In 1967, New Hampshire enacted a sales tax.
It is only on prepared meals, rooms, and vehicle rentals. We pay 9 percent which goes into state coffers — well, most of it. Businesses offering those services retain a 3 percent commission for collecting the tax, record keeping, and sending the revenue to the state by the 15th of each month. I’m told that calculating and submitting the tax only takes about 10 minutes.
Last year, commissions topped $9 million — a lot in a state where we don’t fund priorities because we don’t have the money.
The Federation of Tax Administrators compiled a list of state sales taxes and vendor discounts (commissions). This lists information on general sales taxes. Accordingly, New Hampshire is listed as “N/A” with footnote #11: “NH imposes a 9% tax on Meals & Rooms with a 3% vendor discount.” Twenty-eight states allow vendor discounts, most with caps of $25 to $500 per month. Sixteen states have no discount; every customer dollar goes to the state. None of our New England neighbors provides a vendor discount under their sales taxes.
Connecticut’s sales tax is 6.35 percent.
Maine’s sales tax is 5.5 percent with prepared food and alcohol at 8 percent.
Massachusetts’ sales tax is 6.25 percent.
Rhode Island’s sales tax is 7 percent.
Vermont’s sales tax is 6 percent, with prepared food and lodging at 9 percent, and alcohol served in restaurants at 10 percent.
Our 9 percent Meals and Rooms Tax increases credit card swipe fees. Leaving a 20 percent tip increases them more than twice as much. Nationwide, the majority of transactions use credit cards and the fees are not any lower based on the vendor discount. Tax or tip, these fees are costs of doing business and thus, deductible.
Should we join our New England neighbors and end these commissions entirely? In the interest of protecting small business and covering the actual costs of filing the Meals and Rooms return, I sponsored HB 1710, which would cap commissions at $100 per month.
The additional revenue generated by capping vendor commissions would be dedicated to school building aid — a program that had helped fund school construction and renovation sorely needed in many communities. The entire cost of these projects now falls on local property taxpayers. Had HB 1710 been in effect last year, more than $6 million would have been available to address the backlog of projects. The state’s share of these exceeds $200 million, and $6 million is a drop in the bucket. But it’s a start.
The Meals and Rooms Tax has been a reliable revenue source and would contribute to school building aid year after year, unlike the Emergency School Infrastructure Fund — a onetime investment of $18 million to be distributed later this year. Should we have school buildings with conditions requiring emergency action?
I wrote this piece to inform the general public about the 3 percent commission and about HB 1710, a bill to reform it. The bill raises neither a tax nor a fee, only revenue from money customers are already spending. Please contact your legislators and ask them to support HB 1710.
— State Rep. Michael Cahill, D-Newmarket, represents Rockingham County District 17, and serves on the House Labor, Industrial and Rehabilitative Services Committee.