Valley economy

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(HOST) The Vermont Retail Association recently released a study that concludes that the implementation of the sales tax has been the primary reason for the decline of retail sales in Vermont along the Connecticut River. Commentator Timothy McQuiston disagrees and suggests that it was caused by a different, but no less monumental, change in Vermont public policy.

(MCQUISTON) There never was a “there” there along the Connecticut River in New Hampshire until about thirty-five years ago. OK, Dartmouth, but that was about it. Vermont had the downtowns, the railroad, the interstate and thriving retail all along the river. Then things changed.

Conventional wisdom says that the downfall of retail on the Vermont side of the river lies with the introduction of the sales tax in 1969, and there are concerns that an increase to six percent will make matters worse.

Well, consider this. When Vermonters shop in New Hampshire, they buy clothes, gasoline, cars, groceries and beverages, as well as gizmos and stuff.

But Vermont has no sales tax on clothes anymore, so cross that off the list of possible culprits. Vermont has gasoline prices similar to those in New Hampshire. If you’re a Vermonter and you buy a car in New Hampshire you still have to pay the Vermont sales tax. There’s no tax on groceries in Vermont, and you can buy soft drinks, hard drinks, and semi-hard drinks in a gazillion stores on both sides of the river. So that leaves only gizmos and stuff on our list.

Remember, New Hampshire historically has had a larger and slightly wealthier population, and the retail sales trend lines were already moving toward New Hampshire before 1969.

So the sales tax, in fact, does not appear to be the reason for retail to have left Vermont. Sorry. Now I suppose you could buy gobs of party supplies and electronic equipment and furniture on the other side, and just finish up your shopping while you’re there, but that’s not what happened. It’s much more basic than that. If you build it, they will come.

You see, the onus is not on the sales tax, it’s on Act 250. Since the onset of Act 250 in 1970, New Hampshire has been a much easier place to develop than Vermont. New Hampshire not only has fewer regulatory hoops to jump through, they also have a “can-do” attitude. They don’t skimp on environmental laws, but they do work with the developer to find a way. There’s also more flat land on the New Hampshire side, and that counts for a lot. But even in St. Johnsbury, where there is land, most of the new development is on the New Hampshire side. It’s easier and cheaper to develop over there.

If there had been the will and the land and the can-do attitude on the Vermont side of the river for the last thirty-five years, retail would have stayed here regardless of the sales tax.

Can we do anything now to fix this? Absolutely. Clean house on the regulatory hoops, and improve the attitude. Create a no-sales-tax zone if that makes you feel better.

Shopping destinations change all the time. Newer is almost always better. Give people a better shopping option and they’ll go there.

I’m just not sure where we’d put it.

This is Timothy McQuiston.

Timothy McQuiston is editor of Vermont Business Magazine.

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