CONCORD — House and Senate policy committees grappled Wednesday with a variety of bills to raise or rebrand state taxes.
State Rep. Skip Cleaver, D-Nashua, said public schools need more support from the state and that’s why he proposed a 4.3 percent sales tax on all electronic devices.
“We have schools that are struggling tremendously in large classrooms, canceling music, arts, etc. Some of our schools do very well where there is a high property tax base,” Cleaver told the House Ways and Means Committee Wednesday.
“Adequate is not enough; I think we should shoot for a superior education and for that we need more funding from the state. The bottom line is we don’t have enough money.”
Cleaver estimated his bill (HB 1492) would raise $200 million a year.
Items to be taxed would include television sets, video games, smart watches, all computers and related equipment, printers, scanners, fax machines and “all related hardware and software.”
“That’s the reason I chose those products. Video games to me are the opposite of education and video games should fund it,” Cleaver said.
Rep. Mark King, also D-Nashua, is the only co-sponsor of the bill.
More than a dozen signed up in opposition to the bill including Gov. Chris Sununu, House Republican Leader Dick Hinch of Merrimack, David Juvet with the Business & Industry Association and Henry Veilleux on behalf of the Entertainment Software Association.
No one signed up in support.
Curtis Barry, a lobbyist for the New Hampshire Retail Association, rejected Cleaver’s claim that New Hampshire firms would still thrive since the 4.3 percent tax would be lower than the 5.5 percent sales tax in Maine, 6 percent tax in Vermont and 6.25 percent in Massachusetts.
“No matter how narrowly scoped or how low the rate is, this spells the end of tax-free shopping,” Barry said.
“Once you can no longer say tax-free shopping, the New Hampshire Advantage is over. It will diminish shopping from the other states, there will be job losses and you will lower commercial property values.”
Greg Moore, state director of Americans for Prosperity, said the bill is the definition of killing the golden goose, since it would tax products that have powered the New Hampshire economy.
“This really is a tax on technology. We should not be discouraging technology here in the state; we should be encouraging it,” Moore said.
“Most of the productivity gains have been as the result of all items covered in this tax.”
Broadbased tax amendment sought
On a related topic, two advocates urged the same committee to support putting on the November 2020 ballot an amendment to the Constitution that would qualify any future adoption of a broadbased income or sales tax.
The proposal (CACR 17) would require the proceeds of any future income or sales tax must be used to lower local property taxes.
“The Legislature can identify what the broad-based tax would be to go into this fund,” said Rep. Thomas Schamberg, D-Wilmot.
Robert Hemenway said he’s been working a few years on this plan.
He believes it could hold the answer for a new commission that over the next year will discuss what recommendations to offer, if any, to increase state aid to education.
“Clearly the state is not following its responsibilities,” Hemenway said.
Several committee members said the amendment, if passed, would fail to advise lawmakers on whether the public prefers an income or a sales tax.
Rep. Lisa Bunker, D-Exeter, said the amendment would prevent using any proceeds to deal with state needs.
“You are effectively tying the hands of future legislatures,” Bunker said.
Renaming ‘income’ tax on interest and dividends
State Sen. Jeanne Dietsch, D-Peterborough, promoted her bill (SB 474) to change the name of the 5 percent interest and dividends tax to the “income tax on interest and dividends.”
“I know when I moved here 35 years ago, I didn’t expect I would be paying an income tax due to New Hampshire’s image as an income tax-free state,” Dietsch told the Senate Ways and Means Committee.
“We need to see ourselves as a state in which half the people do pay income tax, a third pay interest and dividends and about a fifth pay half a billion dollars of income tax a year to Massachusetts to help educate not New Hampshire’s children but others.”
Senate Republican Leader Chuck Morse, R-Salem, moved to amend Dietsch’s bill to reject the new title and instead in the future double the income exempt from the tax from $1,200 to $2,400 annually.
“With record low unemployment, anything we do that encourages older people to stay in the work force or stay in the state is a good thing,” Morse said.
“Instead of renaming a tax which I don’t think is any good for us at all, we should start lowering the tax.”