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Vermont Sales Tax Revenue Down


 Determining what is and isn't impacted by Vermont's soda tax isn't easy.

Sales tax revenue in Vermont is lagging. Economists working with Governor Shumlin’s administration project the general fund will drop by $4.7 million in fiscal year 2016 (what’s left of it) and by $9.1 million in fiscal year 2017. They predict the education fund will drop by $1 million this fiscal year and by $500,000 is FY 2017. The news was released in the January consensus projections.

One reason for the dip is a drop in tourism. A lack of snow kept the skiers away during two of the big three holiday periods. Fewer tourists mean less money entered the state. Governor Shumlin tweeted, “Yesterday we got news that the warmest Xmas in memory hurt our economy.” He took the opportunity to ask Vermonters to help combat climate change.

The Soda Tax

The new sales tax on soda and other sugary beverages has also brought in less revenue than predicted. “Small grocers have reported difficulty with implementing the new tax,” which took effect July 1, 2015. Many sellers were still expressing confusion about the tax in mid September. Determining what is and isn’t subject to the tax requires reading labels: V-8 Splash and Fusion are taxable, for example, but regular V-8 is exempt.

Consulting economist Tom Kavet said, “Either we’re getting a little bit more loss than we thought from some of the changes or some of the newer taxes are not generating as much income right off the bat. Sometimes it takes awhile before there’s full compliance” (Rutland Herald).

News isn’t all bad. Transportation revenue is expected to increase by $900,000 in FY 2016 and $1.1 million in FY 2017. And Governor Shumlin is planning to adjust his FY 2017 budget to account for the shortfall.

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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.