After four working sessions and much angst, the Ways and Means House Ways and Means Committee voted unanimously to exempt New Hampshire businesses from paying taxes on Check Protection Program loans. canceled payroll.
The 23-0 bipartisan vote to pass Senate Bill 3 without amendment indicates that the measure is likely to be passed by the entire House next week and sent to Governor Chris Sununu for his signature.
The vote came a week after the latest estimate that the bill would cost the treasury nearly $ 100 million, and the day before the Department of Revenue Administration’s update on how it would affect the budget of the ‘State.
But the committee recognized that there were so many variables and unknowns that any estimate is “very rough,” in the words of Representative Susan Almy, D-Lebanon.
“At the end of the day, it’s not a mathematical equation,” said Rep. Walter Spilsbury, R-Charlestown, who proposed an amendment limiting the tax exemption and had another behind the scenes. “But we had more income than expected, and we can afford to give it back all at once.”
So far, the state has raised $ 172 million in more revenue than expected this fiscal year, said Representative Patrick Abrami, R-Stratham. Abrami didn’t even mention the nearly $ 1 billion in aid the state expects from the US bailout.
As of May 23, the $ 291 billion PPP loan program has loaned more than $ 3.7 billion to more than 40,000 New Hampshire businesses, with some 16,000 businesses receiving $ 1.15 billion so far. in the second round of the program.
The New Hampshire loans are still being processed. Last week, for example, the SBA approved 340 loans totaling over $ 7 million.
The SBA cancels PPP loans when the proceeds are spent on payroll and other specified expenses, but the cancellation process takes some time. As of May 24, the SBA had written off a total of $ 280 billion of the $ 521.2 billion loaned nationwide last year, with more than $ 80 billion outstanding. The agency has yet to receive $ 160 billion in forgiveness requests and has not even started to remit the loans it approved this year.
There is no state-by-state breakdown of remission rates, but Joe Bator, executive vice president of Primary, said that of the 950 first-round loans he made in New Hampshire, 700 were submitted to the SBA and all but 50 have yet to be forgiven. None were rejected.
A loan does not become taxable in New Hampshire until it is canceled, although expenses can be deducted. This puts the state at odds with the federal government, which has decided not to tax revenues and expenses. and over 40 states across the country, including all of the New England states.
Most states do this automatically because they comply with the current federal tax code, but New Hampshire updates their code every few years, so they had to pass a bill like SB 3 to update this. special arrangement.
SB 3 passed through the Senate, with sponsors pointing out that the Granite State cannot lag behind the federal government and Massachusetts on pro-business taxation.
During its four meetings on the bull, members of the House Ways and Means Committee questioned whether it was fair for businesses to be able to deduct both income and expenses, and whether the bill would help only those who made enough profit to even pay corporate income tax. Small businesses that pay corporate tax do not pay tax on PPP income and therefore would not be helped by SB 3.
Ultimately, the pressure from the business world turned the tide.
“The rooms reminded us of what a lifeline this is for so many businesses,” said Abrami. “It was relief money. The question is: should we tax relief money or not?
“We are doing the right thing,” said Representative Richard Ames, D-Jaffrey, adding that Congress had passed the PPP “as a stimulus package, as an investment in the economy.”
Meanwhile, with the P3 not officially ending until Memorial Day, May 4, the SBA has suddenly told banks to stop accepting new loans for fear of depleting program funds, although she said she would process outstanding loans.
For example, Primary Bank submitted three loans that day, and the SBA eventually approved all of them, although it could not accept applications from companies that walked through the door the very next day.
Primary referred these applicants to community financial institutions, which still have $ 9 billion in PPP loans specifically earmarked for them. Unfortunately, New Hampshire does not have any FCI participating in the PPP program.
“It would have been nice if they had given us at least a day’s notice,” Primary said Bator.
These articles are shared by The Granite State News Collaborative partners. For more information visit collaborationnh.org.