By GARRY RAYNO, InDepthNH.org
CONCORD — After spending a month parsing the details of a bill to exempt Paycheck Protection Program grants from business profits tax liability, the House Ways and Means Committee Tuesday voted unanimously to approve the unamended bill.
Senate Bill 3 would put New Hampshire in step with about 40 other states and the federal government in exempting the money from forgiven PPP loans from business tax liability and to allow the business expenses paid to qualify for loan forgiveness to offset revenues.
State businesses received an estimated $3.7 billion in PPP loans under the federal relief program in two rounds of applications. The estimated tax the state would receive if almost all the loans are forgiven and become grants, as anticipated, would be nearly $100 million over three or four years.
Several Ways and Means members had balked at approving SB3, which passed the Senate on a 23-0 vote, saying it did not have the intended effect of helping struggling businesses, and instead most of the benefits flowed to large multi-state or international corporations.
Rep. Walter Spilsbury, R-Charlestown, proposed an amendment that would prevent a company from using expenses paid from the loan to qualify for a grant, to also be used as business expenses deductible against revenue. The committee never voted on the amendment.
At Tuesday’s meeting, Spilsbury said he also considered an amendment mirroring a Virginia provision exempting $100,000 of any grant, but decided not to bring it forward.
“I am glad we gave this bill extra time, but in the end it is not a mathematical equation, it is a value judgement,” Spilsbury said. “Business revenues are more than planned, we can afford to give some back.”
According to committee vice chair Patrick Abrami, R-Stratham, as of May 15, business tax revenues are $172.7 million more than estimates.
“The state can afford to cover the lost revenue in future years if it is managed properly and I am confident it will be,” he said. “We are doing our part in helping New Hampshire businesses rebound post pandemic.”
Rep. Susan Almy, D-Lebanon, also said the bill should be passed as it came from the Senate, but noted the committee owes it to the legislature and state to determine what it will cost and in what fiscal years.
“We need to make clear to the House and the Senate and the governor,” Almy said, “whatever money we are seeing in business taxes that is surplus needs to be saved and not spent because we will need to pay it back.”
Many businesses that received loans and qualified to have them forgiven paid business profits tax on the money. Under current law, it is taxable.
Committee members believe the businesses that paid the tax account for a sizable amount of surplus business tax revenues the state received during the past few months, which will have to be paid back to the businesses if SB3 is passed by the House and signed by the governor.
“We don’t know what taxes have been paid on the grants,” said Rep. Dick Ames, D-Jaffrey. “That is the big question mark.”
About 41,000 New Hampshire businesses received PPP loans under the federal relief and recovery program.
At the beginning of the meeting, committee chair Rep. Norm Major, R-Plaistow, said the committee’s job is to evaluate each bill that comes before the committee and determine its consequences, noting some will be negatively impacted and some will benefit.
“Hopefully we are ready to make a decision,” Major said. “Do the positive benefits outweigh the negative aspects?”
The bill will go before the House next week.
If it passes as the committee recommends, it will go to the governor, who is expected to sign it.
Garry Rayno may be reached at email@example.com.