Blue Ribbon Tax Commission issues report

first_imgThe Vermont Blue Ribbon Tax Commission issued its final report this afternoon. The commission, formed in 2009, offered several profound and subtle changes to Vermont’s tax code. Most noticeably, the sales tax on clothes would be restored. The commission suggested levying the general sales tax on all consumer-purchased services with limited exception on food and prescription drugs and for certain health and education services and business-to-business transactions. However, soda would now be taxed under this proposal. All this would allow the sales tax to go down to 4.5 percent. The commission urged the state to work with other states to include the sales tax on all Internet purchases. READ REPORTThe commission also wants the state to lower and flatten the income tax rate and get rid of most exemptions. The most obvious change for Vermonters would be to use the federal Adjusted Gross Income number to calculate taxes instead of the federal Taxable Income. This would allow Vermonters to take more advantage of built-in federal tax breaks.Commission members are Kathy Hoyt, Bill Sayre and Bill Schubart. They did not take up the property tax.Governor Peter Shumlin today thanked the members of Vermont’s Blue Ribbon Tax Commission for developing a report outlining changes they believe would improve the state’s tax system. ‘The report provides an excellent foundation for an important conversation, which I welcome,’ Governor Shumlin said.The Governor stated that he supports the concept of moving the state toward a simpler income tax system, as proposed by the Commission and currently used by the majority of states.‘That makes good sense, although we would want to be sure that any rate structure maintains progressivity and that adequate consideration is given to any unintended consequences of such a change,’ the Governor said.He said he remains skeptical of any increased reliance on the sales tax, voicing concern about that tax’s impact on low income Vermonters and businesses on the Connecticut River. However, he explained, there may be some room to broaden the base to lower rates in some limited instances, and he voiced support for efforts to capture the tax on sales occurring over the internet.Speaking to another suggestion in the report, the Governor added, ‘It makes sense to regularly review holes in our taxes created by credits and exemptions to make sure they still fit with our policies.’‘This administration will work with the Legislature to examine the specific principles, findings and recommendations,’ he said.Commission member Kathy Hoyt told Vermont Business Magazine that if implemented, Vermont’s national rank, which was cited as 10th highest in the nation, probably would not change significantly.The Public Assets Institute issued the following statement: “Vermont’s tax structure has had serious problems for a long time that have made the impact of the recession on Vermonters worse than it needed to be. Sales tax revenue has not kept pace with economic growth for decades. And while Vermont’s effective income tax rate’the taxes that Vermonters actually pay’puts the state in the middle of the pack nationally, our rates appear high because, as the commission has noted, those rates apply after people have taken Vermont’s generous deduction and exemptions.The political rhetoric we’ve heard in recent years about Vermont’s tax system has been misleading. This state actually has one of the fairest tax systems in the country. As more Vermonters understand this, we’ll have a better chance of taking a balanced approach to solving our current budget problems. The commission report, which was badly needed and long overdue, is a good first step in strengthening our revenue system so it continues to support the essential public services that all Vermont deserve.”View full reportlast_img

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