A temporary five-cent gas tax cut passed the House yesterday. Is it political posturing or an altruistic measure for cash-strapped New Hampshire consumers?
3 sides of the nickel
Gov. John Lynch dismissed the last-minute tax cut proposal that was trumpeted by House leadership (see “Speaking of Gas Prices“). Lynch said he wouldn’t have to veto Senate Bill 78 because the Senate won’t pass this “political gimmick” that could chop an estimated $6.5 million out of the state’s Highway Fund, which is used for road and bridge construction and maintenance.
House Majority Leader Rep. D. J. Bettencourt (R-Salem) countered with enthusiasm, suggesting an economic development chain reaction would unfold if the measure passes. While New Hampshire already has the lowest gas tax and prices in the region, Bettencourt said, “Expanding this margin by another 5 cents would result in more out-of-state residents coming to New Hampshire to fill their gas tanks. While they are here, visitors will also take advantage of our low tax environment and purchase other goods, including cigarettes, liquor and lottery tickets. This will help to drive up state revenues, as will the business profits taxes of the local gas stations benefiting from the additional business.”
On the other hand, Senate Finance Chair Chuck Morse (R-Salem) told the Concord Monitor he wondered whether oil producers would benefit most from the gas tax reduction. The Senate also wasn’t ready to embrace the math attached to the House cigarette tax reduction bill (lower taxes = greater revenues) when it tabled House Bill 156 yesterday (see “The Price of Taxing Tobacco“).
Steps of the dance
While it may appear that the Senate is playing bad cop to the House’s good cop when it comes to tax cuts, this is a traditional legislative dance of differing assumptions and priorities. It can and does work both ways, as Sen. Lou D’Allensandro (D-Manchester) found out in 2010 when he managed to get an expanded gambling bill through the Senate — only to run into a wall of opposition and skepticism in the House.
The reality is that this stage of the game is nearly all political posturing. The tax cuts that have been passed by the House or tabled in both the House and Senate remain very much in play. It’s the final House-Senate conference committees, where the two chambers’ differences are worked out, that will reveal the Legislature’s final revenue priorities come June.
This Daily Briefing was written by Michael McCord.
If you’re in retail, we want to know: Do you see more business with lower taxes?
(Comments below, policy here.)