Raising taxes ... intelligently

Friday April 26, 2013

We are fortunate to have Peter Shumlin as a governor who understands how businesses work and jobs are created. Like most of my fellow business owners, I love Vermont and I want to stay in this beautiful state and keep my business sustainable. However, businesses in Vermont face many challenges, including rising costs and onerous regulations that make it difficult to remain consistently profitable and plan for future capital investments.

Governor Shumlin understands that the correct method of raising more revenue for the state is not to increase tax rates on those who already bear the lion's share of responsibility for state tax revenue. He understands that higher sales taxes hurt our restaurants and merchants while falling hardest on those least able to afford it. He knows that helping businesses thrive and become more profitable will result in more revenue to the state.

Last year was a very challenging ski season for Vermont resorts. Had taxes been increased after last season, as some would have liked, we at Sugarbush would not have been able to invest in the capital projects completed over the summer which helped us improve operations and create a better long-term guest experience. These investments have allowed us to become more competitive with ski areas in New York, Massachusetts, New Hampshire, Maine and elsewhere. And while Mother Nature certainly helped this winter, the result of these investments is that our skier visits and revenue have increased more than our costs. Consequently, we have been sending considerably more tax revenue to Montpelier in the form of rooms, meals and sales taxes. A successful year allows us to hire more employees, increase wages, and invest in our future. Importantly, our business success also allows us to support local charitable organizations whereas higher taxes will diminish that ability.

Next year we will face yet another increase in our property tax and almost assuredly higher taxes on gasoline and diesel. These will come straight out of our bottom line. Further tax increases will force us to spend less on the investments that I mention above. While we are not happy about paying more for fuel, we realize that our roads are badly in need of repair and critical to our business. Matching federal transportation dollars are important to the state, so we understand the need to take action. However, the rise in property taxes over the next few years is another matter.

A good system of education is critical to the success of our business. We understand that. And we are happy to invest in our local schools. But we would be even happier if the system were run more efficiently. Vermont spends far more than necessary to provide quality education for our children. One example that highlights this inefficiency is the fact that we have over 60 supervisory unions, which cost the taxpayers $32 million per year. Do we really need over 60 administrative units for 85,000 students? No, we do not. A fraction of this number is needed to administer our educational system. The savings could be directed toward early education and make it possible to hold our taxes at current levels or even reduce them. Creating fewer supervisory unions does not mean that school consolidation must occur. Let us reduce administrative overhead and redirect these tax dollars to educators, not administrators.

Success in business often requires difficult choices and it always requires leadership. If we experience a bad year at Sugarbush, we have to put many projects on the back burner. Even after a good year, our revenue will not support every worthwhile initiative. We have to prioritize. Sometimes prioritizing requires us to reduce or even eliminate a popular event or program for the good of the whole. It is never easy but we do it because resources are limited.

As a business owner, I understand the governor's approach of harvesting savings from one program to support another more attractive program. We do it all the time. In a perfect world he would keep all programs and build new ones as needed. But the world is far from perfect and good leaders understand that fact.

Governor Shumlin has properly drawn a line in the sand about higher broad-based taxes. I agree with his statement that "Vermonters are already taxed enough." We are willing to pay more taxes to the state but we want to do so from consistent improvement in our business results, not by having our tax rates go up further.

Win Smith lives in Warren and is an owner and president of Sugarbush Resort.


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