory law is RSA 400-A:35). Insurance taxation is determined on a state level, and established by each state. For New Hampshire, when another state impose taxes, fines, penalties, licenses, fees, and other obligation that New Hampshire does not impose, then New Hampshire retaliates by imposing an identical charge. When New Hampshire and the other state both impose a tax, fee, assessment, or obligation, the two amounts charged are compared. If New Hampshire’s tax, fee, assessment or obligation is less than the other state’s tax, fee, assessment, or obligation, the difference between the two amounts is the retaliatory amount which is charged to the other state’s insurer and paid to New Hampshire by those out of state insurers. When a specific tax, fee, assessment, or obligation levied by New Hampshire is greater than the specific tax, fee, assessment, or obligation levied by the other state, the difference is calculated as zero and the company does not pay a retaliatory amount to New Hampshire. New Hampshire received $1.4 million in FY 2016 and $1.3 million in FY 2017 as a result of retaliatory taxes and assessments collected for fire related charges imposed by other states. This bill may have an impact on state revenues collected on a retaliatory basis. If this bill were to be interpreted as creating a fire tax embedded in the premium tax, effectively the premium tax would be treated as having been decreased and a fire tax would be treated as having been imposed in those years when revenue is transferred to the fire fund. For informational purposes, if this change were to be interpreted as such, had this bill been in effect during FY 2016 and FY 2017 and a transfer to the fire fund had occurred, it is estimated the retaliatory amount collected in New Hampshire would have been reduced by as much as approximately $346,000 and $442,000, respectively.
AGENCIES CONTACTED:
Department of Safety and Insurance Department