(Host) A new tax plan backed by the House Ways and Means Committee is being viewed as a way to lower corporate income tax rates for Vermont businesses and provide an additional $5 million for next year’s budget.
VPR’s Bob Kinzel reports.
(Kinzel) The plan developed by the Ways and Means committee has two distinct sections – one provision that will be attractive to many House Republicans and a second part that’s likely to find support in the Democratically controlled Senate.
The first part requires multinational corporations with stores in the state to pay taxes on the profit that’s generated from their Vermont businesses – a number of companies currently avoid paying state taxes by allocating national expenses to their local stores.
This section of the bill is projected to raise about $5 million a year and the committee wants to use this money to reduce Vermont’s corporate income tax rate by 14% over a two year period.
Ways and Means Chairman Dick Marron thinks this tax cut will help stimulate economic development efforts in the state:
(Marron) “I think it provides a lot more fairness and equity to the tax system for corporations, people doing business in the state. So I think it will be a positive from an economic development standpoint. Our corporate tax rates will look lower and they will in fact be lower.”
(Kinzel) The second part of the bill closes some loopholes in the state’s bank franchise tax. In the first year this provision is also expected to raise about $5 million and this money hasn’t been earmarked for any specific purpose.
Senate President Pro tem Peter Welch says Democrats are likely to support the overall tax plan because it offers an opportunity to add some money to next year’s state budget to help deal with some unexpected spending pressures:
(Welch) “The corrections budget is out of control. We’ve got such a huge caseload that the administration came in to request about 4 to 5 million dollars, actually more on corrections spending, so we’re going to have to get that money from somewhere. It is an end of the session practical problem. We’ve had suicides; we have absolutely woeful mental health system in corrections. The place is a mess.”
(Kinzel) The bill is being reviewed by the House Appropriations committee and could be on the House floor for a vote in the next week or two.
For Vermont Public Radio I’m Bob Kinzel in Montpelier.