By Coos County Commissioners
New Hampshire’s yield tax on timber, often called the “timber tax,” was established in 1949 and has been locally collected to offset property taxes ever since. The tax is constitutionally permitted by an amendment to Part II, Article V of the state constitution, which was ratified in 1942 by over two-thirds of New Hampshire’s voters. The yield tax on timber has been an essential tool for promoting conservation, helping the timber industry, and stabilizing municipal revenues in heavily timbered towns.
In the originally passed legislation from 1949, the legislature declared the policy’s intent was to “provide a continuous, sustained yield of wood and timber for New Hampshire wood-using industries and to stabilize employment in those industries, to maintain forest lands at their maximum productiveness….” The legislative intent also stated the legislation would, “…encourage conservation of the forest resources of [New Hampshire] by releasing growing wood and timber from the yearly burden of local property taxes and substituting a yield tax….” The timber tax is very effective in achieving these goals, promoting a robust, stable timber industry that helped restore forested lands. The current policy strikes an excellent balance between industry and conservation.
There is a new government-promoted industry that is threatening New Hampshire’s timber industry, loggers, timber processors, and heavily timbered towns that depend on timber tax revenues. Carbon credits are being sold in the California cap-and-trade program and others, and these tax schemes and programs are tying down New Hampshire’s timber in multi-decade carbon sequestration agreements or leases. Companies will pay landowners a set amount for the rights to sequester the timber’s carbon based upon the species of trees, their stage of growth, and the number of acres of timber. This sequestered carbon is then purchased by other businesses or entities seeking to have carbon neutral or net-zero emissions for marketing or ethical reasons, or to meet the requirements of other states or foreign nations cap-and-trade programs or carbon taxes. The market for sequestered carbon is growing and will continue to impact the timber industry in New Hampshire, nationally, and internationally. The timber tax revenues municipalities will receive will also be negatively impacted, and the tax burden shift will increase local property taxes.
Carbon sequestration is a type of yield from timber that the yield tax on timber does not account for because, when the state law was originally written in 1949, the concept of profiting from forests absorbing and sequestering atmospheric carbon did not exist. Today, landowners are yielding carbon credits per metric ton from their standing timber and selling them on the free market. This new type of timber yield is impacting the revenues municipalities receive from the yield tax on timber, particularly in communities and regions where logging historically has been a major economic driver. Less timber is being cut on a regular basis and, instead, is being put into multi-decade lease agreements to sequester the timber’s metric tonnage of carbon. There is also a negative trickle-down effect on local economies, too.
There is a bill, HB 123, that the New Hampshire House of Representatives will vote on this upcoming Thursday that addresses the negative impacts carbon sequestration has on New Hampshire’s timber industry and heavily timber municipalities. HB 123 would modify the existing yield tax on cut timber in RSA 79 to include taxing the yield of the metric tonnage of carbon sequestered from standing timber. It is important to New Hampshire’s municipalities that revenues from the timber tax be preserved and all yields from timber — whether from cutting or sequestration — be accounted for equally when the tax is assessed.
HB 123 is not a new tax or a “carbon tax,” despite what some out-of-state interests are pushing in the halls of the State House. As previously stated, the yield tax of 10% on timber has existed since 1949, so for over 75 years. The law was created as an alternative to taxing standing timber under a general property tax. All HB 123 ensures is that timber yields are treated the same. Treating carbon that is sequestered like any other wood product yielded from timber is consistent with the intent of the original law and ensures no yield on timber is unfairly excluded from the 76-year-old tax. HB 123 also protects municipalities’ timber tax revenues, which helps property taxpayers.
Encourage your State Representatives and Senators to level the playing field for New Hampshire’s timber industry and save timber tax revenues that decrease local property taxes. Tell them to please support HB 123 and protect Granite State towns and industries from out-of-state carbon schemes that will tie up New Hampshire’s timber.
Coos County Commissioners
Tom Brady, Chairman of the Board, Raymond Gorman, Robert Theberge