Lawmakers and Gov. Peter Shumlin have very different views about how taxes affect the economy.
The governor remains adamantly opposed to the tax bills passed by both the House and Senate. He underscored his resistance again at his weekly news conference Thursday.
“It’s always tougher for this Legislature to take existing money and spend it more wisely, than it is to turn to taxpayers and say, ‘Hey, we’re just going to dig into your pockets for more loot,’” he said.
The only broad-based tax boost the governor supports is an increase in the gas tax, which went into effect May 1.
The revenue increases eyed by lawmakers include a hike in the meals tax, changes in the income tax, and extending the sales tax to bottled water.
Shumlin argued that any additional taxes will stifle the recovering economy.
“We’re making great progress. We have the third lowest unemployment rate in America right now. We’re making great progress, but it’s a fragile recovery,” he said. “And if you want to choke it off, raise every single tax you can think of on Vermonters – that seems to be what this Legislature wants to do.”
But lawmakers disagree. They don’t see their revenue proposals as harming the economic rebound.
“I think if you make our tax system more fair, and more equitable, that can only have a positive impact,” said Rep. Janet Ancel, D-Calais, chairwoman of the House Ways and Means Committee.
Ancel said lawmakers have sound policy reasons for their proposals.
“Eliminating exemptions from the sales tax, particularly when we’re looking at things like candy and soda and bottled water, I can make good arguments, good policy arguments for that,” she said. “So I tend to look at the tax questions more as questions of what’s equitable and what’s fair.”
The Legislature has rejected some of the governor’s ideas as well. Shumlin had sought an increase in the franchise tax on the five largest banks. The change would have raised about $2 million, but that idea died in the House and Senate. The governor also wanted to reduce the state earned income tax credit for low income working people with children. But Ancel said that proposal remains a non-starter with lawmakers.
Still, she thinks a compromise on the revenue and budget package is likely.
“There was only one instance in recent history when we actually passed a tax bill that actually ended up getting vetoed. It wasn’t that long ago, 2009,” she said. “Every other year we managed to come to an agreement. This particular governor has been part of that agreement for as long as I’ve been around here, either as Senate president or as governor, so I’m sure we can work things out.”
The governor has made a point of not threatening a veto. But Ancel said it’s too early to predict the outlines of the any revenue deal.
