After weeks of debate and number crunching, Friday the House Ways and Means Committee voted to raise taxes, increasing projected revenue by $27 million.
"We came up with a package that I think it's probably fair to say nobody loves," said Rep. Janet Ancel, D-Calais.
Chairwoman Ancel says tapped reserves and declining federal contributions to Vermont's budget necessitate a tax hike.
"Each one is relatively small, but they add up to some money," Ancel said.
In the tax change bill voted out of committee, effective income taxes will be going up for Vermont's highest bracket. State income tax deductions will be capped. The two moves should pull in $4.5 million for Vermont in 2014 and more than $20 million in 2015.
A sugary beverages tax did not survive debate, but the sales tax exemption for soft drinks, candy, bottled water, dietary supplements and clothing worth more than $110 are going away, resulting in a combined $11.3 million in revenue.
A half-percent jump in the meals tax will raise $4.2 million, but Chamber of Commerce spokespeople say that threatens restaurants already stomaching small margins.
"A half-a-percent might as well be a whole percent," said Vicky Tebbetts of the Vermont Chamber of Commerce.
Under the proposal, a pack of cigarettes will cost you an extra 50 cents. Combined with new rates on snuff and smokeless tobacco, the move would generate $6 million.
Upstairs, House colleagues debated the spending side of the equation, and how to use $20 million to cover $34 million worth of proposals from the governor.
"What it means is that we'll spend less than the governor's budget on things like thermal efficiency, clean energy development fund and probably child care," said Rep. Shap Smith, D-Vt. House Speaker.
Smith says the budget balancing act will likely result in several million in reserve, a necessary component to react to unanticipated costs.
A few members of the committee did voice disapproval for the tax package, as did Gov. Peter Shumlin, D-Vermont. He released this statement:
"I know that the House is working hard on the FY14 budget, and while I appreciate that they support funding many of my priorities, I disagree strongly with the manner in which the Ways and Means Committee has chosen to raise revenue. I have repeatedly opposed increases to income, meals, and sales taxes, and yet this proposal hits all three. Rather than reallocating existing funds more efficiently to achieve better outcomes as my budget recommends, the committee proposal increases Vermont's already high tax burden. Luckily, we are only part way through this legislative session and I look forward to working with the Legislature to ensure that we end up with a responsible budget acceptable to all of us."
Now, this budget would still have to be signed off on by the full House and Senate, and receive the governor's signature. Asked earlier in the week if he would veto such a bill, the governor said he doesn't threaten vetoes.
The gas tax and break-open ticket tax proposals we've heard are not covered by this. The gas tax is part of the transportation bill which has already passed through the House and is awaiting debate in the Senate. The break-open ticket tax is still on the table for House Ways and Means, but legislators doubt it will raise the $17 million touted by Governor Shumlin.
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