N.H. Considers How to Split Meals Tax

A Senate committee didn’t show much appetite Tuesday for legislation that would divert more revenue from the state’s meals-and-rooms tax to the communities that generate that revenue — cities and towns with ski resorts, restaurants and other tourist draws.

The Senate Ways and Means Committee didn’t debate or vote on the bill, which was introduced by Hampton Republican Sen. Nancy Stiles and has 10 additional sponsors, including Democrats and Republicans from both the Democratic-controlled House and GOP-controlled Senate.

But two of the tax-writing panel’s five members spoke out against it during an hour-long public hearing: Sen. Jim Rausch, a Derry Republican, who said the bill had the potential to foster “class warfare,” and Sen. Bob Odell, a Lempster Republican and the committee’s chairman, who said it would amplify differences between communities that have tourist infrastructure and those that don’t.

“I think that going down this road is a very dangerous process,” Odell said.

New Hampshire doesn’t have a broad-based sales tax, but does levy a 9 percent tax on hotel rooms and restaurant meals. A portion of that revenue — nearly $59 million in the 2012 fiscal year — is distributed to towns and cities based on their population.

Under the bill introduced by Stiles, 56 percent of that money would still be distributed based on population. But 44 percent would be distributed based on the source of the revenue.

“I think we can agree that to provide a little extra back to the communities that support our restaurants and hotels, that generates the tax, makes some sense,” Stiles said.

The legislation would send more money to places like Portsmouth, which has a large concentration of restaurants; Hampton, with its beach and seaside hotels; and Carroll, home to the Omni Mount Washington Resort. Officials from all three communities support the bill, with some testifying yesterday that they shoulder higher police, fire, infrastructure and other costs due to tourism but don’t get a fair share of the revenue collected by the state.

“Any type of a situation where Coos County sends money to Concord (and) gets less back is not a fair or equitable way to distribute money,” said Sen. Jeff Woodburn, a Dalton Democrat and sponsor of the bill.

Other Senate sponsors are Majority Leader Jeb Bradley, of Wolfeboro, Republican Sen. Sharon Carson, of Londonderry, Republican Sen. John Reagan, of Deerfield and Democratic Sen. Martha Fuller Clark, of Portsmouth.

But Odell said communities like Portsmouth already enjoy larger tax bases, and as a result lower property tax rates, than places like Claremont and Charlestown.

“I’m struggling with the pain you have in Portsmouth, with all the good things that that city has going for it, and then to actually look to a town with double, almost double, the tax rate that you have and ...(have them) get less money from the meals-and-rooms tax to subsidize Portsmouth,” Odell said. “The math doesn’t work, in my mind.”