The Tax Foundation has sized up sales taxes on the state and local levels and ranked states from highest to lowest in two categories.
In the first category – statewide sales tax – Vermont’s 6 percent sales tax rate ranks 16.
The second column of statistics factors in local sales taxes to come up with a combined state sales tax ranking. 11 Vermont communities have a local options sales tax. Vermont is ranked 34 based on that metric.
The report doesn’t take into account how the sales tax is applied. Unlike Vermont, some states levy a sales tax on items like groceries and clothing..
The Tax Foundation points out that sales taxes are just one part of a state's revenue picture and, "should be considered in context. For example, Washington State has high sales taxes but no income tax; Oregon has no sales tax but high income taxes.”
Vermont was the last state to impose a sales tax. The tax was controversial when Republican Gov. Deane Davis proposed it in his 1969 inaugural address but Davis prevailed thanks to Republican majorities in both the House and Senate.
In the ensuing years there have been calls to reduce the sales tax, citing the impact on low income Vermonters and on businesses along the Connecticut River that compete with those in New Hampshire, which is among five states with no sales tax. Despite those concerns, the sales tax has continued to rise. The most recent bump was from 5 to 6 percent in 2003.
