(Host) The Senate has given strong approval to a bill that reduces the number of homeowners who pay their education tax based on income.
They would pay the education tax according to the value of their property and that would add $10 million to the state’s Education Fund.
The changes are expected to affect three-thousand people.
VPR’s Bob Kinzel has more.
(Kinzel) Governor Jim Douglas has been very critical about parts of this bill including a plan to delay the passing through of a federal tax credit for businesses that manufacture a variety of products. Postponing this credit for a two year period means that the state will receive roughly two million dollars a year in additional revenue:
(Douglas) "I’m very concerned about the reliance on taxes from last year, new taxes this year and the prospect for higher taxes next year as the result of actions and inactions that the Legislature might take…I told Legislative leaders that relying on these taxes is not acceptable."
(Kinzel) Senate Finance chairwoman Ann Cummings defended the delay and she says every other New England state is adopting the same policy.
(Cummings) "We’re trying to do a balanced budget. We’re trying not to decimate Human Service programs and we’re trying not to raise taxes, and when you start out with the kind of hole that we started out with that’s fairly difficult to do."
(Kinzel) Cummings also pointed out that her bill includes a significant tax credit to help the EHV Weidman Company in St. Johnsbury upgrade its operations to preserve 200 jobs.
(Cummings) "On the other hand in this bill we have up to 8 million dollars in tax credits for a struggling business up in the northeast kingdom and we’re trying to save those jobs in that area."
(Kinzel) The legislation also imposes an assets test for a program that allows many Vermonters to pay their education tax based on their income instead of the value of their property.
Cummings says the first change will directly affect homeowners with more than $5,000 in dividend and interest income:
(Cummings)"What we’re really trying to get after is the folks that have wealth in the form of assets not income and you can manipulate those assets in order to control your income and so this is a very simple assets test and we’re hoping to pick up… We have picked up about 3,000 people who when you figure in the assets they have are probably able to pay their property taxes and will be."
(Kinzel) The Senate also passed an amendment banning anyone with a net worth of more than a million dollars from being eligible for the program.
The House addressed this issue in a different way. It capped the value of a house that qualifies for income sensitivity at $425,000.
A conference committee will now meet to work out a compromise on these issues.
For VPR News, I’m Bob Kinzel in Montpelier.