House and Senate confer on new tax plans

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(Host) The future of an Act 60 Reform plan is now in the hands of a House Senate conference committee. While the two chambers agree on several key parts of the bill, there are some major differences that will need to be resolved.

VPR’s Bob Kinzel reports:

(Kinzel) The biggest difference between the chambers is a decision by the House to increase the sales tax from 5% to 6% as a way to provide $70 million in property tax relief. The Senate rejected the sales tax increase and adopted a more modest package of tax increases, including a 1% jump in the rooms and meals tax.

Both the House and the Senate are supporting a two-tiered property tax system with one rate for residents and a second rate for businesses. The House rate is lower because of the additional revenue that is generated by the sales tax increase.

Senate President Pro Tempore Peter Welch (D-Windsor) says the sales tax increase is a big problem for the Senate. Welch says the House plan raises too much money in new taxes at one time. He wants to phase in the tax relief benefits of Act 60 to give lawmakers an opportunity to implement stronger cost control provisions next winter, and to save some of the state’s taxing capacity:

(Welch) “We do definitely have a concern about whether it makes sense to use virtually all of the tax capacity that the state has as the primary response to this serious situation we have in education financing. We’ve got to focus on the costs side as well, that’s number one. Number two, let’s be real here: we have economic problems in the state and we may have need next year, you don’t know, for tax capacity. And if we use it all now where’s that leave us tomorrow ?”

(Kinzel) House Ways and Means Chairman Dick Marron (R-Stowe) argues that the $70 million raised by increasing the sales tax is needed if the average homeowner is going to feel some property tax relief:

(Marron) “I’m not trying to raise taxes here. I’m trying to shift tax burdens from one class of taxpayers to the other. I’m not trying to spend more money. There is an argument that there’s not enough cost containment. I’ll be happy to work with the Senate conferees on ways to make sure that we have that in the final proposal. But I’m not here to fund an expansion of state government programs. I’m just here to try to take the burden off property taxpayers.”

(Kinzel) Resolution of this issue is expected to be one of the final actions of the Legislature before the General Assembly adjourns for the year. Some lawmakers are suggesting that the final compromise may include a .5% increase in the sales tax, coupled with stronger cost containment provisions.

For Vermont Public Radio, I’m Bob Kinzel in Montpelier.

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