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No Expansion of Vermont Sales Tax

The Vermont Tax Structure Commission recommended to the legislature that it should expand Vermont’s 6% sales and use tax, which is currently limited to non-essential goods and a handful of services, to cover all goods and services except healthcare, and to lower the overall rate to 3.6%.

Essential goods that would now be subject to the new 3.6% tax include food, clothing, and home energy. Over two hundred services would be subject to the new tax would include childcare, college and other tuition, legal aid, carpentry, plumbing, hair and beauty services, home maintenance, etc. The Commission’s recommendation is not a revenue neutral one but calls for a $20 million net revenue increase, above and beyond added costs for bureaucracy and new or expanded income redistribution programs.

In addition to making Vermont a less affordable place to live for us all, the new logistical burden that would be placed on service businesses, many of which are small and struggling, to collect, account for, and remit the taxes would be an especially cruel blow as they try to recover from the economic devastation caused by Covid. Not to mention putting them at a severe competitive disadvantage with rivals across the Connecticut River in New Hampshire and the other forty-six states that don’t cast nearly as broad a sales tax net.

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