Chairwoman Almy and members of the committee. Thank you for allowing me to come here today and speak. My name is Andy Sanborn and I am here as a small business owner and representing the New Hampshire Lodging and Restaurant Association. By way of background, the New Hampshire Lodging and Restaurant industry is the largest provider of jobs and Taxes in New Hampshire. Our industry represents 67,000 employees and with revenues exceeding $2.6 Billion Dollars last year alone we provided the State of New Hampshire with $210 Million Dollars in Rooms and Meals Taxes. Not to mention Business Enterprises Tax, Business Profits Tax and so much more. In addition, the State itself, claims our industry is responsible for an additional $2.2 Billion in ancillary revenue. Suffice to say, Our primary industry in New Hampshire is Tourism.
I was planning on coming to this summit to provide empirical data on how the recent trends of increasing taxes and fees has negatively effected both the businesses and residents of New Hampshire, but I came the realization that as legislators, and not business owners, some of you may not fully understand the total cost of taxation. Legislators have increased about 60 new taxes and fees at the State level, not to mention increases at the local level. But most pro tax politicians will shrug and suggest that a $100 tax here or there isn’t that significant. The harsh reality is, does anyone really know what they pay in taxes? Most people know their monthly phone bill, but do they know the 3 monthly taxes on that same bill? They know how much their home insurance bill is, but do they know there is a 2% tax, added onto their monthly bill?
So today, I have brought in a list of two small businesses in New Hampshire, that combined, employ 60 residents of our State. And this is a list of the taxes we pay.
So last year, as a small business owner operating in New Hampshire I paid in excess of $161,000 in company taxes, not including any personal taxes. This $161,000 in taxes comes off the top of business. Before payroll, rent. Insurance, cost of food, health benefits. Insert that amount into any small business income statement. This isn’t a percentage of Net Income. It’s an actual dollar amount right off the top. More clearly, taxes are the 3rd largest expense I pay in running a company today. For this amount of money, think about what I could offer my employees better healthcare, raises, education. Not to mention being able to pass along real savings to my customers.
Again, let me reiterate, this is only the taxes my company pays and does not include my personal taxes on income, real estate, car registrations, Gas Tax, and more.
Some of the Pro tax legislators may say … your company pays only 35 taxes? That can’t be THAT bad. But one must also consider the cost of paying these taxes, and where the money is coming from to pay them.
Every time the State or City raises taxes, business have only so much room to absorb these increases. Unlike government, prices in business are in-elastic. There is a limit on how much a restaurant can charge for a Hamburger. Only so much for a truckload of gravel. So the challenge is how long can any company absorb these increases in taxation, before they are forced to pass these expenses along to the residents of New Hampshire. Every tax increase you impose on businesses not only challenges the company’s ability to offer health insurance, pay raises and more to its employees, In the end, it must be passed along and becomes an additional tax on the people living and visiting New Hampshire. So, how much more can we possibly tax the people of this State?
As Local Business owners, we recognize the need to contribute to the community through taxation, and we want to insure that those most in need are getting support, but it needs to be at a reasonable level. Today, the level of taxation is beyond reasonable. As owners we are loosing our ability to pay all these taxes and still provide jobs.
So the question is, how do we as a State, generate sufficient revenue to satisfy the needs of Government. Well, in our opinion, there are two things that can be done. First and foremost is focusing as much time, if not more, insuring that the government is running as efficiently as it can. Because in the end, it’s not what you make, it’s what you keep. No business looks only at Revenue, without looking at Spending. Just think how much more the State could do, if it was 5% more efficient.
You are not going to be able to tax us into an economic recovery. The recovery and corresponding taxes in New Hampshire will only come from an expansion of the economic base, and we feel that should be the biggest focus, so….. Second. As legislators, especially those who want more revenue, you need to realize that the existing business community has reached its limit of taxation. When you get to the level of taxing the ground people come to sleep on, that’s saying something We think it would be best for the State to focus on helping creating jobs, expanding business opportunities. That will increase the pool of tax revenue, without raising taxes. We need to focus on expanding the opportunities of businesses in New Hampshire and returning this great State to the position of the low tax business advantage. The biggest fear we have today isn’t just the 55,000 people unemployed, but it’s the 100,000’s of thousands that are underemployed. How many people do you know that are making less this year than last. Wait staff, Car salesmen, contractors and more. Think of how much money the State is missing as a result of these people not being able to participate in the economy.
Most people remember the State 20 years ago. Everyone had a job that wanted one. Employers were offering bonuses just to find qualified employees. The State was raking in more money than it could spend.
So we believe you need to help businesses expand, as the result of their expansion will generate more tax revenue. Its not just the $30,000 or $40,000 a person makes a year, it’s the fact that they then go out to eat, take vacations, buy a car, participate in the economy. All of these will increase revenue without raising taxes. Keeping 55,000 people hanging out in the unemployment line will not.
The most telling picture of the New Hampshire economy today can’t be seen in the numbers. It can be seen in the actions of business in this difficult economic climate. Every week, we hear of companies being forced to consolidate in this difficult economy. The problem is every single company consolidating today is consolidating OUT of New Hampshire, not into New Hampshire. This is so much more troublesome than layoffs, furloughs or cutbacks. We are losing these jobs and the corresponding taxes forever. The cost of companies moving out of State and setting up or consolidating operations in other States will forever eliminate these companies from our economy. Back when New Hampshire was a low tax State, we had companies consolidating TOO New Hampshire. So wouldn’t it be nice that instead of continuing to raise taxes on less people, we could spread a lighter obligation to a wider group of businesses.
There are things we can do…
Recently the City of Des Moines Iowa recognized the need to attract business and expand their tax base. As a result of providing business tax incentives, during the past year, this town of 200,000 has become the beneficiary of 400 separate Hollywood productions.
When considering vacations, do people look to find the most expensive place to visit? Or do they look for a reasonable deal. Why is it when Disney or Las Vegas advertises, they promote the great Value in visiting there. They have not positioned themselves as the most expensive place to go, they insure that it is a great value and as a result make it up on the shear volume of people visiting.
Being that New Hampshire is also a Tourism State, we also have the opportunity to create a place people want to come to, not because we have the highest Rooms and Meals tax in the Nation or because we now charge people to sleep on the ground, but if we take a long term view of expanding the base, then as a State, we will be able to generate sufficient revenue to meet the needs of an efficient State Government.
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