Republican Gov. Phil Scott had some choice words Thursday for Democratic lawmakers’ decision to tax Paycheck Protection Program loans forgiven by the feds in 2021.
“I completely disagree with the Legislature on that,” Scott said Thursday on VPR’s Vermont Edition. “I feel strongly the Legislature should reverse its decision to insert at the last minute a new potential tax liability on federal PPP loans.”
The House and Senate agreed last week to tuck the new tax into H.315, a Covid-19 relief bill. The underlying legislation was designed to pump federal aid into Vermont’s education system, as well as workforce and economic development initiatives.
The state would treat the loans — doled out to businesses last year as part of the federal government’s response to the pandemic — as taxable income. Loans that were forgiven in 2020 would not be subject to the tax.
The bill arrived on the governor’s desk Monday, starting the five-day clock for him to sign it, veto it or let it become law without his signature.
On Thursday, Scott said he hoped lawmakers would reverse course.
“It can be rectified. They put it in at the last minute in a bill — unfortunately — that is awaiting my signature or my action, but it’s unfortunate because there’s a lot of good things in the bill as well,” Scott said. “I’m contemplating what to do. Hopefully they’ll make a decision to rectify what they’ve done in H.315.”
Business groups across the state have universally panned the Legislature’s move. The point of the program, they say, was to provide tax-free, forgivable loans to companies to help them make payroll and stay afloat during the pandemic.
During a Senate Democratic caucus meeting Tuesday, lawmakers defended their decision.
Senators maintained they are still undecided about whether to actually tax PPP loans, arguing they have time before the 2021 tax deadline to further debate the issue.
The Senate Committee on Finance expects to begin that discussion Tuesday when it’s scheduled to hear directly from business leaders.
