CONCORD — The cost of eating out will not change after the House killed a bill Wednesday to reduce the tax on meals at restaurants and in grocery stores from 9 percent to 8 percent.
House Bill 1597 would have lowered just the meals portion of the rooms and meals tax from 9 to 8 percent while leaving the rate at 9 percent for hotels, motels and rental vehicles.
Supporters of the bill said it would reduce the cost of eating out allowing restaurants to attract more business and encouraging local residents to dine at restaurants.
And they said the cut would be revenue neutral as the rooms and meals tax receipts are about 5 percent more than anticipated.
“More people in the state will have more money in their pockets,” said Rep. Russell Ober, R-Hudson, “and we’ll still get the same amount of revenue to spend in our budget.”
But bill opponents disagreed saying it is just speculation additional revenue will be produced by the decrease.
While the rooms and meals tax is ahead of estimates other taxes are not, said House Ways and Means Committee Chair Susan Almy, D-Lebanon. “We don’t have 24 million to play around with,” she said. “If you vote for this, you need to figure out where to cut $24 million a year.”
Almy said when the rate of the rooms and meals tax was raised from 8 to 9 percent, the state agreed to increase the money for out-of-state tourism advertising.
That increase would likely be one of the first reductions if the bill passes she said.
But those favoring a reduction said lowering the rate would make New Hampshire restaurants more attractive to residents in other states along the state’s borders, particularly in Massachusetts where the push is on to reduce their sales tax to 4 percent.
“The dirty little secret is New Hampshire residents pay the lion’s share of the rooms and meals tax,” said Rep. Emily Sandblade, R-Manchester. “I know there is no free lunch, but I know it could be more affordable.”
The meals portion of the tax produces about 80 percent of the roughly $235 million state budget writers expect to receive from the levy this year.
After the vote House Minority Leader Gene Chandler, R-Bartlett, lamented the outcome.
“While some would like you to believe the meals tax is primarily paid by those who visit our state as tourists, the reality is that you and I pay it on our morning coffee or bagel, our grilled cheese at lunch, or our pizza dinner with the family,” Chandler said. “Lowering taxes like the meals tax is something I hope we continue to discuss as ways to help families keep more of their hard earned money in their own pockets.”
The House killed the bill on a 184-148 vote.