Senate leaders propose using capital gains tax to repair bridges and roads
02/12/08 6:03PM By Bob Kinzel
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(Host) Vermont's capital gains tax could be used to help pay for transportation projects.
Republican and Democratic leaders in the Senate are drafting a proposal to close a tax loophole, and use the savings to improve the state's roads and bridges.
But the Douglas Administration wants to use the
money to lower income taxes for middle and upper income Vermonters.
VPR's Bob Kinzel reports:
(Kinzel) The idea of linking money from the capital gains tax to help repair the state's transportation infrastructure came from Washington senator Phil Scott who serves as the vice chairman of the Senate Transportation committee.
The plan is to close the so-called 40 % exemption of capital gains revenue and to use the roughly $20 million generated from this change to increase spending on roads and bridges.
Scott notes that the state's Transportation Fund, not the General Fund, pays the entire $32 million budget of the Vermont State Police and he thinks this arrangement is unfair. He says over the years, the Transportation Fund has been deprived of more than $500 million:
(Scott) "So I thought let's get over that and move on we have the need we can leverage that money for a lot of other purposes with federal money that we have because it would be state money and we could somewhat create an economic stimulus package of our own a mini one that might create about $100 million worth of construction type related jobs and invest in our own infrastructure."
(Kinzel) Administration Secretary Mike Smith says the governor opposes Scott's plan because Douglas wants to target the capital gains revenue to help lower tax burdens for middle and upper income Vermonters:
(Smith)"We're not supportive of this idea. Primarily, we don't think we should be closing that loophole and spending the money - you should be closing that loophole in the capital gains and put it into reducing middle income taxpayers' tax burden."
(Kinzel) Smith says the Administration believes it's possible to repair the state's transportation infrastructure without resorting to such a large package:
(Smith) "We've increased the paving budgets quite considerably in the past 5 years, we've increased the bridge repair budget considerably and that's where we need to focus. So I think we can meet our needs."
(Kinzel) Progressive gubernatorial candidate Anthony Pollina is also jumping into this debate.
Pollina backs efforts to dramatically increase spending on roads and bridges because he says these efforts will help boost the state economy:
(Pollina)"I think that getting out from under the reputation of having some of the worst roads and bridges in the United States of America will do a lot to encourage people to build businesses in Vermont it will do a lot towards making it easier to do business in Vermont. It will have a much greater impact a more positive impact on Vermont than lowering the tax rate for the wealthiest people in the state."
(Kinzel) Pollina says he plans to make this issue one of his top priorities during his upcoming campaign for governor.
For VPR News I'm Bob Kinzel in Montpelier.