Commentary: Sue Minter Wants to Expand the Sales Tax to Services (September, 2016)

by Rob RoperRob Roper

At the Tunbridge Fair, Democrat gubernatorial candidate Sue Minter indicated in an interview with WDEV’s Mike Smith that she is in favor of expanding the Vermont state sales and use tax to services. Currently it applies only to goods, with a few exceptions.

About thirty minutes into show, Smith 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 replied evasively by answering an unasked question, “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.” Or, in other words, “No.” Minter does not intend to avoid raising those taxes, and given the number of costly new programs she wants to implement, one can see why.

She went on to say, “We have a tax code now… 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 [I think she meant “proposal”] 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 (BRTC) proposal Minter is referring to is expanding the state sales and use tax to coverdriveway services as well as goods – everything from paying legal fees, to putting your child in daycare, to plumbing and home repair, to snow removal to getting a haircut would be subject to the sales tax, and all of those businesses would have to bear the new cost and hassle of collecting, tracking, and remitting the revenue to the state.

The BRTC identified in its report 168 services from a Federation of State Tax Administrators study that would be eligible for taxation and specifically mentioned the following examples: “Lawn and garden, personal transportation, residential utility, financial and insurance, misc. personal (childcare), clothing-related, other professional (legal), personal property rentals, vehicle repair/maintenance, housing and real-estate, pet-related, storage and moving, telecommunications, personal care, home cleaning/maintenance, education-related, admissions/recreation/travel, medical, residence construction/repair, and misc. repair/installation.” That’s a lot of day-to-day expenses that will all of a sudden be between 2 and 6 percent less affordable for Vermonters.

Which gets us to the promise to lowering the overall sales tax rate. If all services were subject to the sales tax, and the policy change was revenue neutral, the overall 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 would be for both political and legal (the heavy federal money and involvement in those services likely makes them un-taxable by the state), the rate only comes down to between 4.5 and 5 percent. And, Minter did not say if she were in favor of a revenue neutral sales tax shift, or one that lowered rates but still raised revenue.

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. Lowering Vermont’s sales tax from 6 percent to 5 or even 4 percent would not prevent shoppers from crossing the boarder for tax-free savings on goods, and expanding the tax would just encourage the same kind of border jumping regarding services. The disadvantages Montpelier has placed on Vermont retail businesses, especially through sales tax policy, has been devastating. Do we really want to do the same thing to our service sector?

It’s worth noting that there was a dissenting minority report issued by the BRTC in regard to expanding the sales tax that touches on the issues mentioned above, but also raises the distinct possibility that an initial lowering of the sales tax rate in connection with expanding it to services may not last very long. Do we trust our politicians who are facing annual budget deficits and seem to have an insatiable desire to spend money to keep the rate low? In fact, Sen. Tim Ashe (D/P- Chittenden), chair of the Senate Finance Committee, has been an advocate for a non-reveue neutral increase in the sales tax. Ashe is an often mentioned candidate to replace retiring John Campbell as Senate President Pro Tem.

If expanding the sales tax to services really is, as she says, Minter’s goal, Vermonters have to have long and detailed conversation about it between now and November, and decide if this is something they really want.

— Rob Roper is president of the Ethan Allen Institute. He lives in Stowe.

{ 2 comments… read them below or add one }

H. Brooke Paige September 25, 2016 at 4:16 am

“Interview, HELL !” – this was the only debate Sue will win this election season – of course she was debating herself and she lost !


Jim Bulmer October 4, 2016 at 1:29 pm

Let’s look down the road a couple of years. The sales tax now includes services and has been reduced to say 4% , Ok. Now some well intentioed misinformed Democrat in the legislature comes up with a hair brained stupid proposal which needs funding OR quite simply, additional funds are needed to meet increased spending, what do we do? Rasise the already penal income tax? Won’t fly. How about adding a measly 1% to the reduced sales tax? Nobody will mind a liitle ole 1%. Now we’re up to 5%, and the beat goes on. These people are not to be trusted. We MUST elect Republicans in November.


Leave a Comment

Previous post:

Next post:

About Us

The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.

Latest News

A Response to “Who’s Really Politicizing Our Kids”

June 13, 2019 by Rob Roper The following is in response to a letter that appeared in the Caledonian Record on June 10th by Steven Isham.  To the...

VPIRG’s Plastic Agenda

June 12, 2019 By John McClaughry The plastic bag ban is sitting on Gov. Phil Scott’s desk. If he signs it, Statehouse Chronicle writer Guy Page reports, a working...

The Blittersdorf Special

June 11, 2019 By John McClaughry Remember the Champlain Flyer? That was Howard Dean’s commuter train that ran 13 miles from Charlotte to Burlington. After three years’ operation...

Roll Call! Senate Blocks Amendment to Remove Insurance Innovation from Bill (7-22), 2019

S.131 – AN ACT RELATING TO INSURANCE AND SECURITIES (BARUTH AMENDMENT) FAILED in the State Senate on April 3, 2019 by a vote of  7-22  . Purpose: The Amendment called for removing...

California Prison Drugs

June 7, 2019 By John McClaughry Steven Greenhut, writing in the Orange County (California) Register, makes an interesting point about drugs in prisons. He quotes a San Francisco...