HB 1709-FN - AS INTRODUCED

 

 

2024 SESSION

24-2613

08/10

 

HOUSE BILL 1709-FN

 

AN ACT establishing a tax on land used for carbon credits.

 

SPONSORS: Rep. E. Kelley, Coos 7

 

COMMITTEE: Resources, Recreation and Development

 

-----------------------------------------------------------------

 

ANALYSIS

 

This bill establishes a tax on land used for carbon credits.

 

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

 

Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

24-2613

08/10

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Twenty Four

 

AN ACT establishing a tax on land used for carbon credits.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

1  New Section; Taxation; Timber; Intent to Generate.  Amend RSA 79 by inserting after section 3-b the following new section:

79:3-c  Intent to Generate.  A yield tax at the rate of 10 percent shall be assessed by the assessing officials within 60 days of receipt of an intent to generate is filed with said officials in the town in which said operation will take place. Interest as provided in RSA 79:4-a shall be charged 30 days after the bills are mailed by the tax collector, on any tax which is due and payable and which remains unpaid. This tax shall be assessed yearly based on the estimated stumpage above baseline at the end of the crediting period divided by 50 years or the length of the crediting period whichever is shorter. An intent to generate is required when New Hampshire land is used for the generation of an emission reduction ton or equivalent carbon credit by way of improved forest management, afforestation, or reforestation. The intent to generate shall include the greenhouse gas project plan or the equivalent required by the certifying authority. The intent to generate shall clearly show the estimated baseline and with-project stumpage at the end of the crediting period. All baseline scenarios that rely on comparable areas shall use comparable areas within 50 miles of project boundaries. Any changes to the greenhouse gas project plan shall also be submitted to the assessing officials. The estimated stumpage value shall be based on the average stumpage value list published by the department of revenue administration and shall be adjusted yearly before the tax is assessed. The tax under RSA 79:5 shall not be imposed as long as taxes under this section are paid.

2  Effective Date.  This act shall take effect 60 days after its passage.

 

LBA

24-2613

12/10/23

 

HB 1709-FN- FISCAL NOTE

AS INTRODUCED

 

AN ACT establishing a tax on land used for carbon credits.

 

FISCAL IMPACT:      [    ] State              [    ] County               [ X ] Local              [    ] None

 

Estimated Political Subdivision Impact - Increase / (Decrease)

 

FY 2024

FY 2025

FY 2026

FY 2027

County Revenue

$0

$0

$0

$0

County Expenditures

$0

$0

$0

$0

Local Revenue

$0

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

Local Expenditures

$0

$0

$0

$0

 

METHODOLOGY:

This bill establishes a yield tax of 10% on land used for carbon credits generated from carbon-storing activities related to the conservation and management of forests.  The Department of Revenue Administration notes the bill enacts a new section RSA 79:3-a, which already exists.  The Department assumes the intent is not repeal and replace the existing RSA 79:3-a but rather to create a new section in RSA 79 to address the new yield tax.

 

The New Hampshire Municipal Association states this bill uses tree growth over a period of 50 years to assess the 10 percent yield tax.   As trees grow they use photosynthesis to convert carbon dioxide from the air into food for tree growth, producing wood. This process can be measured, and values can be determined for forest growth in the form of carbon credits. Carbon credits can then be purchased by entities looking to reach their carbon emission reduction goals. The industry standard is one carbon credit equals one tonne (metric ton) of carbon dioxide removed from the atmosphere.

 

The Association states this bill will potentially increase local revenue; however the Association has no data on how many land parcels in the State are selling carbon credits or how many land parcels would be eligible for this form of taxation to estimate the revenue impact.

 

The Department of Revenue Administration is not able to calculate the potential fiscal impact as it is unable to predict the extent of operations that would generate emission reduction ton or equivalent carbon credit by way of improved forest management, afforestation, or reforestation within the State.  The Department does assume local revenue would increase by an indeterminable amount in FY 2025 and each year thereafter.  

 

The Department assumes it will be responsible for developing the Intent to Generate form; however the Department does not anticipate this bill will result in any additional administrative costs that could not be absorbed by the Department.

 

It is assumed any fiscal impact from this bill would begin after FY 2024.

 

AGENCIES CONTACTED:

Department of Revenue Administration and New Hampshire Municipal Association