HB 15-FN - AS INTRODUCED
2023 SESSION
23-0118
02/10
HOUSE BILL 15-FN
AN ACT relative to the rate of the business enterprise tax.
SPONSORS: Rep. Notter, Hills. 12; Rep. Osborne, Rock. 2; Rep. Steven Smith, Sull. 3; Rep. Layon, Rock. 13; Rep. Packard, Rock. 16; Rep. L. Turcotte, Straf. 4; Rep. Mooney, Hills. 12; Rep. Healey, Hills. 12; Rep. Aron, Sull. 4; Rep. Spillane, Rock. 1
COMMITTEE: Ways and Means
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ANALYSIS
This bill reduces the rate of the business enterprise tax for tax years ending on or after December 31, 2024.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
23-0118
02/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Three
AN ACT relative to the rate of the business enterprise tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Paragraph; Business Enterprise Tax; Rate Reduced 2024. Amend RSA 77-E:2 by inserting after paragraph II the following new paragraph:
III. For all taxable periods ending on or after December 31, 2024, a tax is imposed at the rate of 0.50 percent upon the taxable enterprise value tax base of every business enterprise.
2 Effective Date. This act shall take effect July 1, 2023.
23-0118
9/28/22
HB 15-FN- FISCAL NOTE
AS INTRODUCED
AN ACT relative to the rate of the business enterprise tax.
FISCAL IMPACT: [ X ] State [ ] County [ ] Local [ ] None
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| Estimated Increase / (Decrease) | |||
STATE: | FY 2023 | FY 2024 | FY 2025 | FY 2026 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | $0 | Indeterminable Decrease | Indeterminable Decrease | Indeterminable Decrease |
Expenditures | $0 | $0 | $0 | $0 |
Funding Source: | [ X ] General [ X ] Education [ ] Highway [ ] Other | |||
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METHODOLOGY:
This bill reduces the Business Enterprise Tax (BET) rate from 0.55% to 0.50% for taxable periods ending on or after December 31, 2024. The Department of Revenue Administration states the fiscal impact is indeterminable as the Department is not able to predict future BET tax revenue. Based on the following assumptions/information, the Department is able to estimate a possible fiscal impact:
The first table below provides the tax rates and splits. The second table provides an estimated impact the rate changes will have on revenue.
Table 1. Proposed Legislation Rates and Splits
(The proposed legislation would affect Tax Year 2024 and forward as indicated in shaded cells)
Fiscal Year | Tax Year | % Applicable to Tax Year | BET Rates |
Fiscal Year 2022 | Tax Year 2020 | 15% | 0.60% |
Tax Year 2021 | 63% | 0.60% | |
Tax Year 2022 | 22% | 0.55% | |
Fiscal Year 2023 | Tax Year 2021 | 15% | 0.60% |
Tax Year 2022 | 63% | 0.55% | |
Tax Year 2023 | 22% | 0.55% | |
Fiscal Year 2024 | Tax Year 2022 | 15% | 0.55% |
Tax Year 2023 | 63% | 0.55% | |
Tax Year 2024 | 22% | 0.50% | |
Fiscal Year 2025 | Tax Year 2023 | 15% | 0.55% |
Tax Year 2024 | 63% | 0.50% | |
Tax Year 2025 | 22% | 0.50% | |
Fiscal Year 2026 and forward | Tax Year 2024 and forward | 100% | 0.50% |
Table 2. BET Rate Change Fiscal Impact - Static Analysis
Fiscal Year | FY 2022 Revenues with Current Law | FY 2022 Revenues with Proposed Legislation's Decreased TY 24 Rates | Cumulative Fiscal Impact (Proposed Legislation Compared to Current Law) |
2024 | $311,074,500 | $304,853,010 | ($6,221,490) |
2025 | $311,074,500 | $287,036,925 | ($24,037,575) |
2026 | $311,074,500 | $282,795,000 | ($28,279,500) |
The fiscal impact of the proposed rate reduction as depicted in the above table may be overstated or understated for future years depending on whether actual revenue is more or less than the FY 2022 cash basis revenue.
Pursuant to RSA 77-E:14, BET revenue is deposited into the Education Trust Fund at a rate equal to the additional amounts of revenue produced "by an increase of 0.50 percent in the rate" of the BET tax. This is determined by dividing 0.50% by the current BET tax rate. In current law for taxable periods ending on or after December 31, 2022, 0.50% / 0.55% tax rate results in 90.91% of BET revenue being deposited into the Education Trust Fund, with the remaining amount staying in the General Fund. Under the proposed legislation for taxable periods ending on or after December 31, 2024, 0.50% / 0.50% proposed tax rate results in 100.00% of BET revenue being deposited into the Education Trust Fund.
The Department would need to update all necessary tax return forms and electronic management systems to reflect the change in the BET rate; however, it is not anticipated this will result in any additional administrative costs that could not be absorbed in the Department's operating budget.
AGENCIES CONTACTED:
Department of Revenue Administration