HB 1387-FN-A - AS INTRODUCED
2003 SESSION
09/10
HOUSE BILL 1387-FN-A
AN ACT reducing the rate of the business enterprise tax.
SPONSORS: Rep. Brady, Coos 2; Rep. Holden, Hills 48; Rep. Gibson, Hills 58; Rep. Itse, Rock 80; Sen. Gallus, Dist 1; Sen. Sapareto, Dist 19
This bill reduces the rate of the business enterprise tax to .25 percent over a 5-year period.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03-2088
09/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Three
AN ACT reducing the rate of the business enterprise tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Business Enterprise Tax; Rate Reduced; 2004. Amend RSA 77-E:2 to read as follows:
77-E:2 Imposition of Tax. A tax is imposed at the rate of [3/4 of one] .65 percent upon the taxable enterprise value tax base of every business enterprise.
2 Business Enterprise Tax; Rate Reduced; 2005. Amend RSA 77-E:2 to read as follows:
77-E:2 Imposition of Tax. A tax is imposed at the rate of [.65] .55 percent upon the taxable enterprise value tax base of every business enterprise.
3 Business Enterprise Tax; Rate Reduced; 2006. Amend RSA 77-E:2 to read as follows:
77-E:2 Imposition of Tax. A tax is imposed at the rate of [.55] .45 percent upon the taxable enterprise value tax base of every business enterprise.
4 Business Enterprise Tax; Rate Reduced; 2007. Amend RSA 77-E:2 to read as follows:
77-E:2 Imposition of Tax. A tax is imposed at the rate of [.45] .35 percent upon the taxable enterprise value tax base of every business enterprise.
5 Business Enterprise Tax; Rate Reduced; 2008. Amend RSA 77-E:2 to read as follows:
77-E:2 Imposition of Tax. A tax is imposed at the rate of [.35] .25 percent upon the taxable enterprise value tax base of every business enterprise.
6 Business Enterprise Tax; Distribution of Funds. Amend RSA 77-E:14 to read as follows:
77-E:14 Distribution of Funds.
I. The commissioner shall determine the [additional] amounts of revenue produced by [an increase of .50 percent in] 2/3 of the rate of tax imposed by RSA 77-E:2 for each fiscal year and shall certify such amounts to the state treasurer by October 1 of that year for deposit in the education trust fund established by RSA 198:39.
II. The commissioner shall make quarterly estimates of the amount of [additional] revenues [that will be] produced by [the increase in] 2/3 of the tax rate for the next fiscal year and shall certify such amounts to the state treasurer for deposit in the education trust fund established by RSA 198:39. Such estimates shall be certified on June 1, September 1, December 1, and March 1 of each year.
7 Applicability.
I. Section 1 of this act shall apply to returns and taxes due on account of taxable periods ending on or after July 1, 2004. In the case of any business organization or enterprise which has elected a 52-53 week taxable period under section 441(f) of the United States Internal Revenue Code and the fiscal year of which ends on the last day of the week nearest to June 30, 2004, the taxable period shall be deemed to have ended on June 30, 2004, for the purposes of this act.
II. Section 2 of this act shall apply to returns and taxes due on account of taxable periods ending on or after July 1, 2005. In the case of any business organization or enterprise which has elected a 52-53 week taxable period under section 441(f) of the United States Internal Revenue Code and the fiscal year of which ends on the last day of the week nearest to June 30, 2005, the taxable period shall be deemed to have ended on June 30, 2005, for the purposes of this act.
III. Section 3 of this act shall apply to returns and taxes due on account of taxable periods ending on or after July 1, 2006. In the case of any business organization or enterprise which has elected a 52-53 week taxable period under section 441(f) of the United States Internal Revenue Code and the fiscal year of which ends on the last day of the week nearest to June 30, 2006, the taxable period shall be deemed to have ended on June 30, 2006, for the purposes of this act.
IV. Section 4 of this act shall apply to returns and taxes due on account of taxable periods ending on or after July 1, 2007. In the case of any business organization or enterprise which has elected a 52-53 week taxable period under section 441(f) of the United States Internal Revenue Code and the fiscal year of which ends on the last day of the week nearest to June 30, 2007, the taxable period shall be deemed to have ended on June 30, 2007, for the purposes of this act.
V. Section 5 of this act shall apply to returns and taxes due on account of taxable periods ending on or after July 1, 2008. In the case of any business organization or enterprise which has elected a 52-53 week taxable period under section 441(f) of the United States Internal Revenue Code and the fiscal year of which ends on the last day of the week nearest to June 30, 2008, the taxable period shall be deemed to have ended on June 30, 2008, for the purposes of this act.
8 Effective Date.
I. Section 2 of this act shall take effect July 1, 2005.
II. Section 3 of this act shall take effect July 1, 2006.
III. Section 4 of this act shall take effect July 1, 2007.
IV. Section 5 of this act shall take effect July 1, 2008.
V. The remainder of this act shall take effect July 1, 2004.
LBAO
03-2088
Revised 12/10/03
HB 1387 FISCAL NOTE
AN ACT reducing the rate of the business enterprise tax.
FISCAL IMPACT:
The Department of Revenue Administration indicates this bill will increase state unrestricted general fund revenues by $1.9 million in FY 2005, $3.1 million in FY 2006, and $4.8 million in FY 2007, and decrease restricted education trust fund revenues by $18.0 million in FY 2005, $28.8 million in FY 2006, and $45.0 million in FY 2007. There is no fiscal impact on state, county and local expenditures or county and local revenue.
METHODOLOGY:
The Department states this bill reduces the Business Enterprise Tax (BET) rate from .75% to .25% over a five-year period. This decrease will impact the Education Trust Fund (ETF) and the general fund at a ratio of 67% (.50%/.75%) and 33% (.25%/.75%) respectively. Further, this BET rate reduction will result in the recapture of Business Profits Tax (BPT) credit to both the ETF and general fund at a ratio of 17.65% (1.5%/8.5%) and 82.35% (7.0%/8.5%), respectively. The net result of this change as shown in the table below, is a decrease to the ETF and an increase to the general fund because of the difference in fund allocations between the ETF and general fund for BET and BPT. The Department assumed a constant growth rate of the BET using the same rate of increase that the official FY 2005 BET estimate increased over the FY 2004 official estimate.
Education Trust Fund General Fund Total
FY 2005 ($20,651,632) ($10,325,816) ($30,977,448)
Less BPT recapture 2,623,972 12,245,203 14,869,175
($18,027,660) $ 1,919,387 ($16,108,273)
FY 2006 ($33,009,324) ($16,504,662) ($49,513,986)
Less BPT recapture 4,194,126 19,572,587 23,766,713
($28,815,198) $ 3,067,925 ($25,747,273)
FY 2007 ($51,504,933) ($25,752,467) ($77,257,400)
Less BPT recapture 6,544,156 30,539,396 37,083,552
($44,960,777) $ 4,786,929 ($40,173,848)