This commentary is by Chris Brimmer, the Zoning, planning, and economic development administrator for the town of Fairlee Monday through Thursday, and the administrative officer for the town of Waterford on Friday. He is also secretary of the Vermont Progressive Party.
We are looking at a system for the legal sale of cannabis in Vermont largely to garner the tax revenue that legalization should already be generating.
There is serious discussion of the taxation of services along the lines of sales taxes and, once the problem of reporting is taken care of, I’m sure we will soon be generating revenue from that source as well — a 6% sales tax on items not deemed necessary to human life (food, clothing under a price, etc.), use tax on out-of-state purchases and a meals and rooms tax. Then there is the state property tax for education and the state income tax.
I am going to make the assertion that the state of Vermont has robbed its localities of their tax capacity. In most states, sales taxes are largely the source for local revenue, school districts are supported by property taxes, and some cities that have a workforce that decamps to the suburbs every night have an income tax (St. Louis, for example, has a 1% income tax).
Vermont has allowed its towns to wither on the vine by relying on a property tax that is throttled by the state education tax and an opt-in 1% option tax that is politically problematic for most selectboards.
The net effect has been a local political culture desperate to keep the town property tax as low as possible to offset the unpredictable state school tax, often to only be punished by the voters for increases in total property taxes beyond local control. To float a local 1% option tax to raise local revenue in this environment is nearly impossible.
The result is a deficit in local capital investment in infrastructure, community amenities and town-level economic development.
We are currently looking at a tax on services commensurate with a tax on goods. So long as the same sorts of exemptions apply to services that apply to foodstuffs and other necessary goods are applied to services, I see no reason to exempt one form of consumption over another. We are also looking at a tax on cannabis over and above the usual 6% sales tax.
These two new sources of revenue will raise new tax revenues that will more than offset my proposal: Make the option tax automatic.
Automatically, 1% of every dollar taxed under sales, use, services, meals and rooms, and future cannabis sales go to the town they are levied in. No going to voters to ask them to tax themselves over and above neighboring towns in what amounts to an almost 17% increase in the sales tax, no fighting the local resort over a 1% bump that amounts to an actual increase of almost 10%, no more rushed votes if and when development comes to town.
I don’t even mind if you attach strings to how that money is spent — operations must come out of the municipal property tax, for example — but let’s give towns back some autonomy and local control. That requires resources and a revenue stream dedicated to local government, and that 1% is a place to start.
