HB830: creating enterprise zones in which qualifying businesses are eligible for tax credits.

HB 830-FN-A - AS INTRODUCED

2003 SESSION

03-0999.1

05/10

HOUSE BILL 830-FN-A

AN ACT creating enterprise zones in which qualifying businesses are eligible for tax credits.

SPONSORS: Rep. Brady, Coos 2; Sen. Gallus, Dist 1

COMMITTEE: Ways and Means

ANALYSIS

This bill establishes enterprise zones in which qualifying businesses are eligible for tax credits against either the business profits tax or the business enterprise tax based on the number of jobs created.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03-0999.1

05/10

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Three

AN ACT creating enterprise zones in which qualifying businesses are eligible for tax credits.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 New Subdivision; Enterprise Zones. Amend RSA 12-A by inserting after section 49 the following new subdivision:

Enterprise Zones

12-A:50 Definitions. In this subdivision:

I. "Business" means any enterprise, whether corporation, partnership, sole proprietorship, association, business trust, real estate trust or other form of organization, organized for gain or profit, which carries on a business activity.

II. "Director" means the director of the division of economic development, department of resources and economic development.

IV. "Municipality" means any city, town, incorporated town, or unorganized place.

12-A:51 Designation of Enterprise Zones. The director shall designate a municipality as an enterprise zone upon application by the governing body of the municipality and upon verification by the division that the municipality's per capita income is equal to or less than 82 percent of the median per capita income for New Hampshire, as determined by statistics published by the United States Bureau of the Census.

12-A:52 Enterprise Zone Tax Credit.

I. A new business that locates in an enterprise zone and that creates jobs as defined in paragraph II shall receive the following credit against taxes owed under either RSA 77-A:5, XII or 77-E:3-a for its first 8 years of operation in an enterprise zone:

(a) For businesses that create 3 to 34 jobs, 50 percent credit in the first year the credit is available, with a 40 percent credit in the second year; a 30 percent credit in the third year; a 20 percent credit in the fourth year; and a 10 percent credit in the remaining years.

(b) For businesses that create 35 to 99 jobs, 60 percent credit in the first year the credit is available, with a 50 percent credit in the second year; a 40 percent credit in the third year; a 30 percent credit in the fourth year; a 20 percent credit in the fifth year; and a 10 percent credit in the remaining years.

(c) For businesses that create 100 to 199 jobs, 75 percent credit in the first year the credit is available, with a 15 percent credit in the second year; a 55 percent credit in the third year; a 45 percent credit in the fourth year; a 35 percent credit in the fifth year; a 25 percent credit in the sixth year; and a 15 percent credit in the remaining years.

(d) For businesses that create 200 or more jobs, 90 percent credit in the first year the credit is available, with a 80 percent credit in the second year; a 70 percent credit in the third year; a 60 percent credit in the fourth year; a 50 percent credit in the fifth year; a 40 percent credit in the sixth year; a 30 percent credit in the seventh year; and a 20 percent credit in the eighth year.

II. In order to apply toward the credit established in paragraph I, a job shall pay wages at least 1.75 times the federal minimum wage.

2 New Paragraph; Business Profits Tax; Enterprise Zone Tax Credit. Amend RSA 77-A:5 by inserting after paragraph XI the following new paragraph:

XII. The enterprise zone tax credit as determined under RSA 12-A:52.

3 New Section; Business Enterprise Tax; Enterprise Zone Tax Credit. Amend RSA 77-E by inserting after section 3 the following new section:

77-E:3-a Enterprise Zone Tax Credit. The enterprise zone tax credit, as determined under RSA 12-A:52, shall be allowed against the tax due under this chapter.

4 Effective Date. This act shall take effect July 1, 2003.

LBAO

03-0999

Revised 2/19/03

HB 830 FISCAL NOTE

AN ACT creating enterprise zones in which qualifying businesses are eligible for tax credits.

FISCAL IMPACT:

The Department of Revenue Administration indicates this bill will decrease state unrestricted general fund revenue by an indeterminable amount in FY 2004 and each year thereafter. There is no fiscal impact on state, county and local expenditures or county and local revenue.

METHODOLOGY:

The Department of Revenue Administration states this bill does not adequately define the credit to apply against the Business Profits Tax and Business Enterprise Tax for jobs created in designated enterprise zones. Therefore, the Department cannot estimate the decrease that will be realized by applying this credit against these taxes.

The Department of Resources and Economic Development can absorb the costs to designate and verify an enterprise zone within their existing budget.