It’s tax time again and like everyone, I am never a fan of seeing them go up. It stands to reason, then, that as a small business owner, I would be a fan of the proposal to cut the state’s Business Enterprise Tax from 0.55% to 0.5%. After all, any savings is good, right?
Actually, no. We are facing several huge challenges in NH that threaten the ability of business to move forward, including sky high housing and childcare costs that are driving younger people out of NH and exacerbating the workforce crunch. While the Legislature has made some progress addressing these crises, we have a long way to go.
Yet the NH House felt, at a time when the state is already struggling with revenue, to cut the Business Enterprise Tax again. After several years of consistent cuts to business taxes, the House passed the BET cut earlier this year and as of mid-March (the time I am writing this) it is under consideration in the Senate.
The proposed BET rate reduction would save most small businesses only a few hundred dollars while the biggest multinationals in NH would realize a savings upwards of about $30,000, according to a January report released by the NH Fiscal Policy Institute (NHFPI). Most businesses in NH are small and those savings do nothing to help us to grow. It is not exactly a boon for businesses.
On the other hand, it has a very real impact on the state budget, reducing state revenue by $26 million per year, according to the NHFPI report, which is more than half the road and bridge aid sent by the State to municipalities.
Yes, thanks to the state’s one-time Tax Amnesty Program, February revenue figures are much stronger than expected. According to a March 9 report from the NHFPI, the program, which allowed people and businesses with unpaid taxes to pay past-due amounts without the usual nonpayment penalties, collected $40.6 million above the planned amount of $0.9 million in February and has collected a total of $103.8 million since Jan. 1, “generating nearly 21 times the amount of revenue the Legislature forecast.”
However, the report points out that all other sources of revenue are stagnant or underperforming and that the two most critical sources of revenue—the Business Enterprise Tax and Business Profits Tax— have been “uneven” in recent months “after a period of significant decline.”
This is not a time to pander with a minimal cut to business taxes. If the Legislature is truly interested in helping small businesses succeed, they need to work to make NH more affordable for our employees and stop cutting programs that help them.
Sincerely,
Matthew J. Mowry,
Co-Publisher and Executive Editor