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Vermont to Consider Expanding Sales Tax Base

  • Dec 4, 2015 | Gail Cole

 Should services like lawn care be subject to Vermont sales tax?

The sales tax system in Vermont needs to be improved, according to a report released by the Blue Ribbon Tax Structure Commission (BRTSC) in January 2013. Recommendations included taxing soda (done), collecting tax on Internet purchases (done), and taxing most goods and services equally. The latter is now under consideration.

Act 57 of 2015 requires the Commissioner of Taxes to report to the Senate Committee on Finance and the House Committee on Ways and Means “on how the Department of Taxes would implement an extension of Vermont’s sales and use tax to select consumer services, not to include business to business services, most commonly taxed in other states.” The report must be submitted on or before January 15, 2016 and include specific services by industry type.

In addition, economists for the Legislative and Executive Branches are required to file a joint report to the Senate and House committees “on the fiscal impact of further extending Vermont’s sales and use tax to a broader range of consumer services.” Short-term and long-term economic impacts of enacting change and keeping the current tax policy are to be included in the report.

The existing sales tax base in Vermont is steadily declining. Senator Tim Ashe (D-Chittenden), Chairman of the Senate Committee on Finance, noted last spring that expanding the base and lowering the rate could “boost the future yields.” As he sees it, “We can continue to have this imbalance, which will just grow year after year after year and we can keep coming back looking for this or that splinter tax, or we can try to establish a tax code that will be predictable for many years ahead” (VPR).

These economic arguments leave some business owners unconvinced. They worry that expanding sales tax could stifle economic growth, pointing out that neighboring New Hampshire has no sales tax.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.