Higher Sales Tax for Better Education

Author: Greg Duggan

Get ready to hold onto your wallets. Shopping in Middlebury and everywhere else in Vermont has just gotten a little more expensive. On Oct. 1, the sales tax in Vermont increased from five percent to six percent and the telecommunications tax escalated to six percent.

These raises are part of Act 68, which addresses Vermont educational funding and stipulates that the money raised by the higher taxes will go towards financing the state's public schools. By passing this act and increasing the sales and telecommunications taxes, Vermont property taxes, which are the current means of funding public education, will now decrease. This reduction in property taxes served as the main motivating factor in passing Act 68. According to Governor James Douglas' spokesman, Jason Gibbs, property taxes connected to education will decrease by an average of 22 percent.

Senator Claire Ayer, D-Addison County, explained the reasoning behind cutting property taxes at the expense of sales and telecommunications taxes. "People have a lot of complaints about our high property taxes. The issue is that people who have been in their homes for a long time whose income may have decreased - they may have retired - are finding it hard to stay in their homes," she said. "And yet they don't have enough money to move out and get a smaller place with fewer taxes. What we basically did was take a chunk of money that we raised by property taxes and transfer that to sales taxes."

The higher taxes will add an expected $100 million from the sales tax in 2005 and $104 million in 2006, plus an expected $3.7 million from the telecommunications tax, to the state's income. The change may, however, also hurt some Vermont businesses. Vermont now has the second highest sales tax in New England, second only to Rhode Island's seven percent. Particularly in the eastern part of the state, consumers may feel compelled to travel across the border to New Hampshire, which does not have a sales tax, to do their shopping. Since many Vermonters already cross into New Hampshire for this purpose, much of the opposition to the increased sales tax came from retailers in the Connecticut River Valley who say the change will hinder their economy even more than it currently does.

Phone companies displayed strong opposition to the heightened telecommunication tax. Some citizens contested the increase, but, according to Ayer, the issue "wasn't pressed that hard."

In Middlebury, storeowners do not seem worried that the increase in sales tax will have much of a negative effect on business. Steven Atocha, owner of the Middlebury Mountaineer, said, "I've heard a few people say that [for] a bigger ticket item they may head over to New Hampshire." For the most part, he does not worry about a decrease in sales.

David Disque, owner of Forth 'N Goal, echoed Atocha's sentiments in saying that the store expected business to continue as normal. Disque even said he doubts many customers are aware of the increase in sales tax.

For him, the most important aspect of the sales tax increase is that the taxes continue to not apply to clothing and footwear. "It's fair to the people of Vermont" to not tax necessities such as these.