Vt. House continues debate on tax bill

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(Host) At this hour, the Vermont House is debating a tax bill that’s designed to raise $24 million in new revenue.

This second day of debate has focused on changes to Vermont’s estate tax, and on a plan to impose the state sales tax on digital downloads – the so called ‘i-tunes tax’.

VPRs Bob Kinzel reports:

(Kinzel) The bill raises $24 million by imposing a new income tax surcharge, beefing up enforcement programs and offering a one time amnesty program for people who owe the state back taxes.

The measure also includes some smaller provisions that raise a fair amount of money.  One is a tax on the digital downloading of music, movies and books.

This section of the bill is expected to raise about a million dollars a year.

Milton Rep. Ronald Hubert argued it was a mistake to impose the downloading tax at this time:

(Hubert) "Until we come to an agreement nationally so that all items that are bought over the Internet would be taxed fairly and equitably I strongly ask members of this body to support this amendment."

But Calais Rep. Janet Ancel said taxing digital downloads is a matter of tax fairness:

(Ancel) "Our feeling is that this amendment actually creates a level playing field for our brick and mortar retailers where the sales tax is assessed and the on line retailers who have agreed to voluntarily participate in the streamlined sales tax."

The legislation also makes changes in Vermont’s estate tax. Essentially, the bill caps the estate tax exemption at $2 million even though the federal exemption will rise to $3 and half million in 2009.

Barre Town Rep. Tom Koch said the change will drive wealthy people from the state:

(Koch) "I know people who have done it I suspect most of us know people who have done it and you can deny it study it all you want it’s happening."

Rep. Ancel defended the estate tax change. She said it’s important for Vermont to set its own tax policy and not be linked to the federal tax code.  She also said there are studies that strongly discount the theory that wealthy people will leave the state if these kinds of tax changes are put into place:

(Ancel) "What they find is that those decisions about where people live are much more affected by the closeness of relatives, by the availability of jobs by access to services and climate and perhaps on that last one we may not do very well but on those others I think Vermont does extremely well."

The legislation also lowers the statewide residential property tax rate by two cents.

For VPR News I’m Bob Kinzel in Montpelier.

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