House committee will pass Act 60 reform bill

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(Host) Despite the strong opposition of Governor Jim Douglas, the House Ways and Means committee is about to give its approval to an Act 60 reform plan that shifts the burden for paying for education from the local property tax over to the income and sales taxes.

VPR’s Bob Kinzel reports:

(Kinzel) The committee has a new proposal that does reflect some of Douglas’ concerns, but the basic approach taken by the committee is in direct opposition to the priorities outlined by the governor. The plan imposes a new 1.5% surcharge on all income up to $150,000 for all residents and it eliminates all local property taxes for education unless a community votes to spend above the state block grant amount. Non-residents and businesses would continue to pay a statewide property tax. The plan also expands the state sales tax to include junk food, all professional services like lawyers, accountants and mechanics, non prescription medicines and beer and wine.

The committee originally wanted to increase the sales tax rate from 5- 6% but dropped this idea. Committee Chair Dick Marron (R-Stowe) says his panel feels very strongly that the time has come to shift tax burdens for education away from the property tax:

(Marron) “I know there are folks in Vermont who think that doing anything with the income tax is going to be disastrous for the economy and the image of the state. I think the property tax now is become a real issue.”

(Kinzel) Douglas is concerned that the a new income tax surcharge will hurt economic development efforts and he thinks eliminating local property taxes for education might be a big mistake:

(Douglas) “Inevitably local officials and voters will say, ‘Well gosh our property tax rate is so low we can increase local spending.’ And before you know it we will have a higher tax burden than we have now.”

(Kinzel) Douglas is urging House members to support a plan that is very similar to a proposal adopted by the Senate last month. Under that proposal, a town’s statewide property tax rate would be determined by how much money the community voted to spend on education.

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

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