People in the Granite State really do live free - of income taxes

But there are property and business taxes, road tolls and even a gravel tax

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The Gazette, Wednesday, July 11, 2007

Dick Drisko, my neighbour, friend and landlord at the beach in Maine, commutes from his summer place to his part-time job as a member of the state legislature in Concord, N.H.

With 400 members, it boasts, as Dick says, of being the third-largest parliament in the English-speaking world. Only Westminster, with 645 members of Parliament, and the United States Congress, with 435 members of the House of Representatives, has more members.

And on a per-capita basis, representing a population of only 1.2 million people, the New Hampshire legislature is easily the largest in the anglosphere.

"One seat for every 3,000 people," says Drisko, a Republican member of the legislature from the town of Hollis, about 65 kilometres north of Boston.

By comparison, the Ontario legislature at Queen's Park has 106 seats for a population of

11 million, or one seat for every 100,000 residents. And Quebec, with 125 seats for about 7.5 million people, has one seat for every 55,000 residents.

In the beginning, the idea was that every town would have a seat in the legislature, and as the number of incorporated towns grew, so did the state assembly. In a sense, town-hall democracy was born in New Hampshire, every citizen in town with a say, every town in the state with a vote in the legislature.

While the legislative chamber is definitely a crowded place, members' salaries are not an issue. They are paid $100 per session, plus a very modest mileage allowance.

There is no need for a taxpayer watchdog in New Hampshire. It's in the local DNA.

New Hampshire, famously, has no state income tax and no sales tax. None. Zero. Nada. Massachusetts, the free-spending liberal state next door, is in some flinty New Hampshire circles scorned as Taxachusetts.

No one seeking state-wide office in New Hampshire would ever propose a personal income tax or sales tax. At least, no one with any thought of winning.

"You would have to take the pledge," Drisko says.

No new taxes.

When the first George Bush broke a famous 1988 campaign pledge, "Read my lips, no new taxes," the voters of New Hampshire reminded him of it by punishing him in the 1992 presidential primary, flocking to right-wing maverick Pat Buchanan. Bush put out a grim two-word statement, "Message understood."

But how, in the absence of personal tax revenues, does the state run its services and maintain its infrastructure?

Well, there's the revenue from the renowned tax-free state liquor stores. There's the state lottery, tickets available at the liquor stores. There's excise tax on tobacco. There are state tolls on the Interstates. There's a business profit tax, an interest and dividend tax, a state education property tax, a timber tax and even a gravel tax.

But no personal taxes, and no sales tax. Yet the New Hampshire House recently passed a budget that saw expenditures increase by 25 per cent. And this in a state whose constitution requires a balanced budget. How can that be?

It is, Dick explains, covered by the previous year's surplus. So, a state with no taxes usually runs a surplus.

"What would you say," I asked him, "if the government proposed a tax cut, and only 27 per cent of the voters were in favour of it, and 71 per cent favoured investments in new services instead?"

"I'd say that was pretty unusual," he allowed.

I explained this was, indeed, the case in Quebec, New Hampshire's next-door neighbour to the north.

Of course, the two government models aren't exactly the same. Quebec, one of the highest-taxed jurisdictions in North America, allocates about 45 per cent of spending to delivery of public health care, which doesn't exist in the U.S. Quebec also subsidizes private secondary education and public universities to a degree unheard of anywhere else in North America.

Thus, if only 27 per cent of Quebecers wanted a tax cut, that could be because 42 per cent of them don't pay any provincial income tax, and would prefer to receive more services they're not paying for anyway.

Dick Drisko shook his head in wonderment. Of course, New Hampshire goes Quebec one better - 100 per cent of the people pay no state tax.

One begins to understand the state's motto: "Live free or die." Not to be confused, of course, with the current Bruce Willis action movie, Live Free or Die Hard.

Which would be the fate of anyone proposing state taxes.

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