As a free-market Republican, I certainly would not fault anyone for trying to make a dollar as long as they are doing it honestly and not causing undue harm. Our nation is built on hard work and free enterprise. I opened my small business on this notion. I wanted to provide a needed service to my community and earn a living. Everyone benefits from this type of free market capitalism.
However, this is not the case with all businesses. Many of us learned for the first time a couple of years ago about an out-of-state “green energy” company that had purchased a large tract of land (nearly 150,000 acres) in Coos County. Their business is selling “carbon credits” to California CEOs who want to offset their “carbon footprint” from flying around in their private jets. They may be buying these credits to settle their own conscience or to satisfy tax requirements, but in any case, it is big business.
I have no issue with this company selling this product no matter how silly of an idea I think it is. Unfortunately, in this case, this company’s entire business plan rests on taking advantage of a loophole in our state’s timber yield tax policy and ignoring what is best for the community where they are located.
For some background, our state instituted the “Timber Tax” over 75 years ago to encourage sustainable forestry in New Hampshire. It has since become an important source of revenue to offset property taxes for many towns throughout the state, but especially in the North Country. The tax is levied on the yield of the land – in this case by harvesting timber.
In addition to encouraging conservation, the timber tax was created to support the timber industry. The timber industry has long been important to our state and our nation. It provides jobs and keeps the price of building materials down (which is ever more important given our current housing crunch). On March 1st, the Trump Administration issued an Executive Order calling for the expansion of American timber production. The stated purpose of this EO is to provide timber products “critical to our nation’s wellbeing, and for proposer forest management and wildfire risk prevention.
In short, when more timber is being cut in New Hampshire, everyone benefits.
The Coos County land that this green energy company purchased included an easement allowing the timber industry to continue to use the land. Unfortunately, this large corporation is now attempting to limit the amount of timber that can be harvested from the land in violation of the terms of the easement. It is important to note that this easement was supported by both federal funds from USDA Forest Registry Program, as well as, state funds from the Community Heritage Investment Program.
Essentially, this company is making money by not allowing timber production, and in the process, they are double-dipping by utilizing this loophole to avoid paying the Timber Tax. And to make matters even worse, they are able to keep the property in current use, meaning that they already pay a lower portion of their property taxes to the towns.
HB 123 closes this loophole by applying the timber tax to trees that are generating revenue through carbon sequestration. This is a very reasonable solution. These companies are selling the yield of carbon sequestration harvested from the uncut timber. It is no different than selling the yield of cutting the timber and thus the tax should apply equally.=
This is not a new tax in any way. HB 123 simply closes a loophole being exploited by out-of-state green energy entities that provide no real benefit to the state – they do not create local jobs, they are not encouraging tourism or bringing more money into our state, they are paying lower property taxes by keeping their lands in current use. There is absolutely no reason that we should allow them to continue to utilize this loophole, which only increases the property tax burden for real Granite Staters.
While this is currently a very North Country-specific challenge, there is no doubt that if we allow out-of-state companies to continue to take advantage of this tax loophole, they will buy up even more land throughout the state. This model, in addition to negatively affecting LOCAL jobs, increases our property taxes. As a legislature, we need to ask ourselves: Do we want to put the interests of an out-of-state company running a “carbon credit” scheme over those of the towns and residents of the state?
My answer is a resounding “NO.”
