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Immediate Action Taken to Address Property Tax Increase, But New Tax Options Remain a Concern
There was movement this week on how to rapidly address the looming 20% property tax increases expected this year. A House Ways and Means Committee bill includes a repeal of the 5% cap set on tax rate increases, a measure that the Vermont Chamber and other business organizations asked legislators to take action on. This will take the burden off of non-residential taxpayers like renters and businesses to make up the difference between the 5% cap and full increase in spending. While short-term solutions to soften the projected $250 million statewide school spending hikes are the present focus of the taxing committees, the even greater concern is how they will address the long-term implications of an education fund that does not meet the needs of a school system with dwindling enrollment. Specifically, the next step outlined by legislators is considering new revenue sources for the education fund.
Taxes that have been discussed this session that may be on the table for this discussion include a “cloud tax” on software as a service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS). Whether as a response the the unsustainable increase in school spending or as a more general proposal, it is one possibility that is likely to gain traction in the House again this session. Nearly all Vermont businesses that use cloud-based services would see considerable cost increases. The Vermont Chamber will be working to minimize the impact, specifically on business-to-business transactions.
The following tax increases have also been under discussion this session:
- A high-income earner surcharge of 3% aimed at tax filers, filing single or jointly, earning an annual income over $500,000
- A new personal income tax on unrealized capital gains
- Moving to a worldwide combined reporting corporate tax
- Excise tax on sugary beverages
- Increased taxation on candy (including maple)
- Broadening Vermont’s sales tax.
While legislative proposals for increasing the burden on Vermonters are discussed, the Vermont Chamber is working to ensure cost containment measures, like finding efficiencies in the education system, are also considered.