(Host) A special Blue Ribbon Commission is looking at making some dramatic changes to Vermont’s sales tax.
Under the plan, the sales tax would be applied to a variety of consumer services that are now exempt. But in return, the sales tax rate would be reduced from its current level of 6%.
VPR’s Bob Kinzel reports.
(Kinzel) The commission is looking at ways to make Vermont’s tax code more understandable, more competitive and more equitable. But the panel is not looking at ways to raise more money for the operations of state government. Their final plan is intended to be revenue neutral.
The commission is now looking at the possibility of including consumer services under the jurisdiction of the sales tax – these services are currently exempt from taxation.
Former Tax Commissioner Kathy Hoyt is one the panel’s three members.
(Hoyt) "One of the things that we’ve been looking at very closely is are there areas that we can expand in terms of taxing services that would broaden that base and allow us to make some reductions on the other side."
(Kinzel) Hoyt says there are more than 160 services that could be taxed including, car repairs, TV and computer repairs, dry cleaning services, tax preparation work, and plumbing, painting and carpentry services.
Hoyt says the commission wants to establish a guiding principle to determine what services should be taxed.
(Hoyt) "Most states end up trying to find these that people aren’t going to yell about and put those on the list. And it’s a hodgepodge all across this country the way states have tried to address this question. Most people will agree that the economy has really changed from a good economy to a certainly ‘goods and services’ economy, and we’re letting a lot of revenues go out the door."
(Kinzel) Bill Sayre is the chairman of the commission. He wants to be certain that only discretionary consumer services are taxed.
(Sayre)"The test of whether the consumer has some choice over whether to buy a service or not and some discretion – to me that would be a key factor. If it’s a luxury item or a discretionary item might make it more reasonable to consider than one that is a necessity."
(Kinzel) The panel is also looking at a plan to apply the sales tax to "on line" purchases. This step alone would raise roughly $35 million a year. Commission member Bill Schubart says this proposal would also help strengthen Vermont’s downtown retail community.
(Schubart) "The other thing that’s critical to Vermonters is – ‘what’s the impact on our downtowns?’ You know, Arthur’s closes in Morrisville, a book store closes here, a bookstore closes there, another retailer closes. There’s a huge amount moving on line and if we’re not only losing that business but losing the sales tax revenue it’s a double whammy."
(Kinzel) The commission will issue a final report with specific recommendations about the sales tax, the income tax and the statewide property tax in January.
For VPR News, I’m Bob Kinzel in Montpelier.