Senate will change revenue provisions in Act 60 bill

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(Host) The debate over a compromise Act 60 Reform bill shifts from the House to the Senate this week. Senate President Pro Tempore Peter Welch says he likes the basic framework of the House proposal, but Welch expects the Senate will make some significant changes to the plan.

VPR’s Bob Kinzel reports:

(Kinzel) It’s clear that a number of Senate Democrats don’t like the provision of the House bill that raises $70 million in new revenue by increasing the sales tax from 5% to 6% and by imposing the sales tax on beer and soda. The question is whether or not these senators can find additional revenue sources to replace the sales tax in the plan.

Senate President Pro Tempore Peter Welch says several Senate committees will thoroughly review the House bill this week:

(Welch) “I think the House did an excellent job and I’m confident that we’re gong to be able to work with their bill. We may make some significant changes in the composition of the taxes, but that remains to be seen.”

(Kinzel) Welch says finding an alternative to the sales tax is a top concern for a number of senators:

(Welch) “Seventy million dollars in new taxes is an awful lot of new taxes at once. Number two, total reliance on consumption taxes is disturbing for two reasons: They tend to be more regressive and that’s an immense burden to impose suddenly on our retailers, and that’s especially true of course along the Connecticut River.”

(Kinzel) Some senators would like to substitute an income tax surcharge for the sales tax increase. But Governor Jim Douglas has vowed to veto any Act 60 reform bill that increases the income tax. Welch says increasing the statewide property tax rate in the bill might be a way to reduce reliance on the sales tax without directly challenging Douglas on the income tax issue:

(Welch) “I don’t think on our side we’re going to want to do anything that will jeopardize the reach – we’re within grasp of a significant reduction in property taxes. So we’re going to want to do that. How much sentiment there is for the income tax, now people are going to have to address that. What happens in these debates is that you have an abstract discussion and then you have to face the reality that if you’re going to come up with some revenues then you’re looking at taxes. So this is when people are going to have to get off the fence and decide and I don’t know where it will come out.”

(Kinzel) Several Senate committees this week are also going to consider several new cost containment provisions for the bill.

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

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