Durham — March 21, 2008 — For decades, it has virtually been a requirement that elected state officials in New Hampshire take “The Pledge,” a promise not to institute a broad-based income or sales tax. But now there is a growing movement to reject that pledge and overhaul the state’s tax system.
A nonbinding measure calling for tax reform appeared on the town meeting agenda of 96 communities in the last two years, and it has passed in about 70 percent of them, including at least 67 in the last week. Supporters of the measure say the goal is to ease the tax burden on homeowners. Opponents say it is a backdoor effort to pass an income or sales tax in a state that neither wants nor needs them.
“New Hampshire is over-reliant on property tax,” said Paul Henle, executive director of the Granite State Fair Tax Coalition, which placed the item on the town agendas. Opponents point out that the group focused on towns with extremely high tax rates.
Mr. Henle, however, says new taxes are not the goal.
“We need a rebalancing of our revenue priorities,” Mr. Henle said. “We do understand that if less money comes from the property tax, it has to come from somewhere else. It could be an existing revenue source, a new revenue source. It could conceivably be a new tax, it could be gambling. We don’t know.”
New Hampshire is a study in tax contrasts — the lack of broad-based income or sales taxes gives it the lowest overall tax burden in the nation, but the property tax burden is the country’s third highest. The only other state without a state income tax or a statewide sales tax is Alaska, said Gerald Prante, a senior economist at the Tax Foundation, a nonpartisan tax research group.
“New Hampshire is an oddball in the Northeast,” he added. “They’re just a low-tax state in general, and in New England, it’s an anomaly.”
The property tax here is allocated toward local government and schools, as well as a state education fund. The state taxes various things, including meals and rooms, business profits and personal dividends. That revenue goes into the state budget.
The call to reform the property tax system is heard loudly in Durham, which has one of the highest property tax rates in the state. The rate is high, in part, because the town is home to the main campus of the University of New Hampshire, which does not pay property tax, said Lorrie Pitt, the town tax collector.
The resolution passed overwhelmingly here, with 70 percent of residents voting for it, Ms. Pitt said. Even so, she said, many are still leery of adding new state taxes.
“With property tax,” she said, “at least you can claim it and use it as a deduction.”
Opponents of the measure say it is a way to stealthily push for new taxes.
“The people behind the anti-pledge resolution are a group of people in favor of a broad-based tax in New Hampshire, specifically an income tax,” said Fergus Cullen, chairman of the state’s Republican Party. “What they have put together is a dishonest and misleading resolution, which misrepresents what they really want.”
Gov. John Lynch, a Democrat who has taken the pledge, is opposed to the resolution and would veto any new taxes, a spokesman said.
Rob Dix, the tax assessor here and a resident of nearby Barrington, said he thought the current system was working just fine.
“New Hampshire has the lowest net taxes of any state in the nation,” Mr. Dix said. “If that’s the case, the property tax seems to be working pretty well.
“As a resident of New Hampshire, not an assessor, I appreciate lower taxes.”