SOUTH BURLINGTON — New businesses and business investments in Vermont should enjoy a tax-free launch, Republican gubernatorial candidate Scott Milne said Wednesday afternoon.
At a news conference to unveil his economic development plan 13 days before the general election, Milne described what he’s calling the Green Mountains of Opportunity Initiative. In addition to a general “change (in) tone from the top,” Milne wants to give Vermont’s economy a “shot in the arm” to spark entrepreneurialism and job creation.
Milne did not offer a cost estimate for the program, but he said his intention was to create a net gain for the state.
The first part of his plan is to waive corporate income taxes for any new business created within three years of his policy’s adoption. The tax-free period would extend for the first five years of the company’s profitability.
Any new business that maintains at least 80 percent of its payroll within Vermont would be eligible. Additionally, if businesses add payroll amounting to 5 percent or $100,000 per year (whichever is greater), their tax-free period could be extended for another five years.
Complementing the entrepreneurial incentive would be an effort to ease capital investment: All capital gains taxes on investments made in Vermont over a three-year period would be waived.
Milne said the policies would not only jumpstart business, but also attract working-age people to Vermont.
“The biggest problem is the demographic problem,” Milne said. “We have fewer and fewer young people to help grow our economy to pay our bills.”
Indeed, Moody’s Investors Services names this demographic slip as one of the primary negative factors in Vermont’s generally positive credit rating.
Milne cited a 2013 report by the Agency of Commerce and Community Development that projected Vermont’s broadly defined working age population (20 to 64 years old) will decline between 2010 and 2030. In the same decade, the retirement age population (65 years and older) is projected to increase by a higher margin, he said.
Milne said his education plan, which he unveiled Oct. 15, is designed for long-term impact, while his economic initiative will produce immediate results.
When pressed, he ultimately acknowledged there may be some foregone revenues in the short-term. But that’s just one revenue stream, he said.
“Clearly, the economic impact of a business is profound beyond the corporate income tax base,” Milne said. He suggested increased revenues from sales, meals and rooms, and income taxes would more than make up the difference in time.
His tax-honeymoon proposal for startups does not directly address existing businesses. Wednesday’s press conference was held at just such a place: the Growler Garage, which opened just six weeks ago. The shop caters to Vermont’s beer craze with 21 craft beer taps. Co-owner Liam O’Farrell said the shop employs one full-time and five part-time employees.
Milne said the best service the state could offer existing businesses is to repair Vermont’s energy landscape. While Vermont’s average retail prices are between 24 percent and 37 percent higher than the national averages, he said policies do not benefit average ratepayers.
But O’Farrell, who also owns Mountain Air Systems, a commercial heating and cooling contractor based in Williston, said he had no reservations about locating his second business in Vermont. He purchased Mountain Air from his father, who founded it. O’Farrell said Vermont is where he’s lived for 40 years, and where he wants to stay.
In a candid moment, he told reporters he had found the state of Vermont and the city of South Burlington very supportive in his most recent entrepreneurial venture. While acknowledging the challenges of starting a business, O’Farrell said thus far he had found no unreasonable constraints to his enterprise.
The Department of Liquor Control, in particular, had aided the Growler Garage in its quest to obtain a dual liquor license to offer samples and sell retail beer, he said.
The anecdote contradicted Milne’s contention that, in addition to holding policies unfriendly to business, the state’s agencies are mismanaged and not customer-oriented.
Streamlining business services is a topic of much conversation among all political affiliations at the statehouse. But the subject of tax credits is often met with a foregone conclusion that Vermont simply cannot afford the same type of tax forgiveness that New York is employing to entice businesses.
Though he previously had described the Green Mountains of Opportunity Initiative as intentionally “provocative,” he tried to minimize its boldness when discussing its political feasibility.
“It’s a simple, pragmatic, incremental step,” he said.
