About 780 concerned Vermonters have signed an online petition to stop the proposed expansion of the sales tax to services, Vermont GOP official Paul Dame said.
“There is a proposal to expand the sales tax on services like haircuts, auto repairs, home improvements, even day care and tuition payments,” the petition created by the Vermont Republican Party says. “A service tax essentially means a tax on labor. Anyone who provides their labor is now going to need to collect and pay a new tax to the State. Anyone who owns their own barber shop, house cleaning service, lawn care or snow plowing – even babysitters and other child care professionals will now have to begin calculating and applying the tax to their service, and passing it on to every one of their customers.”
As proposed by a tax commission in January, the new 3.6% service tax would be offset by a sales decrease from the current 6% to 3.6%. In a January 29 press conference, Gov. Phil Scott would consider expanding sales tax on services, products, but only to reduce overall burden. Asked about a plan to reduce the percentage of the sales tax but expand the scope of taxable products and services, Scott said: “This isn’t the time to increase taxes on anyone … if the Legislature is talking about reducing the burden, I’m all ears.”
The new service tax alone would burden Vermonters in many unwelcome, unexpected ways, Rob Roper of the Ethan Allen Institute said. For example, it would increase instate tuition by $450/year at a state college, and up to $1400 at UVM.
It’s also regressive. Low income consumers spend higher percentages of their income on necessities, therefore, under this scenario, a higher percentage of their income on the tax, Roper noted.
Furthermore, longtime observers of the legislature predict revenue hungry lawmakers will soon restore the sales tax to its current six percent level.