9-16-16 – Sue Minter Wants to Expand the Sales Tax to Services

by Rob Roper

At a “debate” at the Tunbridge Fair yesterday (9/15/16, hear the full debate here), Democrat gubernatorial candidate Sue Minter indicated that she is in favor of expanding the Vermont state sales tax to services.

About thirty minutes into the event, moderator Mike Smith of WDEV’s “Open Mike” program asked Minter about tax policy noting that, “Governors Dean, Douglas, and Shumlin avoided raising the personal income tax, sales tax, and corporate income tax because they said it would be damaging to the economy in VT. Would you do the same?”

Minter’s cagey reply, “I will balance the budget. I will be a good steward of the people’s money. I will look at the economic impact of every spending and raising decision.” In other words, no, I won’t avoid raising those taxes.

She went on to say, “We have a tax code now, Mike, and you know this, that was really built around durable goods. And, now our economy – two thirds of it – is really a service sector economy…. We need to be thinking about the entire system. I’m interested in going back to the program we had after the Blue Ribbon Tax Commission that looked at what can we really do to lower rates by expanding the base. That would be my goal.”

The Blue Ribbon Tax Commission recommendation Minter is referring to is specifically expanding the state sales and use tax to cover services as well as goods – everything from legal fees to getting a haircut would be subject to the sales tax. If all services were covered by sales tax, and the change was revenue neutral, the overall sales tax rate could be lowered to around 2 percent from 6 percent where it is today. However, if healthcare and educational services remain exempt, as most people think they will, the rate only comes down to between 4.5 and 5 percent.

(Note: EAI Board member Bill Sayre served on the Blue Ribbon Tax Commission and wrote the minority report opposing a sales tax expansion to services.)

Expanding the sales tax to services would exacerbate Vermont’s New Hampshire problem as our neighbor to the east has no sales tax on goods or services. Vermont’s service sector would face the same disadvantage our retail sector now faces, which has been devastating for business and jobs.

The damage from a sales tax on services would be particularly hard on small businesses. Many small businesses contract out services such as payroll, advertising, etc., which they would have to pay tax on. Large businesses that can afford to produce those services “in-house” by full or part time employees would not pay the tax.  The compliance hassles will also be a negative factor as service businesses would now have to collect, keep track of, and remit taxes to the state.

There are over 160 services that could be subjected to a newly expanded sales tax. Here are few examples of services that would look like:

  • Health Care (though likely would remain exempt)
  • Education (though likely would remain exempt)
  • Child Care
  • Automotive repair labor
  • Information Technology
  • Web/Graphic design
  • Payroll services
  • Home Maintenance
  • Plow services
  • Construction/Carpentry
  • Barbers/Hairdressers
  • Real Estate
  • Architectural services
  • Advertising
  • Accounting
  • Legal services
  • Cleaning services
  • Landscaping
  • Electricians
  • Plumbing & Heating
  • And many more…

Rob Roper is president of the Ethan Allen Institute.

{ 6 comments… read them below or add one }

Ken September 17, 2016 at 1:37 am

What a fool, has she never heard of cutting the budget to balance it ??? If she has a problem finding an area to cut, Please Call ME!!!!!

Reply

H. Brooke Paige September 17, 2016 at 12:17 pm

“Suzie’s Six” – Minter Looks to Giving Vermont Taxpayers a Big “Haircut !”

During the only gubernatorial debate she was assured of winning (she got to debate herself), Sue Minter revealed that she plans to tax virtually everything that is currently exempt primarily “services.” That’s right “everything” from haircuts and healthcare, garbage pick-up and gun repair , laundry and legal services would be “fait game” for a Minter Administration.

The new taxes would send Vermont’s cost of living into the stratosphere as business would now find legal, accounting, information technology and advertising all subject to the 6% statewide tax (or 7% if it is allowed to be applied to the local option surcharge). For the individual, many essential services would also cost more as the tax is applied to their babysitter, plumber, carpenter, assisted living services, even the guy that mows your lawn or the guy that plows your drive will now be required to add “Suzie’s Six-Percent” to the bill.

All of this in turn for the vague promise of some nebulous promise of a sales tax rate reduction in the future – “like that would ever happen.” We all remember when Howard Dean fulfilled Dick Snelling’s promise to end the 1991 “temporary” sale’s tax increase (from 4% to 5%). We also remember how long it was before the Dean Administration jacked it back up to 5% ? – That’s right a mere six months !
So remember that we’ve been given fair warning, that, if elected, Governor Minter promises to give you wallet the “Suzie’s Six” haircut – a fact that will surely have legions of hard working Vermonters “Heading for the Hills” (of New Hampshire) !

H. Brooke Paige

Reply

H. Brooke Paige September 17, 2016 at 12:39 pm

“Suzie’s Six” – Minter Looks to Giving Vermont Taxpayers a Big “Haircut !”

During the only gubernatorial debate she was assured of winning (she got to debate herself), Sue Minter revealed that she plans to tax virtually everything that is currently exempt primarily “services.” That’s right “everything” from haircuts and healthcare, garbage pick-up and gun repair , laundry and legal services would be “fair game” for a Minter Administration.

The new taxes would send Vermont’s cost of living into the stratosphere as business would now find legal, accounting, information technology and advertising all subject to the 6% statewide tax (or 7% if it is allowed to be applied to the local option surcharge). For the individual, many essential services would also cost more as the tax is applied to their babysitter, plumber, carpenter, assisted living services, even the guy that mows your lawn or the guy that plows your drive will now be required to add “Suzie’s Six” to the bill.

All of this in turn for the vague promise of some nebulous promise of a sales tax rate reduction in the future – “like that would ever happen.” We all remember when Howard Dean fulfilled Dick Snelling’s promise to end the 1991 “temporary” sale’s tax increase (from 4% to 5%). We also remember how long it was before the Dean Administration jacked it back up to 5% ? – That’s right a mere six months !

So remember that we’ve been given fair warning, that, if elected, Governor Minter promises to give you wallet the “Suzie’s Six” haircut – a fact that will surely have legions of hard working Vermonters “Heading for the Hills” (of New Hampshire) !

H. Brooke Paige

Reply

Jim Bulmer September 17, 2016 at 12:55 pm

First off, I’m in whole heaarted agreement with the thought of CUTTING SPENDING as a way to balancing our budget!!! Secondly, BEWARE: if the sales tax is reduced early on as part of the scheme to add services to the tax base, what’s to prevent these folks from INCREASNG the sales tax a year or two out when they start scratching around for additional funds to support more hair brained projects????? The simple answer is to nip this line of thinking in the bud by electing Phil Scott! We’ve had enough!!!!

Reply

Paul Hudson September 18, 2016 at 10:56 pm

Good evening,
It is comforting to view the VT tax grab schemes from far. We left VT, our home state, just because of the “tax & spend” attitudes like those that Ms. Minter proposes. My family has been Vermonters since the end of the Revolution, so leaving was not easy at all. But her “tax at all cost” plan will drive more of us in the Middle Class out of VT and leave you with a theme park for the Rich & Famous. Good luck with that, Ms. Minter. PFH

Reply

Frank Bammo September 20, 2016 at 1:36 pm

Irregardless of whom might occupy the governor’s chair, a cooperative legislature is required to change tax law. Given the current makeup of our legislature- the tax on services is inevitable in the next biennium. The governor may sign the bill or veto.
Please remember this on Nov. 8th, as you check boxes for legislators.
I can see this as the “shoot yourself in the foot to see if it hurts the other guy” theory-
should we end up with a Republican governor and a Democratic super-majority come
January.

Reply

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