Local Option Sales Tax· The residents of Burlington, Vermont, voted to authorize a 1% Local Option Sales Tax on Town Meeting Day, March 7, 2006. The City Council and Mayor proposed this tax as a way to fill a gap in the general fund budget, and would like to use it to pay for city services. It is a Charter Change that will need to be approved by the Vermont Legislature. Department heads were asked to prepare two budgets for FY 2007, one with and one without the Local Sales Tax. This is the second year that this item has been brought to the voters. Below is information about Burlington's proposal last year, the status of Williston's tax, and Burlington sales data from 1989 to 2005.
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The 1% tax could generate about $2.7 million.
Of that, $1.75 million (65%+)
would go to the City, with the balance of $809,000 (30%)
and up to an additional $135,000 (5%) collection fee going to the
state.
This is based on FY 2005 taxable retail sales in Burlington of
approximately $269,761,800.
·
In last year's proposal, the City had planned to use
75% of the sales tax (about $1.3 million) for a targeted tax relief
program for income eligible
homeowners and renters. The plan was to target households
with incomes over $47,000. The purpose was to reduce the impact of the shift in
property tax burden due to reappraisal. (See Property
Tax Information for more detail.) ·
The other 25% (about $438,000) would have been used
to pay for police, fire, public works and other central city services. Plans for
using the tax in future years were not defined. ·
The one percent Local Sales Tax will apply to all items
currently subject to the 6% Vermont State Sales Tax. This includes commodities like furniture, cleaning supplies,
paper products, jewelry, linens, books, souvenirs, building
supplies, tires, automotive parts, office equipment, etc.
Also taxed are cable TV, leased equipment,
telecommunications and the
gas, oil and electricity used by businesses (except that used in
the manufacturing process). Exempted are clothing and shoes under $110, food,
prescription drugs, automobiles.
·
Currently Williston is the only municipality in
Chittenden County with a Local Option Sales Tax. Here are some specifics about Williston’s tax: o Williston’s 1% local option sales tax was adopted in 2002 – effective July 1, 2002. State tax was 5% then, before Act 60 increase to 6%. o Authorized by VSA Title 24, Sec 138 - as relief from Act 60 tax increase; enacted through town vote; no additional approval required from Legislature. o Revenues and costs are split 70% town (less about 5% collection fee), 30% state. o Sunsets in 2008. The Legislature is considering extending it. o Did not exempt clothing and footwear under $110, unlike state sales tax. o All items sold in Williston subject to the Vermont sales tax are subject to the Williston Local Option Sales Tax. Williston's 1% local option sales tax is also levied on rooms and meals and alcohol. o Does not include automobile sales subject to purchase and use tax, or automobile rentals. o
Tax applies to items shipped outside Williston to
other towns in Vermont, or sold by sale staff outside of
Williston. Businesses outside Williston are required to collect
and remit the 1% local sales tax for services/items subject to
Vermont sales tax that are provided to an address in Williston,
such as satellite and cable TV, electricity used commercially,
rental and leased property. Table A: Changes in taxable retail sales from 1989 to 2005:
Source: Vermont
Department of Taxes website & Bill Smith; summary & analysis by Nancy Wood.
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Updated March 23, 2006
