Vermont to Consider Expanding Sales Tax Base
- Dec 4, 2015 | Gail Cole
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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