Despite pleas from business leaders, Senate advances tax bill

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(Host) Despite opposition from the governor and a coalition of Vermont businesses, the Senate has advanced a tax bill that raises about $26 million in new revenue.

The business executives said they can’t afford to pay more taxes, and they urged the Legislature to make more cuts to the state budget, instead.

VPR’s John Dillon reports:

(Dillon) Just minutes before debate began in the Senate, Dianne Pedley stood before media microphones and asked lawmakers for a break.

Pedley and her husband own a woodworking business in Fairfax. She said she checked her bank balance this week and found just enough to pay for a week of groceries and half a tank of gas. She said her business owes utility bills, along with state unemployment and withholding taxes.

(Pedley) "Keep in my mind if you’re thinking about adding more tax and utility burdens to your constituents’ piles of bills, think about this. Trim down our state budget some other way, and show us you’re doing what you were elected to do. Look after the long term financial stability of Vermont."

(Dillon) Blair Enman, who owns an engineering company in Rutland, said the Legislature needs to do what businesses do when revenues fall short of expenses.

(Enman) "We’ve cut everywhere that we can. We’re down to employees and benefits. That’s what it’s come to, and it’s come to taxes. And if taxes go up, there’s no other place for us to go. So we’re pleading: Stop the hurt. Don’t take any more out of us."

(Dillon) Inside the Senate chamber, lawmakers debated the possible revenue sources.

Senate President Peter Shumlin backed a bill that hikes taxes on hard liquor and smokeless tobacco. And he said the legislation does away with a tax exemption on capital gains income.

(Shumlin) "This capital gains loophole that’s been on Vermont‘s books is grossly unfair. It’s a working tax penalty for hardworking Vermonters that gives folks who clip coupons, have trust funds, and have other forms of income, a break."

(Dillon) But Franklin Senator Randy Brock said people with potential capital gains income – such as the sale of a small business – will avoid the Vermont tax by moving out of state. He said the bill will only add to Vermont’s reputation as a high tax state.

(Brock) "We’re encouraging the flight of money outside the state, which we could desperately use in order to provide the kind of jobs we need in this environment. Overall, what this does is raises our taxes by $26 million-plus a year. This should be called the Herbert Hoover economic development bill."

(Dillon) Shumlin said the money raised by eliminating the capital gains exemption will be used to lower personal income taxes.

He said the Legislature has already cut $70 million from the budget over the last year. Next year’s spending bill trims another $28 million, he said.

(Shumlin) "And if you’re going to cut $25 million more you’re talking about getting rid of the prescription drug program for elderly people, closing more rest areas. There’s all kind of options, but the easy options are now gone. You’d really be compromising Vermonters’ quality of life."

(Dillon) The Senate is also working on the 2010 budget. The tax bill was designed to fill a $26 million dollar gap in next year’s spending bill.

For VPR News, I’m John Dillon in Montpelier.

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