House Committee Backs $26M Tax Plan That Includes Rooms and Meals

Tax Bill

Rep. Janet Ancel, D-Calais, says debating whether rooms and meals is considered a broad-based tax undermines the severe budget challenges facing Vermont. (AP File Photo/Toby Talbot)

By Kirk Carapezza

A key House committee has given preliminary approval to a tax package that would raise roughly $26 million, putting it on a collision course with the governor because it includes provisions he opposes.

Governor Peter Shumlin has said he does not want to raise broad-based taxes.

The House Ways and Means Committee on Friday took a straw vote in favor of a deal that includes a half percent tax increase on rooms and meals – from 9 to 9.5 percent.

Committee Chairwoman Janet Ancel, D-Calais, said debating whether rooms and meals is considered a broad-based tax undermines the severe budget challenges facing Vermont.

“I think the real point that we need to ask ourselves is are we going to raise revenue to do the things we need to do? And if we raise revenue, how do we do that equitably and fairly?” Ancel said.

The package in the House would also impose the sales tax on soda, candy and bottled water, and clothing costing more than $110. Ancel said these taxes make fiscal sense to pay for state programs.

“We’re actually – frankly – not quite an outlier, but we’re in a minority of states in that we don’t apply the tax to candy and soda,” Ancel said. “So I think there’s certainly some good policy arguments for doing it.”

In the spirit of March Madness, some lawmakers this week have been filling out brackets that list various taxes. They’ve been picking which tax is going to “win” in the House Ways and Means Committee.

For those of you keeping score at home, the panel voted narrowly against a tax on sugar-sweetened beverages. But it backed a 50-cent tax increase on cigarettes. It did not consider the governor’s proposal to tax break-open tickets, which are games akin to a lottery that are played in social clubs and bars.

The committee also rejected the governor’s proposal for redirecting $17 million from an earned income tax credit program for working Vermonters to subsidize child care. Not a big surprise – most lawmakers had seeded that proposal at the bottom of their bracket.

In a statement released Friday, Shumlin said he disagrees strongly with the manner in which the Ways and Means Committee has chosen to raise revenue.

“I have repeatedly opposed increases to income, meals, and sales taxes, and yet this proposal hits all three,” Shumlin said. “Rather than reallocating existing funds more efficiently to achieve better outcomes as my budget recommends, the committee proposal increases Vermont’s already high tax burden.”