BRATTLEBORO -- The Brattleboro Area Chamber of Commerce is asking Brattleboro residents to reject a proposal to institute a new local option tax which will be on the ballot during Town Meeting Day voting.

Brattleboro voters will weigh in on the non-binding question at the polls Tuesday by Australian ballot. The outcome of Tuesday's vote will only help Town Meeting Representatives understand how the public feels about the new tax. Town Meeting Representatives will decide on March 22 whether the town will establish the new tax, which is projected to bring in about $650,000 if it goes into effect.

But the Selectboard wants the voters to have a say and on Tuesday the question will be on the Town Meeting Day ballot.

The Brattleboro Area Chamber of Commerce Board of Directors, at their February meeting, asked residents to vote against the new tax.

"In an already competitive market for our local businesses, exacerbated by our proximity to tax-free New Hampshire and the increase in Internet shopping, the Board of Directors of the Brattleboro Area Chamber of Commerce urges the voters of the town of Brattleboro and Town Meeting Representatives not to impose a 1 percent local option sales tax," the chamber stated in a press release.

Under Vermont state law clothing and shoes, food, manufacturing machinery, over-the-counter drugs and medical equipment and supplies would be exempt from the new tax.

If the new tax is accepted it could reduce the Brattleboro tax rate by about 5.5 cents, lowering this year's projected municipal tax increase from 8.5 cents to 2.9 cents, according to the Brattleboro Finance Department.

"As an organization and a board we have great respect for the people who vote and the outcome, but that doesn't mean we have to agree with it," Brattleboro Area Chamber of Commerce Executive Director Kate O'Connor said. O'Connor is also a member of the Brattleboro Selectboard. "Regardless of the outcome of Tuesday's vote we will still make our case with Town Meeting Representatives before the vote on March 22."

Town Meeting Representatives overwhelmingly rejected the new tax at a special meeting in October 2012 when the $14.1 million police-fire renovation project was approved. The Selectboard at that time wanted to institute the new tax to help pay for the renovations.

Now, as payments on the $14.1 million project are coming due and are significantly affecting the tax rate, the board is asking voters to let the Town Meeting Representatives know how they feel about Brattleboro taxes.

"Brattleboro faces very significant revenue generating hurdles. We have very significant operation-related obligations and a very limited number of options for raising money to pay for the business of the town," said Brattleboro Selectboard Chairman David Gartenstein. "The state authorizes us to levy property taxes, a room and meals tax, an alcohol tax and a local option sales tax. To the extent that we decide not to levy one of those taxes the burden falls on property taxpayers. We think the voters should have the option of weighing in on that."

According to data released by the town, a property owner with a $200,000 home is going to see a tax increase of about $170 under the proposed FY15 budget. If the local option tax is approved that increase will drop to a little more than $57.

Brad Borofsky, co-owner of Sam's Outdoor Outfitters, said the tax could have a much wider impact. He said with tax-free New Hampshire across the river large retailers have mostly abandoned Vermont. Business is booming in Keene and Hinsdale, he said, while small businesses in Brattleboro struggle. And customers at those stores already pay significant sales taxes to the towns where they are located.

"With another sales tax we will only see that trend continue," he said. "Major retailers are never going to come to open up in this atmosphere. We already have less businesses paying taxes because of the sales tax."

Borofsky has stores in Keene, N.H., and in Hadley, Mass., and he said both are growing at a more rapid rate than the Brattleboro store.

Eventually, he said, the state of Vermont is going to look to increase the sales tax and it is going to be much harder to make an argument against a statewide increase when the largest town in southeastern Vermont is raising its own tax rate.

"This is a major consequence. We might as well just give up on fighting the state," Borofsky said. "The only people who love it when we raise a new tax are the people of New Hampshire because it means more business will go there."

"We understand completely the concerns of local merchants that a local option sales tax could hurt sales," Gartenstein said. "Town Meeting Representatives ask us to be aware of significant tax increases. We went through the budget with a fine-toothed comb and the budget we presented is a realistic assessment of what it cost to run this town. Without the local option tax property taxes are necessarily going to be that much higher. The tax gives us a way to diversify how we raise revenue."

There is more information about the proposed 1 percent local option sales tax on the town's website: www.Brattleboro.org.

Howard Weiss-Tisman can be reached at 802-254-2311, ext. 279, or hwtisman@reformer.com. Follow Howard on Twitter @HowardReformer.