The Democratic legislature in Concord has a problem. Their budget is not balanced. The reason it is not balanced is that they have passed a retroactive tax increase. That’s unfair, unconstitutional and illegal. Mr. Governor veto this budget!
What is in place…
Last year, in a little noted move, the legislature changed the effective date for the scheduled BPT/BET tax reduction to January first. Originally the effective date had been June 30, to coincide with the state’s fiscal year. The motivation for the change was recognition that most businesses actually use a calendar year for their accounting and tax reporting according to the Department of Revenue Administration.
Why it is in place…
This was a commonsense adjustment to a bill already on the books. Revenue was up following the previous tax rate reduction. Risk was minimal. New Hampshire tax law requires quarterly tax filings for most businesses. Last session’s adjustment allows the business community to be sure what their tax obligation is for quarterly tax filings. Two tax filings are complete before this year’s tax increase is goes into effect.
The year is half over. and this calendar year taxes are in for the first two quarters. Changing the tax rate, increasing it, after the tax payments are made makes the new tax law change both an increase and retroactive. It is plainly unfair to the business community for the legislation passed this year to stand. If it does not stand the budget is out of balance. The businesses of the state implemented their operating plans based on known tax rates for the year.
Why the change is wrong…
Imposition of a retroactive tax increase harms the business community. It is little different than unilaterally breaking a contract. It is acting in bad faith. Businesses are entitled to know what their tax obligation is at the start of the year. It seems logical that litigation will ensue. This move is unfair, illegal and unconstitutional. The legal term of art is “ex post facto”. The U.S. Constitution, art. 1, sec. 10, forbids the states to pass any ex post facto law. Imposing an obligation after the fact is just plain wrong. What’s next changing the 2010 tax law so we can collect more this year?
Mr. Governor veto this budget!
