Lawmakers make progress on Act 60 puzzle

Print More

(Host) House leaders are looking for an Act 60 reform compromise that does not include a provision raising the state income tax. That’s because Governor Jim Douglas has told the House that he won’t accept a plan that includes the income tax.

VPR’s Bob Kinzel reports:

(Kinzel) Lawmakers who are working on a compromise Act 60 reform plan at the Statehouse say their work is like trying to put together a huge jigsaw puzzle. Virtually every possible tax source is being looked at and each individual provision under consideration has a rippling effect on the entire plan.

Although the House Ways and Means Committee wants to shift property tax burdens to the income tax and an expanded sales tax, members of the panel understand that Governor Jim Douglas strongly opposes the income tax component. It’s one of the few “lines in the sand” that Douglas has drawn with the Legislature:

(Douglas) “Economists tell me that’s the one that if not competitive would have the greatest impact in terms of economic disadvantage to the state. So the income tax for me is as real serious disadvantage. It’s very, very high in terms of national comparisons and so I think that’s an area we ought not to increase.”

(Kinzel) Douglas is also unenthusiastic about the committee’s plan to impose the state sales tax on all professional services – from lawyers to accountants to electricians to car mechanics.

If the income tax and professional services tax are out – what’s in? Lawmakers are looking at a proposal to set up a single state health care plan for all teachers. It’s viewed as a way to help keep these costs under control and remove a controversial element from local bargaining discussions.

Ways and Means Chairman Dick Marron (R-Stowe) is considering a sales tax on Internet goods but this proposal must be approved by other states as part of a national approach on this issue and it cannot go into effect until at least 2006. This so-called “streamlined plan” is estimated to raise roughly $70 million a year. The administration appears willing to consider imposing the sales tax on junk food. Marron thinks even more money could be raised if the sales tax rate is increased from 5% to 6% as a bridge to get to the Internet proposal:

(Marron) “At the same time there may some other ways we can do this. I haven’t given up on the idea of just raising the sales tax for a short period of time. We’re right now taking some testimony on the streamlined sales tax proposal.”

(Kinzel) Key lawmakers say that even this plan will still require a statewide property tax, although they feel it may be possible for them to recommend a significant reduction in the current rate of $1.10. Marron says he hopes to have a new plan drafted in the next few days.

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

Comments are closed.