On July 19, Gov. Chris Sununu signed SB 242, legislation I sponsored that provides some protection for New Hampshire retail and online merchants that could be forced by the U.S. Supreme Court’s Wayfair Decision to collect a sales tax on purchases made by visitors in our state. SB 242 represents a triumph of bipartisanship, sober recognition of the threat N.H. businesses confront and persistence of legislators, the attorney general, the governor and his staff.

First, some background. Just over a year ago, the Supreme Court overturned many years of precedent and ruled the “physical presence” of a retail establishment does not determine collection or payment of a sales tax. For example, under the Supreme Court ruling, when an out-of-state visitor shops in N.H., the N.H. merchant could be responsible to collect and remit the sales tax, for the visitor’s purchase to that state.

Needless to say, the Wayfair decision could be problematic for New Hampshire merchants. We don’t have a sales tax and visitors take advantage of that.

Sununu recognized immediately how the Supreme Court undermined the New Hampshire Advantage and called for a special legislative session in the summer of 2018. As a result, a legislative commission unanimously recommended passage of legislation I sponsored in that special session. While the Senate passed it 24-0, the House was split with some members believing that the bill did not go far enough and others felt it had not been adequately vetted in the special session.

In 2019, I reintroduced the legislation, SB 242. Several months had elapsed, and states with sales taxes (45) had begun to take measures to collect sales taxes when their residents made purchases out of their home state. Connecticut even budgeted for auditors to try and collect this revenue. These actions by other states made the threat real in Concord and SB 242 is now law.

What does SB 242 do? Most important, if another state seeks to collect sales tax revenue on purchases made in New Hampshire, that state must provide our attorney general’s office notice 45 days prior to initiating such action. The attorney general must determine the legality and constitutionally of such actions. SB 242 provides protection against retroactive taxation and provides for customer privacy and fraud protection. Lastly, any N.H. merchant that must collect and remit sales taxes can deduct the cost of that collection from the remittance.

New Hampshire businesses do not want this expensive threat that undermines their competitiveness. We cannot obviously overturn the Supreme Court decision. But we must also recognize the unlikely prospect of Congress taking action when 45 states collect sales taxes and those states want to maximize revenue.

Hence, SB 242 attempts to make the best of a bad situation. We will have to carefully monitor SB 242’s implementation and be prepared to make adjustments as necessary given the legal constraints of the court.

It is encouraging that across the aisle legislators recognized the threat to N.H. merchants and took action to protect our “no sales tax” advantage. Hopefully, the same recognition occurs regarding the business tax rate debate central to the budget Sununu vetoed.

There is no question New Hampshire enjoys its advantage due to our lack of both a sales tax or income tax, but comparatively our rate of business taxation is among the nation’s highest. According to the Tax Foundation, several years ago New Hampshire had the 48th worst business tax rate. Today, that ranking has started to decline due to incremental decreases to our business profits and business enterprise tax that came as a result of legislation I sponsored in 2015 and 2017. When we began to lower these rates, the BPT was 8.5 percent. As of Jan. 1, 2019, the rate was 7.7 percent. The budget Sununu vetoed increased the BPT to 7.9 percent.

Despite what some are saying, this is clearly an increase in the tax rate. Businesses make decisions on job expansion or retention upon many criteria, but state tax rates are one of those essential criteria.

Since we began lowering business taxes the economy has responded. New Hampshire now enjoys one of the lowest unemployment rates, the lowest poverty rate and among the highest income levels in America. Moreover, since reducing the tax rates revenue has been more than $500 million above expectations. Clearly, the results have been positive, not only for New Hampshire businesses, but also everyone who depends on a good job.

Yet, many have labeled these tax rates as “giveaways to big out-of-state corporations.” Perhaps that is a good partisan talking point. But it undermines retaining and attracting the jobs that hardworking families need. Look no further than Lonza’s 1,000-job Portsmouth expansion or BAE System’s 800 job Manchester expansion. Lonza is a Swiss bio-pharmaceutical company and BAE’s American subsidiary is headquartered in Virginia. In a very competitive global economy, businesses expect predictability, stability and competitiveness on the cost of doing business. We need to recognize that fact — at least if we want to encourage Lonza, BAE and many other companies to invest in N.H.

The debate on business taxes is a critical budget debate. I hope the same bipartisan sense of protecting New Hampshire’s lack of a sales tax and SB 242’s passage, also occurs regarding competitive business tax rates. The economic success and the jobs of thousands of N.H. residents are at stake.


Jeb Bradley is the Republican state senator from Wolfeboro.

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