NH restaurant, hotel owners pan proposal that would allow local tax on meals, lodging

NH restaurant, hotel owners pan local tax option

CONCORD, N.H. — A group of New Hampshire restaurant and hotel owners said Monday a proposal to let communities impose local taxes on lodging and on restaurant meals would be disastrous to their industry.

Mike Somers, president of the New Hampshire Lodging and Restaurant Association, said lawmakers should drop the proposal and Gov. John Lynch should veto it if it reaches his desk.

“Our rooms and meals tax is currently one of the highest in the nation,” Somers said at a Statehouse news conference.

New Hampshire restaurants and hotels would lose their competitive edge if communities enacted a local tax on top of the state’s 9 percent tax on rooms and meals, he said. Each community would have to approve its own rate.

According to a 2006 report by the National Conference of State Legislatures, only two states and the District of Columbia had higher lodging taxes than New Hampshire. However, some states also impose a general sales tax, which New Hampshire does not have.

The House and Senate passed the proposal in separate bills to close a budget shortfall that could approach $300 million by July 1, 2011.

House Finance Chairwoman Marjorie Smith, D-Durham, said Monday the provision was in response to communities’ complaints the state was cutting local aid.

“Understanding they’re limited to the property tax, which is much overused, this is an opportunity if cities and towns choose to do so to add some additional revenue without having to increase the property tax,” she said. “The control for that is completely in the hands of cities and towns and none of the money will come to the state.”

Lynch spokesman Colin Manning said the governor “has a number of serious questions and concerns about this proposal, including how it will impact communities and businesses and will this pit communities against each other.”

Manning said Lynch will discuss the proposal with lawmakers and the commissioner of revenue administration.

Somers said he expected communities would take advantage of the option and impose a local tax if the law was passed.

Alex Ray, owner of the Common Man Family of Restaurants, said New Hampshire could wind up with a patchwork of taxes on rooms and meals from town to town which would confuse the public.

Ray said the proposal was hastily added to the budget bills without benefit of a public hearing.

“I think it’s crazy,” he said.

Somers said the industry has had to cut costs to survive the recession and the state should do so, too.

Rusty McLear, owner of the Inns and Spa at Mills Falls in Meredith, said the provision was “nothing but reactionary thought. That’s not the way to run a business and it’s not the way to run a state.”

Ray said the competing rates could cause businesses to lose customers in towns with the local tax.