House tax bill going in wrong direction
Albert J. Marro / Staff Photo
Melissa Romano looks over a selection of soda at the Circle K convenience store on Woodstock Avenue in Rutland. Soda will be subject to the state sales tax under a proposal in the Vermont House.
This past week the Vermont House of Representatives advanced a tax bill, H.528, by a vote of 85-55. We are very disappointed that the House would pass a “basketful” of regressive product and excise tax increases on retailers and their customers. These taxes will hit the small stores the hardest and Vermonters who can least afford it.
This tax package will continue to deteriorate the health of our businesses along the New Hampshire border who are struggling to stay open every day. This comes on the heels of a $22 million hike in the gas tax previously approved by the full House.
The House tax package includes:
Sales tax on dietary supplements.
Sales tax on bottled water.
Sales tax on soft drinks.
Sales tax on candy.
Increase in cigarette excise tax (50 cents per pack).
Increase in tax on snuff and other tobacco products (88 cents).
Increase in meals tax to 9.5 percent (10.5 percent in local option towns).
Sales tax on clothing over $110.
Plus other income-related taxes.
In addition, when tax increases are necessary, they should be clear and easy to understand. Several of these fail that test miserably. Soft drinks no longer mean soda in the legislative mindset in a few of the examples shown here:
Diet tea, taxable; unsweetened tea, not taxable. Club soda, not taxable; tonic water, taxable. Cranberry juice cocktail, taxable; cranberry juice, not taxable.
And candy has an equally quirky list of exceptions as evidenced by just a couple of examples:
Honey roasted peanuts, taxable; marshmallows, taxable; Kit Kats, not taxable; licorice, not taxable; chocolate chips for baking, taxable; Craisins, taxable; raisins, not taxable; Butterfingers, taxable; Crunch, not taxable.
Additionally, because the House has chosen to begin taxing groceries, retailers that accept SNAP benefits (3SquaresVT and previously food stamps) will have to void the sales tax on any item purchased with those benefits. Confusing for both the customer and storekeeper.
Vermont already has the seventh-highest cigarette tax (the House bill moves it to number three). Increasing it further just sends more business out of state and/or increases the black market and retail break-ins that are all too prevalent today. And from a state revenue standpoint, this source of tax will just decrease going forward, meaning more new revenue sources will be needed next year and beyond.
As Gov. Shumlin was recently quoted, “I have repeatedly opposed increases to income, meals, and sales taxes, and yet this proposal hits all three.
Rather than reallocating existing funds more efficiently to achieve better outcomes as my budget recommends, the committee proposal increases Vermont’s already high tax burden.
Luckily, we are only part way through this legislative session, and I look forward to working with the Legislature to ensure that we end up with a responsible budget acceptable to all of us.”
We appreciate that Gov. Shumlin clearly understands the state of the state and that the Legislature should be focusing on growing jobs and not passing regressive product taxes.
We are hopeful the Vermont Senate will look at a more balanced and fairer approach to the state’s taxes as H.528 moves forward.
Jim Harrison is president of the Vermont Grocers’ Association, which is based in Montpelier.