SB301 (2019) Detail

Relative to the rates of the business profits tax and business enterprise tax, and relative to revenue sharing with cities and towns.

SB 301-FN-A-LOCAL - AS INTRODUCED

 

 

2019 SESSION

19-0990

10/04

 

SENATE BILL 301-FN-A-LOCAL

 

AN ACT relative to the rates of the business profits tax and business enterprise tax, and relative to revenue sharing with cities and towns.

 

SPONSORS: Sen. Feltes, Dist 15; Sen. Soucy, Dist 18

 

COMMITTEE: Ways and Means

 

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ANALYSIS

 

This bill amends the rate changes to the business profits tax and the business enterprise tax by retaining the applicable rate for 2018 for use in 2019, and suspends the future rate changes to those taxes made in 2017, 156.  The bill also provides for revenue sharing with the cities and towns for each year of the biennium ending June 30, 2021.

 

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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

19-0990

10/04

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Nineteen

 

AN ACT relative to the rates of the business profits tax and business enterprise tax, and relative to revenue sharing with cities and towns.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

1  Business Profits Tax; Imposition of Tax; 2019.  RSA 77-A:2 is repealed and reenacted to read as follows:

77-A:2  Imposition of Tax.  A tax is imposed at the rate of 7.9 percent upon the taxable business profits of every business organization.

2  Application Business Profits Tax Rate.  Section 1 of this act shall apply to taxable periods ending on or after December 31, 2019.

3  Business Enterprise Tax; Imposition of Tax; 2019.  RSA 77-E:2 is repealed and reenacted to read as follows:

77-E:2  Imposition of Tax.  A tax is imposed at the rate of .675 percent upon the taxable enterprise value tax base of every business enterprise.

4  Application of Business Enterprise Rate.  Section 3 of this act shall apply to taxable periods ending on or after December 31, 2019.

5  Suspension of Future Rate Changes; Business Profits Tax; Business Enterprise Tax.  The following provisions of law are hereby suspended:

I.  The provisions of 2017, 156:215 and 2017, 156:216, relating to changes to the rates of the business profits tax and business enterprise tax.

II.  The provisions of 2017, 156:217, II, relating to the applicability of the rate changes in paragraph I.

III.  The effective date provisions in 2017, 156:249, VIII, as amended by 2018,11:1, for the rate changes in paragraph I.

6  Repeal.  2017, 156:217, I, relative the applicability of the 2019 rate changes to the business profits tax and business enterprise tax, is repealed.

7  Revenue Sharing; Appropriation.  

I.  Notwithstanding the provisions of RSA 31-A to the contrary, for each year of the biennium ending June 30, 2021, the state treasurer shall distribute to the cities and towns each year the amount appropriated in paragraph III according to the formula for calculating the annual share of each city or town described in the introductory paragraph of RSA 31-A:4 and paid quarterly.

II.  The amount of revenue sharing in each fiscal year of the biennium shall be the sum certified by the commissioner of the department of revenue administration by October 1 of that year as the total of:

(a)  The estimated additional amount of revenue produced by the suspension of further rate reduction by the provisions of 2017, 156:213 in the rate of tax imposed by RSA 77-A:2, for each fiscal year, and shall certify such amounts to the state treasurer; and

(b)  The estimated additional amount of revenue produced by the suspension of further rate reduction by the provisions of 2017, 156:214 in the rate of tax imposed by RSA 77-E:2, for each fiscal year, and shall certify such amounts to the state treasurer.

III.  The sums certified in paragraph II are hereby appropriated to the state treasurer for the purpose of revenue sharing under paragraph I.  The governor is authorized to draw a warrant for said sums out of any money in the treasury not otherwise appropriated.

8  Effective Date.  This act shall take effect July 1, 2019.

 

LBAO

19-0990

Revised 2/19/19

 

SB 301-FN-A-LOCAL- FISCAL NOTE

AS INTRODUCED

 

AN ACT relative to the rates of the business profits tax and business enterprise tax, and relative to revenue sharing with cities and towns.

 

FISCAL IMPACT:      [ X ] State              [    ] County               [ X ] Local              [    ] None

 

 

 

Estimated Increase / (Decrease)

STATE:

FY 2020

FY 2021

FY 2022

FY 2023

   Appropriation

$0

$0

$0

$0

   Revenue

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

   Expenditures

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

Funding Source:

  [ X ] General            [ X ] Education            [   ] Highway           [    ] Other

 

 

LOCAL:

 

 

 

 

   Revenue

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

   Expenditures

$0

$0

$0

$0

 

METHODOLOGY:

This bill keeps the Business Profits Tax rate at 7.9 percent and the Business Enterprise Tax rate at 0.675 percent and suspends future rate reductions contained in Chapter 156, Laws of 2017.  The bill also establishes that the amount of revenue sharing distributed to cities and towns be based on the estimated additional revenue amount produced by not implementing the business tax rate reductions contained in Chapter 156, Laws of 2017.  The Commissioner for the Department of Revenue Administration is required to certify the estimated additional revenue and the Governor is authorized to draw a warrant for said sum from funds not otherwise appropriated.

 

The Department of Revenue Administration states the fiscal impact is indeterminable as the Department is not able to predict future business tax revenue.  Based on the following assumptions, the Department is able to estimate a possible fiscal impact:

  • the current 2019 and 2021 rate reductions would have been in effect for FY 2020 through FY 2023;
  • the FY 2018 cash basis business tax revenue of $775,900,000 is the starting point for calculating the fiscal impact;
  • based on a tax year revenue analysis of FY 2018 revenue, 13 percent is attributable to tax year 2016, 64 percent is attributable to tax year 2017, and 23 percent is attributable to tax year 2018; and
  • applying the split to FY 2018 revenue as well as applying the applicable rates creates a base of $47,786,625,316 (BET:$41,896,601,852 + BPT:$5,890,023,464)  to use for the starting point of the calculating the fiscal impact.

 

Applying the applicable tax rates results in the following impact:

Fiscal Year

FY 2018 Revenue with Current Law's 2019 and 2021 Rate Reductions

FY 2018 Revenues with Proposed Rate Increases

Estimated Fiscal Impact Per Year (proposed legislation compared to current law)

2020

 $710,527,743

 $748,113,916

 $37,586,173

2021

 $692,565,789

 $748,113,916

 $55,548,127

2022

 $658,212,733

 $748,113,916

 $89,901,183

2023

 $651,234,769

 $748,113,916

 $96,879,147

 

The Department notes that future revenue may be overstated or understated for future fiscal years depending on whether actual revenue is more or less than FY 2018.

 

The Treasury Department is unable to estimate the amount of increased revenue that would be distributed as revenue sharing to cities and towns.  The Department states its expenditures would increase by an amount equal to the amount certified to be distributed as revenue sharing.  

Without this bill and if not suspended in the FY 2020-2021 biennium, revenue sharing to cities and towns would be appropriated to and disbursed by the Treasury Department in an amount equal to $25.2 million in FY 2020 and $25.2 million in FY 2021.   

   

AGENCIES CONTACTED:

Treasury Department and Department of Revenue Administration

 

Links


Action Dates

Date Body Type
Feb. 13, 2019 Senate Hearing
March 14, 2019 Senate Floor Vote

Bill Text Revisions

SB301 Revision: 5272 Date: Feb. 19, 2019, 10:50 a.m.

Docket

Sept. 25, 2019: Inexpedient to Legislate, Senate Rule 3-23, Adjournment 09/25/2019; SJ 1

March 14, 2019: Pending Motion OT3rdg; 03/14/2019; SJ 8

March 14, 2019: Sen. Feltes Moved Laid on Table, MA, VV; 03/14/2019; SJ 8

March 14, 2019: Ought to Pass: RC 14Y-10N, MA; 03/14/2019; SJ 8

March 14, 2019: Committee Report: Ought to Pass, 03/14/2019; SC 13

Feb. 13, 2019: ==TIME CHANGE== Hearing: 02/13/2019, Room 100, SH, 12:00 pm; SC 10

Jan. 3, 2019: Introduced 01/03/2019 and Referred to Ways and Means; SJ 4