Governor Shumlin has made it clear he firmly opposes any increase in “broad-based taxes.” Don’t even think about it, is his message to lawmakers who’ll be looking for ways to address a tough budget situation.
His definition of broad-based taxes? Income, sales, and rooms and meals.
The first two are no-brainers. But rooms and meals? Is that really a broad-based tax? Or, to put it another way, is it really broader-based than some other forms of taxation?
Vermont has a goal of weatherizing 80,000 homes by the year 2020, which would save a whole lot of money and energy; but there’s no funding mechanism in place to meet the goal. According to the Vermont Press Bureau, a task force will recommend a tax on most home heating fuels — kerosene, propane, coal, and fuel oil. Natural gas, reports VTDigger, is already subject to an energy efficiency tax; biomass and firewood would be exempt.
At his news conference last week, Shumlin was specifically asked if such a fuel tax should be considered “broad-based.” After a substantial pause, the Governor finally said no, such a tax would not be broad-based. Not so fast, says Matt Cota of the Vermont Fuel Dealers Association:
“This is a broad-based tax,” he said. “Whether you’re rich, poor, or a business, everyone pays.” Cota estimated that about 170,000 homes in Vermont use heating oil or propane, representing about 70 percent of the housing stock.
I’m inclined to support a fuel tax that would fund weatherization. Fossil fuels are undertaxed as it is, since their prices don’t reflect the costs of carbon emissions. A fuel tax for weatherization is perfectly logical. Kills two birds with one stone.
But I have to agree with Cota: it is a broad-based tax.
It’s less broad-based than sales or income, but it’s certainly broader-based than the rooms and meals tax. It’s also much more regressive; the rooms and meals tax hits higher-income people harder, while a fuel tax would have a bigger proportionate impact on poorer people.
And no, I’m not saying we should increase the rooms and meals tax instead. I’m just saying I don’t buy the Governor’s reasoning.
Especially since we’ve got this other big item staring us in the face: a huge bill for water quality improvements. The Agency of Natural Resources says the state would have to increase spending by $156 million a year to meet our water quality challenges. That’s such a high price tag that the ANR didn’t even try to recommend a way to raise it all. It suggested a range of taxes or surcharges, including a stormwater fee for each property, a surcharge on the income or property tax, and taxes on items that contribute to water pollution such as motor fuels or fertilizers.
Even if we approved all those measures, we’d still be far short of the needed revenue. The best we can hope for is a substantial influx of federal money — at a time when the feds are trying to tighten their belts. But to get even a decent start on improving water quality, we’re facing some tax and fee increases.
And none of them are on Shumlin’s list of broad-based taxes. He has crafted a definition that will let him present himself as a fiscal tightwad, while leaving himself quite a bit of wiggle room to increase state revenues.