House Endorses Tax Legislation

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(Host) The House has given its preliminary approval to legislation that raises taxes on health care providers, tobacco products and the statewide property rate for education. The vote on the bill was 90 to 47.

During its debate, the House rejected efforts to impose an income tax surcharge on the wealthy to help offset cuts to human service programs. But the issue could come up again later in the session.

VPR’s Bob Kinzel reports:

(Kinzel) The tax bill is the first of three major pieces of legislation on the House floor this week – the other two are the Governor’s health care reform plan and the state budget for next year.

This legislation does several things. It raises nearly $25 millionfrom health care providers – hospitals are the largest single source of revenue under this tax.

It imposes a small tax on all health care claims – this provision raises almost $11 million. These health care revenues are then matched by the federal government to help finance the state’s Medicaid program.

The plan also increases the state cigarette tax by 27 cents a pack and it raises the statewide property tax for education by a cent.

Barre City Rep. Paul Poirier asked members to support a plan to impose an income tax surcharge on families with incomes of more than $137,000 a year.  He said the surcharge is needed to help offset drastic cuts in many human service programs:

(Poirier) "There are many, many thousands of Vermonters who are suffering. There are times when a legislative body has to step up to the plate and become the social conscience for the people who are going without many necessities."

(Kinzel) Although most Republicans opposed the income tax surcharge, they let a number of Democrats lead the opposition to the plan. 

Ways and Means chairwoman Janet Ancel asked her colleagues to delay acting on this amendment until her committee brings an income tax reform bill to the floor in several weeks:

(Ancel) "We intend to continue to work in committee on that bill and my feeling about the proposal to do an income tax surcharge is that the right time to take up that issue is when we look at the income tax restructuring."

(Kinzel) The House then rejected the amendment by a vote of 117 to 23.

Many Republicans oppose the health care provider taxes because they say the costs will be passed along to people with private health insurance policies.

But backers of the plan say that a good portion of this money will be returned to many health care providers in the form of higher Medicaid reimbursement rates.

The measure is scheduled to come up for final approval in the House on Wednesday. Then the House will tackle the health care reform bill.

For VPR News I’m Bob Kinzel in Montpelier.

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