The tax on meals and rooms comes into effect

New Hampshire’s tax on meals and rooms drops 0.5% as of Friday, following a 2021-2023 budget change that lowers the rate to 8.5%.

As of October 1, those in New Hampshire who eat in restaurants and dining establishments, who buy alcohol in bars, who stay in hotels and accommodation based on apps on Airbnb or Vrbo, or who motor vehicle leases will see the new tax rate. Businesses were encouraged this week to start updating their point-of-sale software to anticipate the change, which will take effect at midnight Thursday.

“It is important that businesses of all sizes remember the change and implement the new rate on October 1,” Lindsey Stepp, commissioner of the Department of Revenue Administration, said Monday in a statement. “This will help ensure transparency with customers who will expect this lower rate and ensure compliance with state law. “

The tax cut was triggered by a two-year budget signed by Governor Chris Sununu in June that cut taxes in a variety of areas, including taxes on corporate and business profits and the tax on interest. and dividends, which should be reduced. to zero in five years.

Sununu had championed the tax cuts from the night he was re-elected in November 2020. Throughout the budget process, he said the cuts would benefit both businesses and consumers.

“What we have tried to do is not just create tax breaks for businesses, but for everyone,” he said in February.

Top Democrats have criticized the reduction in room and meal taxes as inefficient and costly to the state as a whole. The Republicans have added a reduction in the room and dining tax rate that won’t help restaurants at all either, saving the customer just a dime on a sandwich, but it will add up to $ 30 million in revenue lost to the state in the budget, ”he added. wrote Democratic Senses Cindy Rosenwald and Lou D’Allesandro, of Nashua and Manchester, respectively, in a June opinion column.

Mike Somers, CEO of the New Hampshire Lodging and Restaurants Association, said the change could help the perception of the state, even if the actual impact is marginal.

“In the grand scheme of things, I don’t think it’s going to make a huge difference, but I think it adds to the narrative that New Hampshire is a low-tax state,” Somers said in an interview Thursday. “If you have to choose between us and some of our neighboring states, New Hampshire is the more affordable option.”

But Somers said the state’s meal and rent tax rate is only part of the financial equation for businesses – and won’t change prices on its own.

“It’s a consumption tax, so it doesn’t really affect companies’ prices for their products, just because those prices are determined by a lot of market forces,” Somers said. “For example, we all know that there are a lot of supply chain issues, and therefore the cost of some of the foods and products that they have to acquire in order to offer them to customers – those prices have gone up and up and so you will see the menu prices increase.

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