Tax surcharge is approved in House

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(Host) After several hours of debate, the House has given its approval to a $24 million package that includes an income tax surcharge to help balance next year’s budget.

Backers of the plan said the extra revenue is needed to avoid making difficult and painful budget cuts. But opponents argued that the legislation puts the state on an unsustainable spending track.

VPRs Bob Kinzel reports:

(Kinzel) Much of the debate in the House centered on one question – should additional cuts be made to next year’s budget or would those cuts cause severe damage to essential state services and undermine Vermont’s safety net of social programs? 

Calais Rep. Janet Ancel is the vice chairwoman of the House Ways and Means committee.

She argued that imposing further cuts including; reductions to drug subsidies and long term health care programs for the elderly, closing all rest areas and historic sites, shutting down the fish hatcheries, and closing the state court system several days a week, was not an acceptable option:

(Ancel) "As I was thinking how to report this bill I decided that the place to start was with the list…these programs and services matter to Vermonters they reflect our values and without 24 million dollars in revenue proposed in this bill these programs and services have to be cut or reduced."

The legislation includes a 3 year income tax surcharge. Ancel says an individual with a taxable income of $28,000 a year would pay an extra nine dollars under the surcharge – someone with an income of $74,000 would pay an additional $48 and a person with an income of a quarter of a million dollars would pay almost $300:

(Ancel) "We will probably hear that it’s a bad idea to raise taxes during a recession while it’s possible to find an economist just about any point of view in this case the great weight of economic thinking falls on the side of the approach that we are taking – choosing not rely exclusively on spending reductions but relying also on increased revenues particularly tax increases on higher income tax payers as the best available option."

Many Republicans spoke against the bill including Vergennes Rep. Greg Clark:

(Clark) "There needs to be in my mind some big decisions made around doing some more cuts I know people have struggled with this before but it seems to me this is more of a spending problem than a revenue problem and I think people out in the hinterland away from being under the golden dome may very well feel the same way."

And Stowe Rep. Heidi Scheuermann said it’s wrong to raise taxes in an economic downturn:

(Scheuermann) "I’ve heard from my community throughout Lamoille County their frustration about this bill and about the others that have come forward at a time when they’re struggling to pay their existing bills and their existing taxes we’re going after them again even the receipt of over 600 million dollars in federal stimulus fund isn’t enough we still Vermonters to pay more."      

The bill also calls for greater enforcement of uncollected tax payments and it includes a one time amnesty program for individuals who owe the state back taxes.

For VPR News I’m Bob Kinzel in Montpelier.

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