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Senate panel saddles up for machine horse racing, not yet for online taxes

By Garry Rayno - InDepthNH | Apr 20, 2021

Rep. Patrick Abrami, R-Stratham

CONCORD — The Senate Ways and Means Committee made quick work Monday of a bill to allow historical horse racing under charitable gaming but wants more information on a bill the sponsor said closes a loophole in the rooms and meals tax by taxing online platforms for car rentals and short-term rentals.

The committee voted 5-0 to recommend House Bill 626 be approved by the full Senate. The House passed the bill earlier this month in one of its three-day marathon sessions.

The bill would allow gambling on historic horse races run on machines similar to slot machines at the 16 existing charitable gambling facilities in the state, which would have a three-year monopoly before new venues could be added.

Under the bill, there would be no limit on the number of machines at each site or statewide.

The bill’s prime sponsor, Rep. Patrick Abrami, R-Stratham, said allowing historic racing would allow more charities to participate in charitable gambling and provide the state and charities with additional revenue. He noted there is a long list of charities wanting to participate.

Under the bill, charities are projected to receive $5.75 million annually, $12.05 million would go to the Education Trust Fund and $820,000 would go to the problem gambling program.

Abrami said the state has allowed stand-alone charitable gaming facilities for about 15 years and they provide between $8 million and $19 million in revenue to charities every year.

Nashua Police Chief Michael Carignan, who said he serves on the board of several charitable organizations, noted many of the nonprofits his department and the city depend on for services would not have survived the pandemic but for the revenues from charitable gaming.

“If these nonprofits start to close down — they not only benefit Nashua but also the surrounding communities,” he said adding the services they provide “will have to be absorbed by the state through taxes.”

State Sen. Lou D’Allesandro, D-Manchester, noted the facility operators will receive far more revenue from historic racing than the charities, and committee chair Sen. Bob Giuda, R-Warren, noted the charitable gaming study committee that would be established under a Senate passed bill that is in the House, could include that in its discussion.

The issue was also raised during the House debate before the bill passed on a 223-152.

If the Senate passes the bill without changes, it will go to the governor.

Rooms and Meals

House Bill 15 would expand the rooms and meals tax to online platforms that facilitate “person-to-person” car rentals or short-term room or apartment rentals.

Supporters of the bill said it attempts to level the playing field between the online organizations and those with “brick and mortar” facilities that do pay the tax.

The bill’s prime sponsor, House Speaker Sherman Packard, R-Londonderry, noted his bill originally only applied to cars, but the House Ways and Means Committee added room rentals to the provision for online facilitators.

He said there are several companies like Turo that operate on a different platform from the larger companies like Hertz or Enterprise that allow people to rent a person’s car.

“Our belief is all they do is rent cars,” Packard said. “All we want to do is if you rent cars in this state, the same rules should apply to them as to the brick and mortar stores.”

He said others will say his plan is a new tax, but that is not true, Packard argued, it applies to a different form of car rental.

But opponents lined up to oppose the tax both for the cars and for rooms.

Representatives for Turo and Avail said the companies have allowed people during the pandemic to have a little more income by renting their vehicles when they are not using them.

Representing Avail, lobbyist Michael McLaughlin said it is very difficult to rent a car north of Concord, while Avail allows people in the North Country to rent their vehicles and provide service.

He noted the bill does not put the individual renting the vehicle on the hook for the tax, just the third-party facilitator.

“Leveling the playing field will never get done when you are up against billions and billions of dollars in marketing,” McLaughlin said. “For a couple of thousand dollars in a billions of dollars budget, we can wait to do this.”

Revenues estimates for the change are projected to be about $5,000.

Lobbyist Maura Weston representing Turo likened the transaction to a neighbor using her father’s truck and then filling it with gas as compensation.

She said individuals who rent their vehicles receive a small amount of money $300 a month.

Turo owns no vehicles, does not have a fleet of cars, she said, and the vehicles are owned by New Hampshire citizens.

“This is like taxing my children’s lemonade stand on the corner like it was Minute Maid,” Weston said. “This is government interference with the use of a person’s property.”

But Rep. Susan Almy, D-Lebanon, said unless the bill passes, people who rent rooms or apartments and do not register with the Department of Revenue Administration, but get caught, have to pay the taxes owed, not the facilitator.

She said a person in her town was renting a room to visiting nurses and was caught and had to pay all the back taxes.

If the facilitator does not collect the taxes and the person is caught, that person is liable under the law, she explained.

Almy said the bill simply brings the definition of facilitator into the current business environment.

Others argued the proposal is a new tax on service fees collected by businesses that arrange the transaction, many not located in New Hampshire and working with people who live in other states.

One representative for a national organization said that undermines the state’s argument against having to collect sales taxes for out-of-state business as the Wayfair decision requires.

John Olsen, the director of an internet association that represents a number of platforms, said it is a new tax, because it taxes fees not commissions, noting the legislation would shift responsibility to out-of-state platforms.

He said the bill would affect about 400 people in New Hampshire.

Genevieve Strand of the American Society of Travel Advisors said the bill would be a new tax on travel services when the industry faces significant challenges having laid off 60 percent of staff.

She noted the bill exempts commissions paid by very large operators while placing a significant burden on small businesses.

Chryssa Alexis, regional vice president of Enterprise Holdings, and Henry Veilleux, representing the NH Restaurant and Lodging Association, backed the bill.

“This would be equal rules-of-the-road for all rental car transactions,” Alexis said. “This bill would make sure the tax is collected and remitted and makes sure it happens across the board.”

Veilleux said many small businesses in New Hampshire have to compete with online platforms for the same customers.

“The brick and mortar companies are fine with the competition,” he said, “they want the tax applied evenly and this makes it a lot easier to collect the tax.”

The committee sought additional information about the bill and did not make an immediate recommendation.

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