Where to find $195 million

A sales tax on household services in Vermont could generate up to $195 million in revenue. That’s according to testimony given by phone by Michael Mazerov, Senior Fellow at the Center on Budget & Policy Priorities, at the March 16 meeting of the Blue Ribbon Tax Structure Commission in Montpelier.

He was talking about the options and issues of a sales tax on services in the state.

Citing data provided by the Public Assets Institute, Mazerov pointed out that taxable sales as a percentage of Vermont’s economy have been declining for the past 30 years.  This is largely because Vermont’s sales growth has been in the service sector, and the state taxes goods, but few services.  Only 13 states of the 46 with a sales tax in place tax fewer services than Vermont.

Lagging growth of taxable sales is one of the longstanding problems that have worsened the effects of the current recession in Vermont.   The legislature is working to close a $154 million budget gap for the fiscal 2011 budget, and the Joint Fiscal Office estimates the fiscal 2012 gap at over $250 million.