Thursday, April 30, 2009

South Dakota, behold your future 

A bill has been passed in the New Hampshire Senate that would protect New Hampshire businesses from being forced to collect sales taxes for other states. The bill, proposed earlier in the year by Governor John Lynch, is a reaction to reports that Massachusetts revenue officials have been bullying New Hampshire small businesses in order to get the businesses to do their bidding and collect sales tax on sales to Massachusetts residents. The bill will probably pass the House without a problem.

The issue stems from the fact that New Hampshire has no state sales tax while Massachusetts has a 5% sales tax. Because of this, Massachusetts residents who live close to the border have an incentive to shop in New Hampshire. Massachusetts is apparently not pleased with all this tax avoidance, and is putting the pressure on businesses to collect sales tax.

From the Tax Foundation. Growing up in Manchester, NH (about twenty minutes north of Nashua) meant you heard many of these stories. NH has state liquor stores, many of which are strategically placed near the state borders. I once observed a snow fence being put up near one along I-93 (one of two main highways between NH and MA.) Turns out the fence was to protect the license plates of liquor store patrons from being viewed by MA state patrol on the other side of the border. It's clear who that liquor store markets to.

That couldn't happen in MN, could it? Maybe.