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Rep. Porter: The back story on sales tax bill



For the Monitor
Tuesday, July 31, 2018

The governor called a special session of the Legislature recently. I’m sure you read about it in the papers or heard about it on the news. According to his press releases, the state had an emergency, which must be dealt with ASAP.

The U.S. Supreme Court had ruled on the Wayfair case, and the ruling was bad for small businesses in the Granite State.

We knew things must be dire for him to break the July rule. As long as I have served in the House, no legislative business has occurred in the month of July – no committee work, no sessions, no trainings – and absolutely no mileage is paid to anyone foolish enough to ask. But this crisis superseded precedent. No holds should be barred.

Our small businesses were going to have to collect (gasp!) sales taxes for out-of-state sales, and we must do something to stop it.

Once the Executive Council gave its approval for the session, things happened quickly. A bill was drafted, and a 17-member joint task force was established to review and improve it. They met for three grueling days, and heard testimony from knowledgeable people, in the hopes they would be able to craft a bill that would save New Hampshire and its small businesses. To add to the stress, there was a deadline. The governor wanted the bill ready to be acted on at the July 25 special session. The regular process would just take too long.

It is important to remember here that in November 2015, then-Gov. Maggie Hassan also called for a special session to deal with another crisis. Deaths from opioid overdoses were rising at an alarming rate, and she asked the Legislature to meet and approve $11.1 million in additional funding for new programs to combat the problem. She thought waiting through the usual process would take too long, and result in more lives being lost.

We met, but no bill was voted on and no approval was given. Instead, a task force was established to study the issue and make recommendations for future legislation. Haste makes waste, and we wanted to get it right, you see.

But this sales tax thing, this is important. The governor himself has said so. His press releases stirred alarm. Businesses were worried. Better to act quickly and risk mistakes than do nothing. Full speed ahead, haste be damned.

Despite the fact I seem to be making light of the issue, it really is an important one which needs to find some sort of solution soon.

Without getting too weedy, in the past companies in states with no sales tax – there are five such states – who sold items in states which did have one were not required to collect the tax if the company did not have a physical presence in that state. If Granite State Goodies had a store in Massachusetts, they had to collect sales tax there. If Granite State Goodies had their only store in New Hampshire, and their sales to Massachusetts were mail-ordered or online, they did not collect.

With the explosion of online sales in recent years, states with sales taxes have been crying foul.

Businesses in no-tax states have an unfair advantage, they said, and tax states are losing billions in tax revenues. The Supreme Court agreed.

The Wayfair decision takes away the physical presence exception. New Hampshire businesses will now have to collect those taxes.

And it’s not just state taxes that are involved. Many counties and municipalities impose sales taxes too. In fact, there are an estimated 10,000 taxing authorities which might be coming after New Hampshire businesses, demanding collection and payment. And there’s no counting the number of different tax rates there will be.

Pretty serious stuff. Our businesses are going to need lots of help and support going forward.

The bill we were asked to vote on contained two major sections. One set up a commission to work on ways to help and protect our businesses from the uncertainties as Wayfair moves forward.

The other outlined a long and complicated process that states and others who sought to collect taxes here had to go through in order to get approval to do so. There was lots of paperwork, and wait times, and fees involved. The goals were to make it so cumbersome to collect the taxes that those applying would give up and go away, and also to protect businesses from scammers claiming authority to tax and demanding payment.

Republican operatives are saying Democrats wanted to kill the bill to give the governor a black mark going into the election, but that is not what I saw from the inside.

For days before the vote was to be taken, and indeed for days since, my inbox has been flooded with back and forth about whether New Hampshire had the authority to do what the bill prescribed, about the constitutionality of it all. Some legal authorities said yes, some said no. Scholarly articles were shared.

Discussion was heated.

And this, mind you, was all from Democrats – we no longer have an ‘all reps” list serve. (That’s a story for another day.)

For a good solid hour in our Democratic caucus the day of the vote, the discussion centered on the constitutionality of the bill (believe it or not, Republicans don’t own the Constitution), and whether it was wise to rush this through. We would most definitely have to fight it in court, with all the costs that entailed.

The Supreme Court has ruled, and we are bound by the ruling. Wasn’t it wrong to give false hope that sheer stubbornness could save us? And for heaven’s sake, what was the rush?

Similar conversations must have been had in various Republican caucuses as well, but I was not privy to them. In the end, the vote count gives us a hint.

An amendment which eliminated the questionable section and left only the task force passed, 164-151. This effectively killed the bill.

And although the press is saying ‘liberal Democrats’ killed the bill, that is not what the vote count tells us.

This was truly a bipartisan defeat. Of those 164 votes, 78 were cast by Republicans, and one by a Libertarian. Of the 151, fifty-three were cast by Democrats.

This was an important bill for the governor, and he is upset to have lost. In fact, he’s lost a lot of important votes in the House this term. And it’s oh so easy for him to blame the Democrats.

Unfortunately for him, the reality is this: Republicans control the House, the Senate, the Executive Council, and the corner office, all by significant margins. It should be a pushover to get anything they want passed. There were 177 Republicans voting last week. Seventy-eight of them voted against their leadership. They can’t seem to control their own caucus.

The governor should have learned this by now. That’s why it was so surprising to find out after the fact that instead of working hard to consolidate the votes in the days before this critical emergency session, he was out-of-state raising money.

Just sayin’.

(Rep. Marjorie Porter lives in Hillsborough.)