The next Vermont "sales tax holiday" will take place Saturday, March 6. The sales tax holiday was initiated in 2008 and has been wildly popular with retailers, consumers and politicians. All items of $2,000 or less that would normally qualify for the Vermont sales and use tax are exempt. This includes both the regular statewide sales of 6 percent and the 1 percent local option tax that most of the larger towns in Vermont also have instituted.
Some economists both here and around the nation, including the Tax Foundation, have questioned the practice. The opposition suggests that it is not really stimulating sales, rather it is only changing the timing of sales that otherwise would have been made. Therefore, the state just loses revenue. If tax revenue is lost from sales, it would mean taxes would have to be raised somewhere else. Florida, for instance, which like most states including Vermont is facing mounting budget deficits, suspended its tax holiday last year. This sales tax holiday is expected to cost Vermont $2.2 million in lost sales tax revenue. The state will pay the 1 percent to the local option towns so those municipalities will see at least a short-term windfall.
But most businesspeople see it as a way to stimulate the economy, which was why the sales tax holiday was instituted in the first place. Below are details and qualifications issued by the Vermont Department of Taxes. Other than the $2,000 limit, almost everything that is now taxed is exempt. In most cases, back-ordered and layaway items are also exempt if they paid for on March 6. Some of the non-exempt items include:
• Amusement charges including season passes for ski resorts.• Charges for telecommunication services including prepaid telephone cards.• Charges for cable television services.• Digital downloads of music, movies and books.
Only a week away, Vermont business owners have high expectations for the sales tax holiday. They remain confident that it will provide a much needed boost to their bottom lines in this down economy. “These sales tax holidays play an important role in getting struggling Vermont businesses back on the path to economic stability,” said Betsy Bishop, President of the Vermont Chamber of Commerce. “We are optimistic that Vermonters will be out across the state taking advantage of the tax-free holiday as well as other incentives that local businesses are offering. It’s really a win, win situation for consumers, for Vermont businesses, and for the state as we all work to get the economy rolling again.” In 2009, the Legislature approved two tax-free holidays allowing any products costing $2,000 or less, that are normally subject to sales and use, or local option sales tax to be exempt. Some businesses are extending their hours, adding additional staff, and even adding extra discounts and promotions. At Buck’s Furniture in Wolcott, co-owner Sandy Howard said she hopes the sales tax holiday will draw consumers into her store to purchase items that they may not otherwise buy if they had to pay sales tax. “This day really helps merchants,” Howard said. “The previous sales tax holiday last August was our single biggest sales day in our 52-year history and we’re hoping we get the same response next week.” Howard said that Buck’s Furniture will be open 24 hours from Midnight on Friday until Midnight on Saturday and they will have additional staff on hand in order to assist an influx of customers. In addition to no sales tax, Howard said the furniture store will also be offering other promotions and deals.
Source: www.stateline.org, Tax Foundation, Vermont Chamber of Commerce, Vermont Department of Taxes, Vermont Business Magazine.