New Hampshire businesses will not suffer automatic tax hikes early next year, new figures released by the Department of Revenue Administration suggest.
A provision in last year’s state budget would have triggered automatic business tax increases if general and education fund revenue fell at least 6% below projections for the 2020 fiscal year. The newly released numbers for the end of the 2020 fiscal year show a 5.4% decline.
Had revenue fallen another $15.35 million, the tax hikes would have been triggered. But higher-than-anticipated collections from the tobacco tax ($14.5 million), insurance taxes ($9 million, the lottery ($2.9 million) and the tobacco settlement ($2.9 million) slowed the decline and kept revenue from hitting the -6% trigger.
Though interest and dividends revenue for the year was 6.8% less than projected, an $11.7 million increase this June vs. last June helped slow the overall revenue slide.
The numbers are not final until audited at the end of the calendar year. Still, these official but unaudited numbers offer some much-needed good news for New Hampshire employers.
“If this holds true after the audited figures have been released, every business in New Hampshire will have dodged a bullet.” Jim Roche, president of the Business and Industry Association, New Hampshire’s statewide chamber of commerce, told the Josiah Bartlett Center. “With all the struggles businesses are experiencing as they come back from the COVID-19 pandemic, higher taxes are the last thing they need.”
“Legislators should have taken this tax-hike trigger off the books when employers asked,” Andrew Cline, president of the Josiah Bartlett Center for Public Policy, said. “Instead, legislators gambled with the livelihoods of many small business owners and their employees. Though employers seem to have gotten lucky, they should’ve been able to rely on their legislators, not Lady Luck.”
The numbers are contained in the Department of Revenue Administration’s June Monthly Revenue Focus report, which tallies the state’s revenue for June and for the entire fiscal year, which ended June 30th.
The report shows business tax revenue to be 14.6% lower than projected. The Business Profits Tax was down 14.7% and the Business Enterprise Tax 14.3%.
The Meals and Rentals Tax was 11.6% below projections, and the Interest and Dividends Tax 6.8% below.
The Tobacco Tax posted a 7.3% gain over projections, and the Insurance Tax a 7.2% gain.
A surge in Tobacco Tax revenue is particularly notable. The June report notes a 56% increase in tobacco stamp sales (which means cigarettes) in June 2020 vs. June 2019. The state saw a similar spike, of 50%, in March.
When compared to the 2019 fiscal year, 2020 general and education fund revenues fell by 7 percent, with business taxes leading the decline.
The state experienced a 19.3 percent drop in business tax revenue from 2019, with Business Profits Tax revenue falling by 16.5% and Business Enterprise Tax revenue falling by 23.6%.
Meals and Rentals Tax revenue was down 6.5% from 2019, and proceeds from the Interest and Dividends tax were down 4.6%.
The Tobacco Tax posted the biggest increase year-over-year, showing a 6.9% gain.
Amid all of the gloomy figures, the monthly numbers for June offer some encouraging news. June revenues — led by tobacco, interest & dividends, liquor, utility property and business profits — were higher than last June’s by a total of $1.4 million.