NH hearing on HB 123: sponsors seek to apply timber yield tax to forest carbon credits

House Bill 123 would require local assessors to treat income from forest carbon-offset contracts as yields under RSA 79 — the state's longstanding timber (yield) tax — and supporters told the Senate Energy and Natural Resources Committee on May 20 that the change is needed to protect timber-dependent towns from lost revenue.

Representative Arnold Davis, the bill's prime sponsor, told the committee that HB 123 "will align carbon sequestration with RSA 79, making all yields equal," and that the change is meant to preserve municipal revenues that historically came from timber. Davis said standing timber has been taxed in New Hampshire since 1949 and described the measure as "not a new tax" but a new application of the existing yield tax to carbon projects that generate tradable credits. He argued carbon deals can defer or replace cutting, which he said shifts tax burdens to towns and property owners.

Why it matters: Sponsors and county officials said the issue affects heavily timbered towns and Coos County in particular. Multiple witnesses said lost timber tax receipts reduce municipalities' ability to pay for services such as ambulances, dispatch and school budgets. Several speakers said large parcels converted to long-term carbon contracts (some contracts described in testimony as lasting decades, up to 100 years) have already reduced local harvesting and related economic activity in parts of northern New Hampshire.

What supporters told the committee - Senator David Roche,…