Legislator Says PAC's Ads On Democrats' Tax Policy Is Off Base

10/15/12 5:50PM By John Dillon
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Turn on your television or open your mailbox and it's hard to avoid an anti-tax message from a group called Vermonters First. The new political action committee is spending hundreds of thousands of dollars on political mailings and TV ads.

One ad features a variety of people said to run their own businesses, including a designer and a hair stylist. They say they're worried that their cost of business may soon go up.

"Democrats want to expand the sales tax to include services," the ad says. "...This will kill jobs in our service economy... Vermont Democrats in control are out of control."

There is a legislative summer committee looking at the tax issue. But its chairwoman says the panel is not considering a sales tax expansion.

"I think they've made a straw man and they're knocking it down," said Calais Democrat Janet Ancel, referring to the Vermonters First ad campaign.

 "I guess that's what happens in politics," she says. "That's not what we're doing in this committee."

The Vermonters First ads are apparently based on the recommendations of a blue ribbon tax committee that looked at the state's tax structure. That panel did suggest broadening the sales tax to include more services such as accounting or law.

But the blue ribbon committee also said if the sales tax was expanded, the overall sales tax rate should be lowered. 

Either way, Ancel says that expanding the sales tax is not likely to be on the Legislature's to-do list. Ancel also chairs the tax-writing House Ways and Means Committee.

"In my mind talking about expanding the base in a very dramatic way is simply not going to happen. I don't think it's anything our committee is interested in doing," she says. "I don't think the Ways and Means committee is interested in doing it. I wouldn't support doing it."

Instead, the summer study committee is mainly focused on sales tax revenue the state is losing from on-line sales.

Max Behlke, a policy specialist with the National Conference of State Legislatures, said that around the country states will fail to collect $23 billion in taxes owed from e-commerce or remote sales. In Vermont, the uncollected tax will be around $44 million this year.

Behlke, testifying by speaker phone, said the U.S. Supreme Court has ruled that states cannot force out of state retailers to collect the tax. So, he said, the solution has to come from federal legislation.

"The bottom line is that states will never be able to collect the taxes that are currently owed without federal action," he says. "That's either overturning the court decision or through congressional action."

On Monday, the tax study committee also touched on the idea of expanding the sales tax, this year's political hot potato. But it did not take testimony in favor of the idea. Instead, the committee heard from a critic of the proposal.

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