Tax prohibition amendments don’t pass House
BEDFORD — House Republicans failed Friday to muster the votes needed to advance two proposed constitutional amendments prohibiting broad-based taxes.
The House did approve a bill to expand the base of the rooms and meals tax to include internet transactions for rental cars and rooms.
The proposed constitutional amendments would have prohibited the legislature from approving an income tax and a “broad-based sales tax.”
Supporters of the prohibition of an income tax said the proposal has previously been before voters and had majority support, but not enough to meet the two-thirds majority needed to be added to the constitution.
Rep. Patrick Abrami, R-Stratham, said the question was last on the ballot in 2012 and was supported by 57 percent of more than 621,000 voters.
“This is the ultimate poll,” he said. “Once again you should give voters a chance to express their view on this.”
But opponents said the provision would tie future legislatures’ and governors’ hands well into the future when the social-economic conditions may be much different than today.
Rep. Dick Ames, D-Jaffrey, said the state constitution provides ample protections to ensure taxation is reasonable, fair and proportional.
He said the amendment’s language would encompass far more than a tax on a person’s income and would likely be challenged in court.
“This does not belong in our constitution,” Ames said, “and it should be rejected.”
Rep. Susan Almy, D-Lebanon, called it a diversion tactic to take people’s attention away from tax cuts for the wealthy, reduced spending and a greater and greater burden on property taxpayers meaning less and less chance for a working family to improve their life.
A constitutional amendment needs a 60 percent majority vote to advance to the Senate. It passed on a 202-171 vote, failing to reach that threshold.
The amendment to prohibit a broad-based sales tax failed by a similar 201-170 vote.
Supporters said not having a sales tax brings people to the state to purchase big ticket items.
Rep. Max Abramson, R-Seabrook, said 40 percent of the state’s sales volume comes from out-of-state shoppers.
He said the legislature needs to pass the proposed amendment to retain and bring more high-end retail and big box stores and car dealerships so they will make long-term investments here.
“We would have more tax revenue by simply passing this measure,” Abramson said, “than some increase in rates or new taxes.”
Ames raised similar issues with a sales tax as he did with the income tax proposal noting the constitutional protections.
“What exactly is a broad-based sales tax,” he asked, noting a 2017 supreme court ruling that said exemptions from taxing the sale of groceries, clothes and certain services means it is not a broad-based tax and would not be covered under the proposed amendment.
“Do we really want the cost of litigation over such a poor definition,” Ames asked.
Rooms and Meals
House Bill 15 would apply to the rooms and meals tax, to internet facilitators of auto rentals and room rentals.
Supporters said the change in the tax would simply level the playing field for brick and motor operators with internet operators.
“This is not a new tax,” said Rep. Tim Baxter, R-Seabrook, “this is not a tax on service.”
He said the bill exempts travel agents from the expansion.
“This is a question of fairness,” Baxter said, “and will prevent crony capitalism, and not treat businesses differently.”
But Rep. Tom Schamberg, D-Wilmot, said it is a new tax because it would treat another entity like it was a business owner or manager.
He said the reason for the change is a court decision against the Department of Revenue Administration striking down a previous tax increase.
While it expands the tax to internet facilitators, it exempts travel agents who also use the internet, Schamberg said.
And he said the proposed change would undermine the framework the state established to protect New Hampshire businesses from the Wayfair decision, which requires New Hampshire businesses to collect sales taxes on products sold to residents of a state that accesses a sales tax.
The bill passed on a 289-78 vote and now goes to the Senate.
Garry Rayno may be reached at email@example.com.