Senate Committee To Make Changes To House Tax Plan

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The Senate Finance committee is working on a tax package for next year and the plan is likely to look quite different from a proposal adopted in the House several weeks ago.

The House plan raised roughly $25 million in 2014 and $46 million in 2015. It increased the rooms and meals tax by half a percent, imposed the sales tax on soda, candy, and bottled water, and capped personal income tax deductions.

Governor Peter Shumlin has vowed to oppose any plan that increases a broad based tax and he says the House proposal does this three times.

"This is just the wrong medicine, at the wrong time for our great state. We do not need to raise income taxes, rooms and meals taxes, sales taxes on hard working Vermont families right now."

Senate Finance chairman Tim Ashe notes that the House plan raised the rooms and meals tax for only a one year period and he says he doesn’t favor this kind of temporary approach.

"Every year the Legislature treats our tax code like a volume dial on a radio," said Ashe. "Turning it up a little turning it down a little bit but whether you’re an individual or a business having that unpredictable nature to our tax code has an effect on you so we should figure out what’s a fair policy and then try to stick with it as long as we can."

The House plan caps personal income tax deductions at two and half times the standard deduction. For an individual, the cap would be roughly $15,000 and for a couple it would be approximately $30,000, but Ashe thinks some deductions have greater policy value than others.

For instance, he questions allowing people who build "trophy homes" to deduct all of their mortgage interest but he likes the idea of encouraging people to make charitable contributions.

"I think we’ll have to give strong consideration either to an a la carte approach to make the system more equitable I think that would be our first approach before going to a total cap as the House has done."

Ashe thinks the House did make the right decision to remove the food exemption on the sales tax for soda and candy.

"So the question isn’t can we raise $2.5 million bucks a year by taxing it. It should be, does it deserve the same treatment as something like you know an apple ?

Ashe says it’s also likely that his committee will reject the Governor’s plan to take $17 million from a tax credit program for low income working people to finance an expansion of child care services.

The panel could have a draft plan ready by the end of the week.

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